Showing posts with label Federal Budget. Show all posts
Showing posts with label Federal Budget. Show all posts
Tuesday, May 2, 2017
A Glimmer of Hope
It's nice to see Democrats and Republicans coming together sometimes. I doubt anyone is happy but all sides seem satisfied with the most recent Congressional Spending Bill. Seeing the word bipartisan attached to anything right now gives me hope for the future but especially when it comes attached to such a difficult subject as federal spending. It is particularly promising to see Republicans supporting spending increases to departments Trump had slated for substantial cuts. Granted, should the bill pass, it is only a temporary fix, but it would give us almost six months in which to hopefully grow some common ground and pave a rational way forward without Trump's all or nothing approach to spending.
Saturday, April 29, 2017
Pay the Man
The Trump tax proposal is short but far from sweet. I found the one page release too ludicrous to laugh at. Breakdowns of what is included are available from multiple sources such as NBC News and CNN Money. To me the biggest take away is how this budget it obviously a rich man's attempt at living on a budget, and failing miserably.
Let's imagine for a moment that the Federal government is an individual trying to make their way in the world. An individual needs money to live off of in the same way the government needs money to perform its essential functions. An individual must pay their bills, buy food, and generally have some money to put into savings and for entertainment in the same way the government has bills to pay, programs to fund, etc. If an individual uses more money than they bring in they go into debt, the same as our federal government. The average, middle class American should about break even with their income vs. spending. If that individual made the voluntary decision to reduce their income substantially but still insisted on maintaining their same spending habits they would be insane, but that is exactly what Trump has set forth to do. He obviously has no understanding of living within your means.
In March I wrote about Trump's Fiscal Year 2018 plan. In this plan he states that he will not raise the national debt but his final numbers do not show any reduction in national spending either. His tax plan, on the other hand, reduces taxes across the board, especially for businesses and the wealthy, without providing any substantial and continuing replacement for the lost funding. This is just as insane as the hypothetical individual above who spends the same even though their income is drastically cut. Supposedly a hard line was taken on the budget but should not an equally hard line be taken on taxes?
Supposedly the cut in taxes will be made up for by economic growth. Even if it was possible to fill the financial gap in this way it would be years before the economy could adjust to fully make up for the cuts. During those intervening years without substantial budget cuts and/or some sort of transitional tax revenue our national debt will balloon even more than it already has.
Trying to get inside Trump's head (a horrifying thought) can only lead me to believe that this plan was designed to provide the greatest possible benefit to Trump personally. Who else could possibly stand to benefit more than people like Trump when you slash the business tax from 35% to 15% and reduce personal income tax from 39.6% to 35% for the highest wage earners? He may also be attempting to salvage his abysmal approval ratings by doing a whitewashed tax cut regardless of the consequences. His obvious love of the lime light would support this second theory.
I would also like to point out his use of the term "death tax" instead of the official term "estate tax" in the release. This is an obvious propaganda ploy to draw a negative connotation to the tax. A tax, it should be known, that only effects estates with a value greater than $5.5 million. In other words estates belonging to people like the Trumps, not middle class Americans and certainly not those of low income.
With just a very basic outline to go off of it may be too soon to tell, but it definitely does not start the tax debate off on the right foot.
Let's imagine for a moment that the Federal government is an individual trying to make their way in the world. An individual needs money to live off of in the same way the government needs money to perform its essential functions. An individual must pay their bills, buy food, and generally have some money to put into savings and for entertainment in the same way the government has bills to pay, programs to fund, etc. If an individual uses more money than they bring in they go into debt, the same as our federal government. The average, middle class American should about break even with their income vs. spending. If that individual made the voluntary decision to reduce their income substantially but still insisted on maintaining their same spending habits they would be insane, but that is exactly what Trump has set forth to do. He obviously has no understanding of living within your means.
In March I wrote about Trump's Fiscal Year 2018 plan. In this plan he states that he will not raise the national debt but his final numbers do not show any reduction in national spending either. His tax plan, on the other hand, reduces taxes across the board, especially for businesses and the wealthy, without providing any substantial and continuing replacement for the lost funding. This is just as insane as the hypothetical individual above who spends the same even though their income is drastically cut. Supposedly a hard line was taken on the budget but should not an equally hard line be taken on taxes?
