House 2013 Budget Blueprint

This is, indeed, a contrast in visions.  We are in the middle of a struggle for the future of our country, and the budget blueprint lays out the parameters of that struggle.

This table, from the House’s Committee on the Budget’s Web site, lays out the contrast pretty clearly.

 

The President’s Budget

House Blueprint

pending

Net $1.5 trillion increase relative to current policy Cuts spending by $5 trillion relative to President’s budget

Taxes

Imposes a $1.9 trillion tax increase; Adds new complexity and new hurdles for hardworking taxpayers, making it more difficult to expand opportunity Prevents President’s tax increases; Reforms broken tax code to make it simple, fair, and competitive; clears out special interest loopholes and lowers everybody’s tax rates to promote growth

Deficits

Four straight trillion-dollar deficits; Breaks promise to cut deficit in half by end of first term; Budget never balances Brings deficits below 3 percent of GDP by 2015; Reduces deficits by over $3 trillion relative to President’s budget; Puts budget on path to balance

Debt

Adds $11 trillion to the debt – increasing debt as a share of the economy – over the next decade; Imposes $200,000 debt burden per household; Debt skyrockets in the years ahead Reduces debt as a share of the economy over the next decade; Charts a sustainable trajectory by reforming the drivers of the debt; Pays off the debt over time

Size of Government

Size of government never falls below 23 percent of the economy, making it more difficult to expand opportunity Brings size of government to 20 percent of economy by 2015, allowing the private sector to grow and create jobs

National Security

Slashes defense spending by nearly $500 billion; Threatens additional cuts by refusing to specify plan of action to address the sequester; Forces troops and military families to pay the price for Washington’s refusal to address drivers of debt Prioritizes national security by preventing deep, indiscriminate cuts to defense; Identifies strategy-driven savings, while funding defense at levels that keep America safe by providing $554 billion for the next fiscal year for national defense spending

Health Security

Doubles down on health care law, allowing government bureaucrats to interfere with patient care; Empowers an unaccountable board of 15 unelected bureaucrats to cut Medicare in ways that result in restricted access and denied care for current seniors, and a bankrupt future for the next generation Repeals President’s health care law; Advances bipartisan solutions that take power away from government bureaucrats and put patients in control; No disruption for those in or near retirement; Ensures a strengthened Medicare program for future generations, with less support given to the wealthy and more assistance for the poor and the sick

A couple of comments are in order (I’ll ignore the political hype in the characterizations in both sides of this table and address only the actual data provided).

First, notice that President Obama’s budget (about which neither he nor his Senate Democrat minions are serious; this is just a campaign speech) both increases Federal spending an enormous amount and increases taxes even more.  This certainly is one way to balance the budget (IFF the tax revenues resulting from those increases actually occur; however, raising taxes actually lowers tax revenue flowing by reducing the economic activity that produces those revenues), but it does so at the expense of our economy’s ability to function.  It constitutes $3.4 trillion dollars taken away from individual Americans and our businesses, either directly—those taxes—or indirectly by taking our spending decisions away from us and putting them into the hands of the Federal government.  It says that we Americans are utterly incapable of making our own money allocation decisions; we must yield those to our Betters in government.

The House budget blueprint, though (it’s certainly true that it could serve as a campaign speech, but it has the added—and critical—advantage of being an actual, workable budget blueprint), recognizes two fundamental things: the money involved is ours, not government’s; we only allocate some of our money to government to spend on our purposes (and not on government’s purposes).  Secondly, the government does not need the money, it does not need those taxes; government does need to spend less.  Period.  It really is that simple.

My second comment concerns the two plans’ attitude toward the appropriate size of government and from that their attitudes toward us Americans.  Obama wants to expand government, not only in size but in authority over our lives.  Government is the answer to our problems, and so the Progressives seek to increase our dependency on government.  Moreover this increase in dependency is not limited to those of us who already are government dependents.  Progressives want to make us all government wards.  We cannot be trusted to work out our own solutions, to make our own decisions.  We’re just not good enough at it.

