FEDERAL BUDGETS

18-things-waste-money[1]Paul Ryan wrote the budget for the House of Representatives.  He proposes spending of $3.531 trillion for FY 2014.  The budget covers 10 years (this is how the government does things).  Ryan’s budget has no tax increases over the 10 years and shows a balance for year 2023.  The House budget shows a deficit of $528 billion for FY 2014 and a deficit of $1.225 trillion over the 10 year period.

Spending under the House budget would contain the cuts in the sequester minus defense.  It would cut the Pell Grant program, making college borrowing much more difficult.  Many of the proposed cuts in domestic spending are not specified but Ryan proposes eliminating Obamacare so the costs and taxes are removed from his spending totals.  Ryan has the budget balancing as the economy grows and spending is held down.

Ryan’s budget doesn’t stand a chance of being accepted in the Democratic controlled Senate.  Senator Patty Murray wrote a budget that cuts spending for defense, but otherwise continues spending increases.  The Democratic budget includes money for new job training, and other programs that will require major new revenues (taxes).  The Senate budget is dead in the water in the House.

The two chambers of Congress go in opposite directions on spending and taxes.  Even with the new revenue in the Senate, the budget never reaches balance over 10 years.  The House blasts the Senate budget as being out of control, and will not allow the economy to grow.  The Senate blasts the House budget as cutting too deeply into the domestic side.

It is my opinion that both budgets are irresponsible.  The Republicans should know the Senate will never allow Obamacare to be totally scrapped.  The Democrats should know the Republicans would never allow revenues to be raised the one trillion plus they propose.  The bottom line is both chambers were posturing and not really trying to reach an agreement.  Ryan’s budget grows spending at a little less than twice the inflation rate (In congress-speak this is a cut) so neither side is proposing any real cuts in overall spending.

This posturing is foolish.  Both sides know that any action they take can not be forced on future Congresses.  All it takes is a vote to totally throw out the projections or deals made by this Congress.  I think that fighting over future years numbers is a waste of time and energy.

Obama has just released his budget, two months late.  This budget doesn’t balance at the end of ten years.  He proposes $1.2 trillion in new taxes during this period and proposes a new entitlement.  Obama wants a new “preschool for all” at a cost of $76 billion.  This is to be paid for with a new tobacco tax.

Obama also proposed adjusting the way the consumer price index is calculated.  This was also in the Ryan budget.  It is understood by economists that the index as currently adjusted, overstates inflation.  This will reduce the increase in Social Security and a host of other programs.  The problem lies in the fact that the tax code brackets will move more of the middle class into higher brackets as the brackets won’t increase proportionally with incomes.  This is expected to raise $124 billion.

Obama wants to increase spending and the deficit over the next two years.  He says he will “get tough on spending and the deficit at the end of the budget projections.”  This means he will get tough on these items 6 years after he leaves office.

Neither side seems to have the guts to justify the spending programs and cut the budget to get this country moving again.  Neither side wants to anger any of their special interest lobbying groups that fund their respective campaigns.  Until that happens, we will not get our house in order.  Meanwhile, the voters continue to re-elect these people to continue doing the same.

Neither side is addressing the waste issue.  Neither side is addressing the true role of government.  What is the real purpose of the federal government?  Where does federal responsibility end and states responsibilities begin?  How can we ever get the federal budget under control without these questions being answered?

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