Supposedly the cut in taxes will be made up for by economic growth. Even if it was possible to fill the financial gap in this way it would be years before the economy could adjust to fully make up for the cuts. During those intervening years without substantial budget cuts and/or some sort of transitional tax revenue our national debt will balloon even more than it already has.
Trying to get inside Trump's head (a horrifying thought) can only lead me to believe that this plan was designed to provide the greatest possible benefit to Trump personally. Who else could possibly stand to benefit more than people like Trump when you slash the business tax from 35% to 15% and reduce personal income tax from 39.6% to 35% for the highest wage earners? He may also be attempting to salvage his abysmal approval ratings by doing a whitewashed tax cut regardless of the consequences. His obvious love of the lime light would support this second theory.
I would also like to point out his use of the term "death tax" instead of the official term "estate tax" in the release. This is an obvious propaganda ploy to draw a negative connotation to the tax. A tax, it should be known, that only effects estates with a value greater than $5.5 million. In other words estates belonging to people like the Trumps, not middle class Americans and certainly not those of low income.
With just a very basic outline to go off of it may be too soon to tell, but it definitely does not start the tax debate off on the right foot.
Thursday, April 13, 2017
Review: The Next America
Title: The Next America: Boomers, Millennials, and the Looming Generational Showdown
By: Paul Taylor and the Pew Research Center
Dense in statistics and broad in scope I would highly recommend this book to anyone interested in a closer look at what makes America, culturally speaking, and a glimpse at what the future may hold for entitlement programs. This book is, at its heart, concerned with the the imminent problems of Social Security and Medicare in a nation with an aging population where the financial math is quickly reaching a crisis point.
To understand the problems and potential solutions this text looks at America's changing demographics broken down into the primary 4 generations currently living. The first is the Silents (born 1928-1945) who are currently the most senior generation at age 72+ and are currently benefiting from our entitlement programs. Next, and largest, is the Baby Boomers (born 1946-1964) who have just started leaving the work force en mass and drawing off of Social Security making the financial woes of the system all the more apparent. The smallest generation is the Gen Xers (born 1965-1980) who bridge the gap to the next generational powerhouse. The Millennials (born 1981-?) rival the Baby Boomers in size and are significantly different politically and socially from the generations who have come before. The author spends the most time contrasting the Boomers and Millennials as these two generations hold the greatest sway from sheer size alone.
Within this generational framework the text examines multiple aspects of America. In addition to general political leanings the author spends a chapter each on the financial circumstances, race/ethnic composition, views on marriage, religion, and technological adaptability of the various generations. The author also takes the time to compare America as a whole to several of our international neighbors, showing how some countries are fairing better than others but how all seem to be making their way towards much more senior populations and the consequences of this demographic shift.
All of this is brought around to conclusion with the question "how best to honor our commitments to the old without bankrupting the young and starving the future?" (pg. 194) The author provides only a general outline of how this should be done as the details of policy reform would no doubt take twice as many pages as it took to outline the problem to begin with.
Written in 2014 this book is a bit dated but the heart of the research and conclusions it draws still ring true. President Obama, despite effort, was unable to make significant headway towards resolving the problems. Now, with Donald Trump sitting in the White House, it seems even less likely for the nation to make progress towards resolving our looming Social Security and Medicare budget issues in the next few years. Hopefully the next president will be up for taking on the task. And hopefully by then it won't be too late to save these essential programs.
By: Paul Taylor and the Pew Research Center
Dense in statistics and broad in scope I would highly recommend this book to anyone interested in a closer look at what makes America, culturally speaking, and a glimpse at what the future may hold for entitlement programs. This book is, at its heart, concerned with the the imminent problems of Social Security and Medicare in a nation with an aging population where the financial math is quickly reaching a crisis point.
To understand the problems and potential solutions this text looks at America's changing demographics broken down into the primary 4 generations currently living. The first is the Silents (born 1928-1945) who are currently the most senior generation at age 72+ and are currently benefiting from our entitlement programs. Next, and largest, is the Baby Boomers (born 1946-1964) who have just started leaving the work force en mass and drawing off of Social Security making the financial woes of the system all the more apparent. The smallest generation is the Gen Xers (born 1965-1980) who bridge the gap to the next generational powerhouse. The Millennials (born 1981-?) rival the Baby Boomers in size and are significantly different politically and socially from the generations who have come before. The author spends the most time contrasting the Boomers and Millennials as these two generations hold the greatest sway from sheer size alone.
