At the end of each fiscal year, the Treasury Department issues a financial report. The last such report was the 2008 Financial Report Of the United States Government. There is a link to the Citizens Guide version of the report here.
The stated 2008 deficit under President Bush was $454.8 billion. That was the largest budget deficit in American history in dollars, though President Obama's first year deficit of $1.8 trillion makes the 2008 deficit look like chump change by comparison. Every other projected Obama deficit over the next 10 years will also be larger than the 2008 largest deficit in history. Yet somehow, Obama's popularity ratings are still high. Go figure. Maybe bankruptcy is the new fiscal responsibility. I don't know. I don't get it.
But the American financial picture is much worse than those deficit numbers alone suggest. The real deficit in 2008 wasn't really $454.8 billion. It was actually much higher, because our federal government does it's accounting on a cash basis. Any debt obligations that are incurred, but have not yet paid, are treated as if they don't exist when it comes to the deficit. Those debts, however, do exist. In 2008, if you add in the debts accrued to pay federal employee and veterans benefits, the deficit balloons to over $1 trillion. If you add in all existing federal debt, we are in the red to the tune of $11 trillion. And if you add in all the accrued entitlement debts from Social Security, Medicare, and others, we are in the neighborhood of $55 trillion in the hole.
Now, imagine you are an incoming President looking at that 2008 financial report, and you can clearly see that America is on an unsustainable fiscal path. The report even states in plain English that America is on an unsustainable fiscal path. What would you do ? If your name is Barack Obama, you would….spend trillions more dollars, skyrocket the debt beyond all historical levels, permanently increase the cost of government, create an enormous new health care entitlement, and expand other entitlements. On top of that, you'd cut taxes for the middle class. In other words, if your name was Barack Obama, you'd do the most fiscally irresponsible thing imaginable. Because one definition of insanity is doing the same thing over and over and expecting different results, I'd say Barack Obama must be insane.
But most of the media talking heads and so-called journalists seem to think Obama is some kind of genius. They act as if he is fixing all that ails our country, even though Obama has taken an already unsustainable fiscal path and made it far more unsustainable, and he did it all in only 100 days. Therefore, most of the media must be insane too. Then the media acts like the Americans who are calling for fiscal responsibility, like the Tea Party protesters for instance, are the insane ones. The media is openly hostile to them. What gives ? What on earth has happened to our country ? It's like a mass delusion has replaced all common sense. Up has become down. Has partisan spin so replaced rational thought that we can't even add and subtract anymore ? We can't even see what is right in front of our faces ? It seems so. I can't think of another reasonable explanation.
To add insult to injury, the same folks who are putting America on course to crash and burn at warp speed say they are doing it because they are "compassionate." They are destroying the future because they "care" about the common man. Are you freaking kidding me ? Please STOP "caring" about me, oh "compassionate" ones, before all your "caring" and "compassion" leaves me penniless and shivering out on the street.
The federal government of the United States Of America is the most broke institution in the entire history of planet earth, bar none. That's what all the "caring" and "compassionate" do-gooders have brought us. We couldn't be worse off if we let the Enron executives out of jail to run this country. Bernie Madoff might as well become the next President.
Btw, the state and local governments are another $160 billion in the red for this year. The house of cards is collapsing, and our government doesn't seem to care, not one bit.
An old Temptations song had the lyric "Vote for me, and I'll set you free." That's what our politicians are doing, setting us free – from our money. The Temptations had it right. It's a ball of confusion. That's what the world is today.
Hey, hey.
{ 24 comments… read them below or add one }
A new report came out today that SS and Medicaid will be in the dump sooner because of all of the huge unemployement figures Obama is causing. Did they just figure this out? The same thing happened to Ohio with the smoking ban and they didn't prepare for an alternate to the tax losses. It cost us about $2.5B in local and state taxes when they issued the ban. They had about $1B coming in from the tobacco settlement but instead of using that to balance the budget, they sold it to a liquidator so that Strickland could be known as the Gov that built new schools. This is how Dems always handle business. Good job guys.
