Budget Debt
The US Government spends about $3.7T a year and generates revenues of about $2.5T a year. A $1.2T annual deficit in 2012. In the last five years, Sequestration cuts and increased revenues have reduced the deficit. If anyone wants to know why we have a budget problem in this country, all you have to do is look at the running debt clock. We are now at $20T in debt.! But, if big numbers alone don't get your attention, then lets put the $20T in perspective, it represents over 100% of GDP. The nation owed $10.6 trillion on Jan. 20, 2009, when President Obama was sworn in, and he doubled it – more than Bush piled up in two terms. There is bipartisan agreement that we cannot sustain this level of debt. There is also bipartisan agreement that we must correct the outflows exceeding inflows that drives the debt higher every second (see debt clock) . Everyone who manages a checkbook has seen this problem before and knows how to correct it - reduce expenses and increase income. Increasing revenues is critical to the solution, but will not have an immediate impact. Reducing expenses is also critical to the solution and can generate immediate impact. It is the only thing in your control instantly! Everything else we here about this subject beyond these two facts is just noise and should be ignored. The political left and right cannot agree on how to correct this problem. Doing something is also better than doing nothing, which is what this stalemate is giving us now. The left solution to our problem is to increase taxes on the rich to increase income. Currently the top 20% of income earners pays 80% of the federal tax burden. So do we want them to pay 100%? 110%? 120%? Maybe just write the check every year for the entire cost of government, whatever it is? Clearly this is not a solution. The right wants us to reduce spending and taxes, which was also a poor solution in a recessionary economy, but in a growing economy in 2017 has promise. But, the truth is we must do both (reduce expenses and increase income), we must do it now and it will not be easy. All the political hot air outside these two facts is simply a distraction from the difficult but obvious answer. To increase income we must immediately restructure the tax code to foster a growing economy. Trump did that in Dec 2017. A growing economy will usually increase income (tax revenues for the government) over the 10 years, but not immediately. The Trump tax reform due to money overseas that will be returning home, will have immediate positive revenue impacts. To immediately begin to impact our budget and debt problem whiling anticipating increased revenues we also must immediately and dramatically cut spending. That MUST include discretionary spending AND entitlements (Social Security, Medicare & Obamacare) which represent 90% of the problem. The left will say you are hurting education, the homeless, healthcare of all Americans, the elderly and on and on. The right will shout "we are already taxed enough". All This whining MUST be ignored. No one wants to hurt themselves, their families or their neighbors We have no choice but to intelligently make these difficult decisions while minimizing the pain. But there will be pain. And our representatives MUST ACT NOW. It is a dereliction of duty if they do not. The 2 year budget passed Feb 2018 does not do this. It was a purely bi-partisan negotiation (which is good) but gives everything to everyone and makes no tough decisions on spending. Below you can watch the ongoing debate on this critical issue. And hopefully see the solution we need develop.

The Guns and Butter Budget

2/9/18
from The Wall Street Journal,
2/7/18:

Democrats exact a high price for agreeing to boost the military.

Congress announced the outline of a two-year bipartisan budget deal on Wednesday, and no doubt Members want to avoid another pointless government shutdown. The deal has the virtue of starting to fix a weakening military. But the delusion is that the U.S. can continue to deny the trade-off between guns and butter, or defense and the entitlement state.

First, the good news: The budget outline would lift defense spending by $80 billion in fiscal 2018 and $85 billion in 2019, honoring a central GOP campaign promise. This busts the “sequester caps” that forced useful restraint on domestic accounts for a few years but damaged the military and did nothing on entitlements.

Military leaders have all but invaded Capitol Hill to say that unreliable and lower funding has eroded readiness in every area from aircraft to munitions.

On the long list of the Democratic haul: An additional four-year extension for the children’s health insurance program, or CHIP, which was recently extended for six years. That means 10 more years of a separate health program for children, though many Democrats said that ObamaCare would provide affordable coverage that would make the CHIP program unnecessary. Now we get both for the long run. Speaker Paul Ryan noted in a press-release pitch that the GOP steered some of the funding toward Republican priorities, including maintenance backlogs at veterans hospitals. Also $2 billion for research at the National Institutes of Health, and a better flu vaccine is looking like a good idea this month. Add to this about $90 billion in disaster relief. That money to rebuild Texas, Florida and other areas would have been whooped through Congress sooner or later, even if plenty of it is sure to be wasted. The deal also includes $6 billion for the opioid crisis, though it’s hardly clear that communities or the health-care system are prepared to absorb more cash.

One good development is that Republicans managed to include the repeal of ObamaCare’s Independent Advisory Payment Board, known as IPAB. The Obama central planners created this panel of bureaucrats to impose price controls on Medicare and it represents everything Americans hate about the Affordable Care Act: political rationing over individual choice.

The larger fiscal reality is the continuing failure to reform entitlements, which absorb an ever-rising share of GDP and federal budget and present the true threat to national defense. President Obama blocked reform, and then the GOP missed the best chance in a generation to fix Medicaid by replacing the Affordable Care Act. The politics of reforming that entitlement is easy compared with Medicare and Social Security.

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