Within this generational framework the text examines multiple aspects of America. In addition to general political leanings the author spends a chapter each on the financial circumstances, race/ethnic composition, views on marriage, religion, and technological adaptability of the various generations. The author also takes the time to compare America as a whole to several of our international neighbors, showing how some countries are fairing better than others but how all seem to be making their way towards much more senior populations and the consequences of this demographic shift.
All of this is brought around to conclusion with the question "how best to honor our commitments to the old without bankrupting the young and starving the future?" (pg. 194) The author provides only a general outline of how this should be done as the details of policy reform would no doubt take twice as many pages as it took to outline the problem to begin with.
Written in 2014 this book is a bit dated but the heart of the research and conclusions it draws still ring true. President Obama, despite effort, was unable to make significant headway towards resolving the problems. Now, with Donald Trump sitting in the White House, it seems even less likely for the nation to make progress towards resolving our looming Social Security and Medicare budget issues in the next few years. Hopefully the next president will be up for taking on the task. And hopefully by then it won't be too late to save these essential programs.
Saturday, March 18, 2017
Fiscal Year 2017
The President has just released a partial budget proposal for the 2018 fiscal year and I have taken the last few days to examine just what it entails. The President's message at the beginning of this proposal states the following:
Because of it's length I have included my full synopsis of the budget proposal at the end of this post. For my actual analysis I would like to highlight my top 5 concerns with this budget:
1) Fear tactic defense spending
2) Threats to the poor, seniors, and people with disabilities
3) Reckless environmental actions
4) Dissolution of public education
5) Disintegration of arts and sciences
Here is my analysis:
1) Fear tactic defense spending
One of the most basic and agreed upon responsibilities of the Federal government is to provide for a national defense. That being said, the US already has the greatest military spending in the world by a substantial margin. In fact, we spend more to fund our military than the next 7 countries combined, 34% of the world's military spending. While every other area on the budget has significant emphasis on efficiency and reducing redundancy this seemingly does not apply to defense spending.
I have no issues with the comparatively moderate increases to the Department of Veteran's Affairs, but the Department of Defense already has nearly 10 times the budget of the next largest department and is set to receive an additional 10% boost to funding. If there was any area where efficiency and redundancy should be looked at for cost saving measures it should be here. However, that is apparently not the President's plan. The President's obsession with winning has resulted in him stating:
He keeps pressing this idea of how insecure our nation is but, I don't know about you, but I don't feel unsafe or in imminent threat from foreigners. Granted, I don't have access to top secret threat analysis data, but we will never be 100% secure and, while prevention is important, strength at home can mean a lot more than military might. Investments in education, infrastructure, and health care can go a lot farther towards improving the daily quality of life for Americans than stockpiling weapons for some vague possibility of threat. The President's proposed increase in military spending to the detriment of other fundamental programs does not speak of a man wishing to "make America great" it says to me that he wants to keep America in fear.
People living in fear find it harder to make rational decisions and are more easily provoked. Teaching the American people to live in fear, which seems to be the President's plan, puts us at risk of turning against each other. It is essential for communities to band together for their own betterment and be constantly critical of the real reason the President wants such a large military power under his control.
2) Threats to the poor, seniors, and people with disabilities
The President's plan calls for substantial cuts to programs that assist the poor, seniors, and people with disabilities. Just a partial list includes the following:
Eliminates:
-Economic Development Administration- encourages economic development in depressed regions
-Federal Supplemental Education Opportunity Grant- grants to college students with financial need
-Low Income Home Energy Assistance- assists families with energy costs
-Community Services Block Grant- funds programs for low-income individuals
-Community Development Block Grant- for the development of viable urban communities
-Capacity Building for Community Development and Affordable Housing- assists communities in developing affordable housing
-HOME Investment Partnerships Program- low-income housing assistance
-Choice Neighborhoods- assisting struggling neighborhoods
-Self-help Homeownership Opportunity Program- grants to non profits who build low-income housing
-Senior Community Service Employment Program- job training for low-income, unemployed seniors
Reduces:
WIC
Work study
Department of Health and Human Services
Job training grants
Office of Disability Employment Policy
Job Corp
Also, while the budget protects funding to IDEA, which is an agency to protect disabled students under the Department of Education, the institution of vouchers, also outlined in the budget, will put disabled students at risk (see my previous post on education vouchers here). There is also the proposed health care bill, which I have not yet covered but seems to be implied in the substantial cuts to the Department of Health and Human Services, which may result in millions of Americans losing their coverage.