It was funny to see Sherrod Brown spoke at the Chrysler Tea Party. Like he cares. He was part of the Obama team that busted down the union employees. (Notice I said employees not the unions. They got their bribe money from BO)
Amen King–I have been singing the same tune for years but it cant compete with "dont worry be happy"
Lets not leave the Rep's out of this equation. Except for a few such as Sen. Coburn the rest say little or snipe at the edges of this insanity. I truly believe that the future of this country takes a back seat to telling the truth and possibly endangering their relection plans for most of the clowns. They are so afraid ,at least the ones that actually have beliefs of the press, that they will not stand on principle for fear of being branded as hatemongers, racist, meanspirited and on and on. Hell they are even afraid to question the Dems and presses constant rant that the party cant win unless it moves to the left. Could someone show me the empirical proof on that claim. If it is true why would the press and the Dems. constantly harp on the need for the party to move left when their goal is to create an enviornrment that allows for permanent control?
Poverty is the great equalizer.
Funny question…
"Could someone show me the empirical proof on that claim."
November 4, 2008.
C-Span–Government's comedy channel
The house members are blathering about the Green School Construction Bill.
The clowns are waxing on about the benfits of properly built green schools resulting in schools of excelence. On congressman had the audacity to propose that a study should be conducted to prove that green schools result in schools of excelence. What a stupid idea. We all know that if it sounds good it must be true.
Mr. King,
I think Hoover proved that balancing the budget during a depression is counterproductive. Although I dislike deficit spending, now is the time for a stimulus for the economy. The danger is, of course, runaway inflation, so I agree that the deficit should be minimized. Our country should be examining where costs can be cut. As I see it, it is insane to spend more on defense than the rest of the world combined when we are broke. We are so overcommitted that our own borders are not secure. For God's sake, we are spending about $2500 per capita per year to maintain over 700 overseas bases, yet cannot afford to inspect the cargo that comes through our ports. But we can afford to have our army maintain over 200 golf courses on these bases. We should be able save an enormous amount by simply marshalling our resources better.
But why not also look for sources of additional revenue for the government? Until 1964, we had an excise tax on securities transactions. Why not now? After all, shouldn't investors pay at least some of the cost of this bailout? We should also tax capital gains at the same rate as any other income. These two measures alone would dampen speculative investing in favor of long term investment, restore some fairness, and decrease the chances of inflation. We could also restore some sanity to the IRS by reducing deductions by 5% per year over 20 years.
Sen. Durbin claimed that the banks owned Congress. I believe he understated things. They also own the White House. And they've owned both for a long time now. As long as raising the most money to mount a campaign is the primary goal of our electorate, the status quo is guaranteed.
Unfortunately, despite changing conditions, the Republicans remain stuck in their tax cut paradigm. As Reagan's budget director, David Stockman stated,
giving a small tax cut to the middle class was just the trojan horse to enact steep cuts for the rich. Bush did the same thing. Sticking to the tax cut paradigm effectively limits the Republicans to being the party of NO.
What is needed now is statesmen, not politicians.
angryc,
I don't leave the Republicans out of the equation. They are to blame as well. Contrary to the notion some have expressed that the Republicans moved to the right during the Bush presidency, the opposite is true when it comes to fiscal policy. The Bush presidency moved to the left. He never vetoed any spending when the Republicans ruled. Bush created the first new Medicare program in two generations. Social spending soared under Bush, the most since LBJ. Pork barrel spending was at an all-time high. Democrats like to point to the wars as the reason spending grew, but the truth is, the wars were only a small part of Bush's spending increases. Bush was committed to expanding mortgage loans for low-income people to increase home ownership too. The way I see it, compassionate conservatism means NOT conservative. It means liberal.
The above description of Bush doesn't apply to foreign policy and national security issues, obviously.
The thing that kills me is, the same people who excoriated Bush for his big spending and deficits are now congratulating Obama for his bigger spending and bigger deficits. I think 'don't worry, be happy' should be the Obamanation's official slogan. Like I said before, it's a mental disorder. Insane.
frank,
You certainly got your wish regarding spending ourselves out of the recession. We've committed to about $12 trillion so far, with more to come. Crazy.