The House blueprint, in stark contrast, shrinks the size and power of government.  This blueprint respects and trusts us Americans to make our own decisions, and to do a better job for each of us individually, as well as for any groups of us, than government can ever hope to do.  After all, at best, government is limited either to a one-size-fits-all solution (which perforce actually fits no one) or to a collection of “solutions” tailored to groups of us (groupings defined by government, mind you, not by us) that demands an army of bureaucrats to administer and another army of lawyers to interpret and defend.

The choice, then, is clear: whom should we elect this fall?  A collection of politicians who don’t trust us with our own lives, or a collection of politicians who are looking actually to reduce government’s—and their—power over us?

Private vs. Government Economic Stimulus

The New Orleans writer Douglas McCollam, in a recent The Wall Street Journal op-ed, described a New Orleans organization that is having an impact on that city’s economic welfare.  The nonprofit organization, Idea Village, it seems, has in its 10 years of existence helped raise $2.7 million

in seed capital for more than 1,100 local entrepreneurs, creating more than 1,000 jobs and $83 million in annual revenue—and these days helping the city’s unemployment rate stay about a point to a point-and-a-half below the national average.

That’s money raised from private sources and voluntarily paid in, not tax money collected by a government.  In addition to Idea Village’s efforts, health care and education are benefitting from private enterprise efforts, rather than government handouts:

Today about 80% of the city’s public schools, formerly among the nation’s worst, are charter schools competing on performance to attract students.  The city’s antiquated Charity Hospital will soon be replaced by a state-of-the-art medical center, part of a larger, 2.4-square-mile medical corridor anchored by a new cancer research facility and BioInnovation Center.

With tax incentives (read tax cuts), New Orleans is about to replace New York City as the second largest venue for making feature films (Los Angeles remains No. 1).

Look again at Idea Village.  In its 10 years, it’s returned on those $2.7 million 30 times that amount in annual revenue.  And those jobs have cost $2,700 per each.

How does that private stimulus money raising and spending compare with government stimulus money taxing and spending?

President Obama and Vice President Biden are constantly claiming that Obama’s Stimulus spending has “created or preserved” millions of jobs in just three years.  They have steadfastly refused, though, to provide any evidence that that’s true, or that jobs created or preserved are the result of that trillion-dollar spending spree in 2009 and not the result of a struggling, otherwise ordinary, business recovery cycle—beyond anecdotal claims from state agencies beholden to the Obama administration for that money and for other billions they each hope to get in the future.

Let’s accept arguendo that the Obama claims are reasonably accurate, though.  $1 trillion dollars from the Stimulus Bill of three years ago has created or saved 3.2 million (the most frequently tossed about number) jobs in these last three years.  That works out to $312,500 per job created or saved.  Sorting out only the created jobs (were that possible) would drive that cost per job even higher.

And the return on those trillion dollars isn’t at all positive.  Meanwhile, the unemployment average remains, three years after Obama’s promise, above 8%.

Hmm….

Labor Costs and Big Spending

Karl Rove, former senior adviser and deputy chief of staff to President Bush the Younger, wrote in last Thursday’s Wall Street Journal about President Obama’s campaign fundraising and spending.  Of particular interest to me, he had this:

The Obama campaign’s high burn rate doesn’t come from large television buys, phone banks or mail programs that could be immediately stopped.  It appears to result instead from huge fixed costs for a big staff and higher-than-expected fund-raising outlays.  These are much tougher to unwind or delay.  Left unaltered, they generally lead to even more frantic efforts to both raise money and stop other spending.

Doesn’t that sound an awful lot like public service unions and their drain on the taxpayers’ dollars?  Is there a pattern here?

Stimulus Money Works

The stimulus money intended to help Detroit-area folks obtain jobs really did succeed in aiding folks—all 2 of them.  Although the money really wasn’t intended to help them find jobs, but only to help them get dressed.

A chunk of a 2009 stimulus grant meant to provide as many as 400 low-income Detroit residents with clothing for job interviews actually helped…2.

Read the whole thing.

Two Economic Plans

Here is a sort-of side-by-side comparison of Senator Rick Santorum’s economic plan with Governor Mitt Romney’s plan—only sort-of because they address different things in addition to their areas of overlap.