The justification for much of these cuts seems to fall into one of two categories: reducing overlap or that a program is better provided by the states. The former excuse fails on two fronts as many grant programs have specific requirements with slight variations that mean organizations qualify for some but not others though at first look the grants may appear to overlap each other in purpose. It also fails in that it reduces overlap but fails to supplement the remaining programs to ensure continued coverage. The secondary excuse fails because states will be required to make up for the loss of Federal funding which will result in an increase in American taxes on the state level or cuts to programs. In any case these cuts will most likely have a direct impact on some of America's most vulnerable citizens
3) Reckless environmental actions
Not much needs to be said on this front. The President has made it clear that he plans to take no action to prevent climate change and has outlined said goals in his budget. He has also set forth in his budget to strip much of the EPA and give authority instead to the states. Considering there are several bills currently pending in Congress to allow states to permit things like fracking this is a dangerous trend. The actions of one state on the environment can have an effect on the entire nation and so it is important that as a nation we stand together on environmental issues.
4) Dissolution of education system
I have already posted at length about the dangers of voucher programs and much of the threat in the current budget comes from stripping the Department of Education and putting funds instead into so called school choice programs. The budget goes further however in reducing grants and work study programs for college students and doing away with other training programs that insure the public receives quality education to be productive members of society.
5) Disintegration of arts and sciences
Related to education but serving a separate roll, the President seems intent on removing all arts and sciences from the national scene. Between reducing or completely eliminating funding for the Corporation for Public Broadcasting, the National Endowment for the Arts, the National Endowment for the Humanities, public libraries, national heritage areas, and wildlife refuges among other programs he is dismantling much of the vibrancy of our nation. Some, possibly many, of these programs will survive, but the cost will be an additional financial burden at the state and local level with no reduction of Federal obligations.
My final thoughts as I turn you over to my lengthy synopsis are these:
If the President's goal is to make America great his budget is misguided at best, dangerous at worst. National defense is important but without real justification to increase spending the precious dollars in the hands of our government should be going to grow our economy and infrastructure and protect the most vulnerable among us. We need to tell Congress and the President that they can, and in fact must, do better.
Department of Agriculture
- $4.7 billion reduction (21%)
- Fully funds Food Safety and Inspection Service
- $6.2 billion to WIC (reduction of $400 million)
- $2.4 wildland fire preparedness and suppression- fully funded
- Reduces funding for National Forest System "lower priority activities"
- $350 million for farmer-focused research
- Reduces funding for statistical capabilities while maintaining funding for the Census for Agriculture
- Eliminates duplicate water and wastewater loan and grant program ($498 million) stating that rural communities can be serviced by the private sector or other funds such as the EPA's State Revolving Funds
- Reduce staffing to the USDA Service Center Agencies to reflect reduced workload and encourage private sector conservation
- Eliminate discretionary activities of the Rural Business and Cooperative Service ($95 million)
- Eliminate McGovern-Dole International Food for Education
Department of Commerce
- $1.5 billion reduction (16%)
- Strengthen International Trade Administration enforcement and compliance functions while reducing export promotion and trade analysis
- Increase of $100 million to Census Bureau to prepare for the 2020 Census
- Consolidates parts of the Economics and Statistics Administration, US Census Bureau, and Department of Commerce's Office of the Secretary
- Eliminate Economic Development Administration ($221 million)
- Eliminates the Minority Business Development Agency
- Discontinue Manufacturing Extension Partnership Program ($124 million)
- Eliminates certain National Oceanic and Atmospheric Administration grants and programs ($250 million)
- Maintains polar orbiting and geostationary satellites for weather forecasting
- Savings from the Polar Follow On program by utilizing commercial data
- Maintains National Weather Service forecasting with $1 billion in investments
- Maintains National Telecommunication and Information Administration
Department of Defense
- $52 billion increase (10%)
- Repeal of defense sequestration plus an additional $2 billion in funding
- Providing resources to "accelerate the defeat of ISIS"