The problem with looking for additional sources of revenue for the government is that it assumes a heavier tax burden is a good thing. It isn't. It would take so much money to cover our debt obligations that we'd have to come up with about $2.5 trillion in new taxes each year to cover them and start paying down the debt. That would have a devastating effect on our economy. Jobs and companies would disappear. If we doubled the capital gains rate, that would shrink the economy even further. I'm sure China and India would love it if we did that, but we're supposed to be looking out for Americans. The ONLY way to accomplish that is to make the American companies more competitive, which would require precisely the opposite prescription from what you propose. Every dollar that goes into the public sector comes out of the private sector. Unless our goal is to become like the old USSR, with the government controlling companies, jobs, wages, etc., we have to change course dramatically away from the notions of big government.
It has always struck me as extremely odd that folks who constantly complain about the big evil corporations can't see that the biggest, most evil corporation of all is the federal government. They dwarf every other company. I think Exxon/Mobil is number one on the Fortune 500 with revenue of about $450 billion. Certain quarters scream and holler about Exxon, but then those same people turn around and want to fund the behemouth federal government with even more money, when the government's revenue is already about $2.8 BILLION. No matter how much money we give the federal government, it will NEVER be enough. If history has taught us anything, it should have taught us that. The only way out of our predicament in the long term is to cut the government way down in size, return taxpayer dollars to the people and businesses that earn it, thereby gaining a competitive edge and allowing our businesses and jobs to fluorish once again. Instead, we are continuing down the unsustainable fiscal path so some politician can say 'look at the cool program I started' and get re-elected.
I agree we need statesman instead of politicians. The politicians are the ones who pretend government spending is the answer to everything.
If we keep going down this insane fiscal path we're on, and we continue to let the politicians sell the future down the river, I predict we'll be in an almost permanent state of recession/depression for the next 20 years, if not longer. The worst is yet to come. This is only the opening salvo. If we're lucky, we'll recover from this mortgage-based recession in a year or so, have a few good years, and then the real fiscal tsunami will swamp us. That's if we're lucky.
King you are right. A couple of other things for our business hating friends. There are very few companies where investors are going to put their money here in America, no, the green energy companies are not going to save us. Most of the stuff is going to be imported or built by foreign companies and the other jobs being created are stimulous jobs created by our tax dollars. This is why Obama wants to charge taxes to American companies for their overseas profits. THis is waaaaaaay out of control and beyond his scope. It is going to cause a further contraction of business confidence.
The world is setting up the 2 new financial powers. China and India. Why? Reasonable costs.This is where our investors are putting thier money. America has become a money pit with all of it's regulations, taxes and fees. Not only will our kids have the highest tax burden in history they are going to be expected to pay it back with the lowest wages since the pre-40's. Small business as we know it, especially sole owners will not be able to sustain itself because the prices it must charge will not be affordable to the public and these jobs will dry up.
You know something is f'd up when they want to tax sugar filled products. Are you f'ing kidding me. Now it's higher taxes on beer, tobacco, tires, gas
etc. I love how they say it in a hypnotic, lawyeresque way that this is for our own good.
THey are also creating havoc. The local and state govt are thinking up all kinds of ways to create taxes to cover their increasing costs and declining revenues. Legislation is now in order to force folks with septic tanks to replace those tanks with a new system. 7 to 12k. Do you really think these people, many who are on the verge of losing their homes can afford this? Or how about how the libs were bitching about benefits being taxed when the fed govt is now saying we must tax these benefits. Where's the tax cut? This is what happens when our president is owned by foreigners and special interests and has no experieince or backbone.
A little off subject, it's bad when jon stewart is playing her off as a liar. Listen to her speak and watch her eyes. She is so lying.
average, don't be too logical, it's easier to just say it's all gerge bewsh's fault.
Mr. King,
By now you should know that I'm no fan of deficit spending. In fact, my post was about minimizing it. There are two ways, decrease spending or raise tax revenues. I suggested decreasing defense spending. We could bring our troops home to secure our borders, our ports, chemical and nuclear facilities, and other potential terrorist targets. How can we fiscally justify our self appointed role as world policeman when we are broke? You didn't address this.
You also didn't address raising revenue through a renewal of the excise tax on securities transactions.
You claim that equalizing capital gains and income tax rates would decrease investment. Give me a break. So the wealthy would rather forgo any profit than lose a small percentage of their profit to taxes. And you didn't address the inequity of people sitting back waiting for a check to come paying taxes at a lower rate than someone breaking their back for a living.