Senator Santorum opened the discussion of his plan with this:

…Obamanomics has left one in six Americans in poverty, and one in four children on food stamps. Millions seek jobs and others have given up.

while Governor Romney had similar words to introduce his plan:

We have record-breaking unemployment and deficit spending, and a tax code that looks like it was devised by our worst enemy to tie us in knots. These three afflictions are interconnected. I have a plan to address them and achieve three goals: more jobs, less debt, and smaller government.

Economic Area

Santorum’s Plan

Comments

Romney’s Plan

Comments

Individual Taxes

only two income tax rates of 10% and 28%. triple the personal deduction for children, eliminate the marriage tax penalty. Strong step in the right direction in simplifying through reducing the number of tax brackets while reducing tax rates.But why keep the distorting subsidy? 20% reduction in marginal individual income tax rates A step in the right direction, but it maintains the multiplicity of tax brackets

 

reduces tax rates for businesses that pay at individual rates and employ the majority of private-sector American workers Through the above 20% reduction

 

abolish the death tax.  repeal the Alternative Minimum Tax Unequivocally good moves

 

place some curbs on personal tax deductions, exemptions and credits Such as…?

Corporate Taxes

corporate tax rate halved to a flat rate of 17.5%. expense all business equipment and investment. Taxes on corporate earnings repatriated from overseas eliminated Again a sound move.  But see my summary below about manufacturing taxes. reduce the corporate tax rate to 25% from 35%, transition from a world-wide taxation system to a territorial one A good step in the right direction.Especially, the territorial tax system can be very beneficial, depending on its details.

 

make the R&D tax credit permanent Lower the tax rate further, and this distortion isn’t necessary.  Nor will it be necessary y to weasel-word what constitutes R&D.

 

maintain the 15% rate on capital gains, interest and qualified dividends, and eliminate the tax entirely for those with annual income below $200,000. Mostly maintains the status quo, but the differential treatment of groups of Americans just continues Obama’s class warfare.Also, see above concerning distortions and tax rates.

 

broaden the corporate tax base. In what way, exactly?

Federal Spending

spending cuts of $5 trillion over five years, including cuts for the remainder of fiscal year 2013 A sound start, but reduced spending in what areas?

 

cut means-tested entitlement programs by 10% across the board, freeze them for four years, and block grant them to states A good start, but why not reduce the size of the grants each year until they’re eliminated?  These are supposed to be State programs: get the Federal government out of them altogether.

Federal Budget

propose budgets that spend less money each year than prior years Reduced spending in what areas?

 

submit to Congress a budget that will balance within four years; call on Congress to pass a balanced-budget Constitutional amendment which limits federal spending to 18% of GDP. Reduced spending in what areas?An Amendment can be good or bad depending on how it’s written.Finally, calling for a thing is easy to do….

 

Unstated in his present plan is his prior insistence on continuing to use our tax code to perpetuate the myth of the usefulness of government-centric economic engineering: he singles out manufacturing for especially low tax rates—no manufacturing corporate tax at all.

In addition, Santorum had this to say about jobs: he’d approve the Keystone XL pipeline, and he’d repeal all “Obama administration regulations that have an economic burden over $100 million.”  I don’t understand, though, why he exempts similar regulations from earlier administrations.  He also insists that Federal agencies must use “sound science and cost benefit analysis;” although here, too, he’s short on specifics, like what analyses fit this bill, or what constitutes “sound” science and cost benefit analysis.

Santorum also says he’ll work to replace Obamacare with “competitive insurance choices,” but without saying what constitutes “competitive” in his view—and he claims to be able to achieve this while maintaining a mandate that somebody must “protect those with uninsurable health conditions.”

Finally, he promises to present to Congress five free trade agreements his first year—but with whom?

Romney, on the other hand, expects his lower taxes to stimulate job growth.  He’s not far wrong here, but more specifics about jobs would have been nice in addition to those tax system generalities.

Both plans are vague on spending cuts, and both continue market distorting subsidies/tax credits of one sort or another—never minding that these simply continue government-generated distortions in our economy, driving up the prices of things that are subsidized and forcing all of us to pay for those price increases, whether we buy the subsidized item or not.  The two plans also emphasize different sides of the revenue coin: Romney focuses on the tax system while Santorum dwells more on spending and budgeting.

In the end, both plans, shortfalls and all, are enormous improvements over the Progressives’ plan of increased spending, higher taxes, exploding debt, and starker class warfare.