- Use funds for war fighting readiness
- Increase/improve training, equipment, and infrastructure
- "Lays the groundwork for a larger, more capable, and more lethal joint force"
- Reduce cost of military programs wherever "feasible"
- Rebuild readiness of US Army
- Increase number of Navy ships- "This budget reflects a down payment on the President's commitment to expanding the fleet"
- Ensure a ready and fully equipped Marine Corps
- Invest in Air Force maintenance, training, and additional F-35 Joint Strike Firghters
Department of Education
- $9 billion reduction (13%)
- Increase funding for school choice such as private and charter schools ($1.4 billion)
- Maintains current IDEA funding for students with disabilities
- Eliminates Supporting Effective Instruction State Grants program ($2.4 billion)
- Eliminates 21st Century Community Learning Centers program ($1.2 billion)
- Eliminates Federal Supplemental Educational Opportunity Grant ($732 million)
- Maintains the Pell Grant while cancelling $3.9 billion in unobligated carryover funding
- Maintains funding for programs that serve high percentage minority students
- Significant reduction to Federal Work Study
- Reduce Federal TRIO Programs and GEAR UP (reduction of $193 million)
- Reduce or eliminate over 20 additional programs including Striving Readers, Teacher Quality Partnership, Impact Aid Support Payments for Federal Property, and International Education programs
Department of Energy
- $1.7 billion reduction (5.6%) however a $1.4 billion increase to the National Nuclear Security Administration (11%)
- Restart Yucca Mountain nuclear waste repository ($120 million)
- Eliminate defense sequestration for the National Nuclear Security Administration
- $6.5 billion to the Environmental Management program to clean up nuclear waste
- Eliminates the Advanced Research Projects Agency-Energy, Title 17 Innovative Technology Loan Guarantee Program, and the Advanced Technology Vehicle Manufacturing Program
- Prioritization of projects within the Office of Science (reduction of $900 million)
- Limits scope of the Office of Energy Efficiency and Renewable Energy, the Office of Nuclear Energy, the Office of Electricity Delivery and Energy Reliability, and the Fossil Energy Research and Development program as well as eliminating the Weatherization Assistance Program and State Energy Program (reduction of $2 billion)
- Support cyber security and grid resiliency within the Office of Electricity Delivery and Energy Reliability
- Continues and enhances research, development, and construction of expanded Navy fleet
Department of Health and Human Services
- $15.1 billion reduction (17.9%)
- Maintain direct health care services such as community health centers
- Increase Health Care Fraud and Abuse Program funding by $70 million
- Support "efficient operations" of Medicare, Medicaid, and the Children's Health Insurance Program
- Increase opioid misuse prevention efforts and access to treatment and recovery services ($500 million)
- Increase the FDA medical product user fees (revenue increase of $1 billion)
- Reduce National Institute of Health ($5.8 billion) including eliminating the Fogarty International Center and consolidating the Agency for Healthcare Research and Quality
- Creates a new Federal Emergency Response Fund and a new $500 million block grant within the CDC
- Invest in "high-performing entities" to focus on "high priority" mental health activities
- Eliminate some health and nurse training programs ($403 million)
- Eliminate discretionary programs in the Office of Community Service including the Low Income Home Energy Assistance Program and the Community Services Block Grant ($4.2 billion)
Department of Homeland Security
- $2.8 billion increase (6.8%)
- $2.6 billion for border security technology including planning of a border wall
- $324 million to recruit, hire, and train Border Patrol, ICE Agents, and support staff
- Increase funding for detention, transport, and removal of illegal immigrants ($1.5 billion)
- Mandatory implementation of nationwide E-Verify usage for employers ($15 million)
- Safeguard cyber space ($1.5 billion)
- Increase Passenger Security Fee to recover 75% of TSA operation costs and eliminate NFIP's Flood Hazard Mapping Program ($190 million)
- Eliminate or reduce FEMA state and local grant funding and require a 25% non-Federal cost match for preparedness grants ($667 million)
- Eliminate or reduce certain TSA programs ($80 million)
Department of Housing and Urban Development
- $6.2 billion reduction (13.2%)
- Provides $35 billion for HUD rental assistance programs
- Eliminates the Community Development Block Grant ($3 billion)
- Eliminate "low priority" programs such as HOME Investment Partnerships Program, Choice Neighborhoods, and the Self-help Homeownership Opportunity Program ($1.1 billion)
- Increase funding to promote lead-safe homes ($20 million)
- Eliminate Section 4 Capacity Building for Community Development and Affordable Housing ($35 million)
- Support FHA mortgage insurance programs
Department of the Interior
- $1.5 billion reduction (12%)
- Increase funding to develop energy on public land and streamline permitting
- Maintains Office of Natural Resources Revenue