Your statement that every dollar that comes into the public sector is reminiscient of Eisenhower's farewell address warning that every dollar that goes into the military industrial complex is one that can't be spent for productive good in the private sector.
I also didn't say anything about the modern stateless mega corporation, but I know they are responsive only to their tax holders, not those who provide their revenues. We can at least vote out politicians who fail us.
I agree with your last paragraph. This financial crisis is not going to end soon.
angry conserv,
So do you propose that we adopt the standards of China and India to compete with them on the basis of cost? I doubt that you'd like living like either the Chinese or Indians. Do you want to earn what they do? Will you accept slave labor? How about child labor? Rather work 20 hour shifts? Rather have the sky blotted out from the pollution? I doubt it. All these things are illegal in our country and for good reason. Instead of lowering ourselves to their standards, why not bring them up to our level. Let's dump the WTO and NAFTA in favor of a set of tariffs based on a percentage the cost differential attributable to the lower standards.
OOps. I meant stock holders not tax holders.
joe,
I always amazed at how Democrats propose one anti-business policy after another. It is so illogical in a globalized world that it almost leaves me speechless. What can they be thinking ? Here we have the size of the federal government literally doubling in the last ten years, and Democrats think the solution is yet more taxes, and more government. It's nuts. The government may have doubled in size, but wages haven't, jobs haven't, because those things are constrained by economic reality. Washington D.C., on the other hand, is completely out of touch with reality.
It seems like we're going to make the mistakes of the Great Depression all over again. Massive tax increases are about the last thing we need at this time, but our enormous debt demands them. We're between a rock and a hard place, thanks to all those "compassionate" pols in D.C.
frank,
If we eliminated our entire defense budget, it wouldn't come close to paying for our massive debt obligations.
You said, "You claim that equalizing capital gains and income tax rates would decrease investment. Give me a break. So the wealthy would rather forgo any profit than lose a small percentage of their profit to taxes"
You're missing the fact that the wealthy don't have to invest their money here in the USA. They can invest all over the world. If we make it less attractive to invest here by increasing taxes on securities, capital gains, and business, money flows away from America. That costs jobs. It's just the wrong approach.
Mr. King,
I haven't been talking about being able to balance the budget, I am merely discussing ways to minimize the huge deficits.
Sure, I know that investors can and do seek out maximum returns on their money. I also know that there are a variety of things to invest in. But would you compare what tax burden an investor faces in other countries with our income tax rates. I would also like to know why all money doesn't flow to the country with the lowest tax burden. In other words, If you can buy Exxon-Mobil stock on a variety of stock exchanges, why doesn't the exchange in the least taxed country get all the business.
Given your theory, should we eliminate the capital gains tax and just tax ordinary income? Should we subsidize investors? At what rate does the capital gains tax make our investments unattractive?
In the last thiry years, we have shifted much of our economy from manufacturing to finance. Shouldn't the tax burden have shifted as well?
This crisis originated in the financial sector. Is it fair to expect our kids to pay for it with (as angryconserv points out) with the lowest wages since the pre-40s?
But we don't need to "minimize the budget deficits." We need to get to huge budgetary surpluses to pay down the debt and deal with all the entitlements. It's either that, or get rid of the entitlements, and that's not going to go over very well after Americans have been paying for them all these years.
The answer to your question about Exxon is – Exxon is our single most profitable company. Number one on the Fortune 500.
The money does flow to the countries with the lowest business costs overall. The tax burden is part of that. That's why our manufacturing base left and our jobs are increasingly going overseas. This isn't rocket science. It's basic economics, basic business.
I think we should leave capital gains taxes low and eliminate corporate income taxes altogether. That would attract new business, investment, and jobs into this country. It would also allow for higher wages. The Democrat's ideas to implement one anti-business policy after another will never work. They will only makes things a lot worse.
Mr. King,
You didn't address any of my questions. Exxon is not "our" company. If you think it has any allegiance to "us", ask the people of Valdez, Alaska. But my question was about why people around the world traded its stock instead of buying and selling at the exchange with the lowest tax rate.
