Letter: Tax breaks and military spending driving deficit
The federal deficit owed by all US taxpayers jumped by $779 billion in the fiscal year ending Oct 1, 2018, a 17 percent increase. This is due largely to the massive Trump tax cut last year which greatly reduced taxes on wealthy individuals and corporations in addition to adding the largest military spending budget in history.
According to Bruce Bartlett, the highly respected Republican financial expert and President Reagan’s Budget Chief, the current Republican majority knew their giant tax cut for billionaires would blow up the deficit and it was their plan all along was to force cuts to our Social Security and Medicare.
He said, “every single Republican who commented on this issue a year ago that said revenues would rise or they would not fall. I’m talking about Paul Ryan, Mitch McConnell, Steve Mnuchin. They were all lies. They knew they were lies when they said those things and they wanted revenues to fall because they wanted the deficit to rise.”
He was asked why?
“Because what they really want to do is to cut entitlement programs. They want to cut those programs that Mitch McConnell talked about, Social Security, Medicare, Medicaid and they understand they are very politically popular. They can only be cut when there is a deficit, so large, that people are frightened and they feel we have no choice and that has been their goal for 40 years.” He went on to state, “They want to cut any spending that only helps people. They want to increase spending which helps the military.” (See Defense Industries profits)
The Republicans blew a $@ trillion hole into the deficit with their tax cut for the rich. Now they are sounding the alarm bells about how big the deficit is. Their solution? Gutting Medicare and Social Security so the rich can keep their tax cut.
As a fiscal conservative, I don’t like our government spending money it doesn’t have. We, the middle class, have to borrow and pay back with tremendous interests rates (billions a year) just so the very wealthy can get a tax break.
In a booming economy, like we have had for the last nine years, it is absolutely unnecessary to borrow more money to stimulate the economy which doesn’t need stimulating.
Little doubt that “we the people” are being misled, or more charitably, lied to by the people that are running our government now.
Dan Barrett
Jasper
Yes the tax cuts almost all went to the rich. It took me about 1 minute to figure that out. Chuck said the middle class got “scraps” and compared to what the rich got, he was 100% correct.
Fact Check
Actually Federal Tax Revenues rose in 2018. The tax cuts did not cause a loss in tax revenue. Corporations began offshoring profits to other countries to avoid corporate taxes to the point of reducing Federal Tax Revenues by $45 Billion a year by 2016. The corporate earnings of more than $180 Billion per year was unavailable to US banks and actually made banks lending money more difficult. Now those global companies are bringing that cash back and paying taxes and spending the money on corporate construction and investment. Employment rose and the additional workers made up much of the corporate deficit.
The budget is broken into two categories, discretionary and non discretionary spending.
Discretionary spending is items such as national defense, government offices i.e Departments of State, Education, Transportation, etc. Congress never runs a deficit in discretionary spending. The deficit comes from non discretionary spending.
Non Discretionary Spending is Social Security, Medicare, Medicaid, Snap, Government Retiree Pensions and Healthcare. These are programs that were voted in by Congress and signed by various Presidents that did not require matching taxes to fund them. These are called Unfunded Mandates. Unfunded Mandates may have associated taxes to raise revenue to fund them but the taxes by law can’t change unless both houses of Congress and the President pass legislation, even though the cost to operate the unfunded mandates might increase.
Non Discretionary Spending for the above programs is $2.5 Trillion per year however the tax revenue collected to fund them in 2018 is $1.17 Trillion. In order to pay the benefits, the Trust Funds of each of these agencies must sell the government bonds that the Trust Funds keep the revenue in. When the Trust Funds sell the bonds, the Federal Government is required to pay for those bonds out of the General Fund thus forcing a deficit on the Federal Government.
The cost of living increases and the increased cost of healthcare force the Trust Fund to spend more than it takes in. The tax rate to fund the Trust Funds is locked in at 7.65% since 1990 for most Americans. Up to 1990 the Social Security and Medicare tax rate would rise every few years by .3% to keep up with inflation. Some of the solutions have been to change the age for retirement or eliminate the spousal benefit or increase the cost of Medicare B, etc.
Since the House of Representatives, the U.S. Senate and the President, since 1990 can’t get on the same page to fix the upcoming deficits in the Trust Funds, we will continue to run deficits.
A .3% increase in Social Security tax would increase the Trust Fund revenue by 20% and a 1% increase would increase the Social Security Trust Fund by 53%. An increase of 1% in Medicare taxes with a standard employee match of 1% would fix Medicare immediately.
https://en.wikipedia.org/wiki/United_States_federal_budget#/media/File:CBO_Infographic_2017.png
https://www.ssa.gov/oact/progdata/taxRates.html
https://www.usgovernmentrevenue.com/download_multi_year_2013_2023USb_20s1li101mcn_12f30f40f50f60fE0fF0fG0f
https://www.aarp.org/work/social-security/info-05-2012/future-of-social-security-proposals.html
https://www.kiplinger.com/article/retirement/T051-C000-S002-ways-to-fix-social-security.html
Daryl Hensley, Jasper IN
https://blog.aarp.org/2012/12/19/ronald-reagans-9-wisest-words-about-social-security/ Since the 1983 amendments, and despite the numerous deficit reduction debates over that time period, Social Security cuts have never been part of any deficit reduction agreement. Congress has always understood – as Reagan observed – that Social Security has nothing to do with the federal budget deficit. Unfortunately, many policymakers today have forgotten that basic truth and have suggested cuts to Social Security as part of the end of year “fiscal cliff” budget package. The proposal – the so-called chained CPI – would change the formula for calculating the Social Security cost of living adjustment (COLA). This COLA cut would reduce benefits by over $100 billion dollars over the next 10 years and would result in thousands of dollars of lost benefits for current (and future) retirees.
Social Security has a long-term shortfall, but any changes to Social Security should be done – as President Reagan and Tip O’Neil achieved in 1983 – in a balanced and separate measure for the purpose of securing Social Security for the long term. Social Security should not be cut as part of a budget package to pay for a shortfall in the rest of the federal budget.
Dan, why is it so hard for you not to lie or mislead?
Commie-crats hate it when hard working American’s have extra money in their pockets or bank accounts. They love spending other peoples money.