- Eliminates "lower priority" programs including Abandoned Mine Land grants, National Heritage Areas, and National Wildlife Refuge payments
- Maintains "stewardship capacity" operations for National Park Service, Fish and Wildlife Service, and Bureau of Land Management
- Maintains tribal sovereignty and self-determination but reduces funds for "more recent" projects and initiatives that only serve a few tribes
- Reduces funds for land acquisition ($120 million)
- Increases funding for deferred maintenance but overall reduces funds for construction and major maintenance programs in National Park Service
- Provides $900 million for US Geological Survey
- Public/private matching plan for wildlife conservation, historic preservation, and recreation grants
- Maintain wildland fire suppression funding
- $1 billion for water resource management in western US
- Minor reduction to Payments in Lieu of Taxes program
Department of Justice
- $1.1 billion reduction (3.8%)
- Increase FBI funding ($249 million)
- Increase law enforcement component funding ($175 million)
- Link prosecutors and intelligence attorneys with investigations and the intelligence community
- Increase number of immigration judges ($80 million)
- Increase number of border enforcement prosecutors and deputy US Marshals
- Increase number of attorneys for immigration legislation and for obtaining land for border wall
- Increases detention space ($171 million)
- Maintain grants to protect state, local, and tribal law enforcement as well as grants for victims of crime
- Eliminates outdated programs ($700 million)
- Reduce prison construction spending (estimated almost $1 billion) however, provides $80 million for prison activation and $113 million for repair and modernization (Net reduction estimate of $800 million)
- Increase bankruptcy-filing fees ($150 million in increased revenue)
Department of Labor
- $2.5 billion reduction (21%)
- Expands Reemployment and Eligibility Assessments
- Reduce certain job training grants including elimination of the Senior Community Service Employment Program ($434 million)
- Eliminates Bureau of International Labor Affairs grant funding ($60 million)
- Closes low performing Job Corps locations
- Decreases funding for job training and employment services
- Fund states to expand apprenticeships
- Refocus the Office of Disability Employment Policy with less funding for technical assistance grants and more funding for early intervention projects
- Eliminates OSHA training grants ($11 million)
Department of State, USAID, and Treasury International Programs
- $10.1 billion reduction (28%) for Department of State and USAID, $12 billion to fund Overseas Contingency Operations, and $803 million reduction (35%) for Treasury International Programs
- Maintains embassy security and core diplomatic functions with $2.2 billion towards embassy construction and maintenance
- Increases funding to $3.1 billion for Israel security assistance
- Eliminates Global Climate Change Initiative and ends all funding to UN climate change programs
- Maintains funds to Gavi, the Vaccine Alliance
- Maintains funding for AIDS, Tuberculosis, and Malaria programs
- Turn some foreign assistance from grants to loans
- Reduce funding for international peacekeeping operations, cap contributions to UN at 25% of peacekeeping costs
- Adjust economic and development assistance to countries that are of greater strategic importance to the US
- Eliminates Emergency Refugee and Migration Assistance
- Reduces funding to Educational and Cultural Exchange programs and focuses remaining funds on the Fulbright Program
- Eliminates certain peacekeeping and security building efforts including the Complex Crisis Fund and small organizations that also have non Federal funds such as the East-West Center
- Consolidates and Reorganizes the DOS and USAID
- Reduces funding of development banks such as the World Bank ($650 million over 3 years)
Department of Transportation
- $2.4 billion reduction (13%)
- Privatize air traffic control
- Reduce Amtrak subsidies, particularly those associated with long distance service
- Only allocate funds for currently approved grants under the Capital Investment Program (New Starts)
- Eliminates Essential Air Service funding ($175 million)
- Eliminates TIGER grant program ($499 million)
Department of the Treasury
- $519 million reduction (4.1%)
- Preserve IRS funding but reduce paper based review ($239 million)
- Enhance cyber security capabilities
- Prioritize funds for economic enforcement tools
- Eliminate Community Development Financial Institutions Fund grants ($210 million)
- End taxpayer bailouts and advance financial regulatory reform
- Reduce federal workforce
Department of Veterans Affairs
- $4.4 billion increase (6%)
- Increase $4.6 billion to improve VA health care
- Extend and fund Veterans Choice Program- set to expire in August 2017
- Fund programs to aid homeless and at-risk veterans
- Fund programs to assist veterans transitioning to civilian life
- Continue funding efforts to optimize the VA claims process
- Fund IT systems to improve quality of services
Environmental Protection Agency