What you are basing your opinions on is economic theory. What you say is all true. But theories break down when they don't take into account all of the factors. Most theories suffer from this because some factors aren't apparent. As an example, one job I had was at a company which, when I started, was in bad shape. They were using one weeks finished product as collateral to buy the next week's raw material. They had laid off their skilled workers who found other jobs. But the group of workers they replaced them with were able after about four years to get the forty year old production machinery running well enough to achieve production at 95% of capacity. (80% is considered excellent). Also during this time, a group of executives within the company bought it from its foreign owners. All of us thought our jobs were secure as they should have been if economic theory held. However, what we didn't know was the property that the business sat on was worth more than the business itself. It wasn't long before all of lost our jobs. As you state tax burden is a part of the cost of business, but it is not the only cost. I would ask that you support your assertion by investigating how large a part capital gains tax plays in investment decisions.
Good stuff from frank, as usual.
I want to concur with something said earlier. Our economy is not coming back to any of the levels we saw in the late 90's and early 00's. It's just not.
Our standard of living, for the first time in our history, will decline. There are many, many reasons for why this will happen…..but our tax rates, some of the lowest in the world, play only a small part. If anything, taxes should be raised.
Republicans have severely handcuffed themselves with the "no" thing. And Democrats are scared of being hit in the head with the tax sledge hammer swung by the party of no.
Mr. King,
An added thought. You propose eliminating the corporate income tax, keeping the capital gains tax low, and previously have proposed retaining the Bush tax cuts. You're also proposing that we not only balance the budget, but run huge surpluses. Does any of this sound contradictory?
frank,
I thought I did answer most your questions, except for the one about shifting the tax burden from the manufacturing sector to the financial sector, because that question didn't really make much sense. The tax burden automatically shifts to the sector that is the most profitable. There aren't any tax code changes necessary to make that happen. When manufacturing jobs and companies disappear, so does the tax revenue.
Regarding balanced budgets and tax cuts being contradictory, you'd be right if the only thing I was proposing were tax cuts while spending grew and grew (which would be like Bush and Obama), but I'd also propose massive cuts in government spending, which is where the real problem lies. Government spending has literally doubled in the last 10 years. Our jobs haven't doubled. Our wages haven't doubled. Government growth is the area that is out of kilter with everything else.
Regarding any kind of tax increases, especially on business and investment, can you honestly say to me that those tax increases are a good idea right now, during a severe recession, with jobs being hemorrhaged by the millions ? Didn't we already learn that lesson during the Depression ?
Rev,
When the current administration is running up trillion dollar deficits, and running up debt faster than ever, being the party of 'no' is a big, big plus. One is not supposed to say 'yes' to that much irresponsibility. The party of 'yes' is the one with the problem.
Mr. King,
The recipients of income from manufacturing and other wages have had their income tax rates remain relatively flat while losing deductions and having other taxes increase dramatically. The wealthier people who by nature tend to have more investment income have had a significant portion of their taxable rate reduced from 78% to 15%. Also, this occurred while trade laws were signed eviscerating manufacturing.
I don't suggest that we make ourselves uncompetitive through taxes. The securities transaction excise tax which I propose resurrecting would be 1/2-1%.Hardly punitive or a deal breaker. Is there any data that proves that equalizing the capital gains rate with wage rates would make the US non competitive? Or would it be a relatively small increase but not a dealbreaker?
Same old stuff. Conservatives run-up huge deficits while cutting taxes then dare Democrats to raise taxes so they can use their big "no sledgehammer.
Dennis Willard from the Beacon has been playing this very game with Ted Strickland. Bitching about the difficulty Strickland is having with the state budget while taunting him to raise taxes, so he can win a gotcha game later.
Republicans nationwide have been threatened for years that they'll get primaried out if they vote for ANY tax increases. That's how unreasonable the cult of "no" is.
I'm for a national sales tax to fund health care and deal with debt. I can hear the boos echoing already.
There should NEVER be any tax increases. The end. We submit nearly $3 trillion per year to the federal government, plus the state and local taxes.
The federal government has doubled in size in the last decade. That is a major problem, regardless of the bs the Revereand is putting out. When spending doubles while revenue is flat, the problem is not with revenue, the problem is with spending. Again, the end.