- $2.6 billion reduction (31%) including the elimination of 3,200 jobs
- Marginal increase to funding for drinking and wastewater infrastructure including the State Revolving Funds and Water Infrastructure Finance and Innovation Act ($4 million)
- Defunds the Clean Power Plan and climate change initiatives ($100 million)
- Reduce Hazardous Substance Superfund Account ($330 million)
- Reduce EPA enforcement budget to focus on programs not delegated to the States ($419 million)
- Reduce Office of Research and Development activities by half ($233 million)
- Reduce Categorical Grants ($482 million)
- Eliminate region specific efforts such as Great Lakes Restoration Initiative and Chesapeake Bay ($427 million)
- Eliminates more than 50 additional programs deemed low priority or poorly performing including Energy Star and infrastructure assistance to Alaska Native Villages and the Mexico Border ($347 million)
National Aeronautics and Space Administration
- Funded at $19.1 billion (0.8% decrease)
- Increase use of public-private partnerships
- Allocates $624 million for aeronautics research
- Allocates $1.9 billion for the Planetary Science Program but no funding for a mission to land on Europa
- Allocates $3.7 billion to send astronauts into deep space but cancels the Asteroid Redirect Mission
- Allocates $1.8 billion for Earth science portfolio, eliminates PACE, OCO-3, DSCOVR, and CLARREO missions as well as reducing Earth science grants ($102 million)
- Eliminates Office of Education ($115)
- Restructures robotic satellite refueling demonstration mission ($88 million)
- Strengthen cyber security capabilities
Small Business Administration
- $43.2 million reduction (5%)
- Maintain loan guarantees
- Reduce duplication and coordinate best practices for outreach center programs
- Maintain disaster relief lending
- Eliminate grant programs covered by the private sector ($12 million)
- Provide training and support for transitioning veterans towards business ownership
- Maintain funding for microloan financing
- Ensure SBA can advocate and assist small businesses in accessing government contracts and research opportunities
Our aim is to meet the simple, but crucial demand of our citizens- a Government that puts the needs of it's own people first. When we do that, we will set free the dreams of every American, and we will begin a new chapter of American greatness.Today I will endeavor to show just what the President means by our "own people" and how he thinks he can "set free the dreams of every American." You be the judge...
Because of it's length I have included my full synopsis of the budget proposal at the end of this post. For my actual analysis I would like to highlight my top 5 concerns with this budget:
1) Fear tactic defense spending
2) Threats to the poor, seniors, and people with disabilities
3) Reckless environmental actions
4) Dissolution of public education
5) Disintegration of arts and sciences
Here is my analysis:
1) Fear tactic defense spending
One of the most basic and agreed upon responsibilities of the Federal government is to provide for a national defense. That being said, the US already has the greatest military spending in the world by a substantial margin. In fact, we spend more to fund our military than the next 7 countries combined, 34% of the world's military spending. While every other area on the budget has significant emphasis on efficiency and reducing redundancy this seemingly does not apply to defense spending.
I have no issues with the comparatively moderate increases to the Department of Veteran's Affairs, but the Department of Defense already has nearly 10 times the budget of the next largest department and is set to receive an additional 10% boost to funding. If there was any area where efficiency and redundancy should be looked at for cost saving measures it should be here. However, that is apparently not the President's plan. The President's obsession with winning has resulted in him stating:
Lays the groundwork for a larger, more capable, and more lethal joint force, driven by... the need for American superiority not only on land, at sea, in the air, and in space, but also in cyberspace.This choice of words is chilling to me. Even in military operations more death should never be the objective. He states further on that the investment of more Navy ships is only a "down payment" suggesting that there is much more to come.
He keeps pressing this idea of how insecure our nation is but, I don't know about you, but I don't feel unsafe or in imminent threat from foreigners. Granted, I don't have access to top secret threat analysis data, but we will never be 100% secure and, while prevention is important, strength at home can mean a lot more than military might. Investments in education, infrastructure, and health care can go a lot farther towards improving the daily quality of life for Americans than stockpiling weapons for some vague possibility of threat. The President's proposed increase in military spending to the detriment of other fundamental programs does not speak of a man wishing to "make America great" it says to me that he wants to keep America in fear.
People living in fear find it harder to make rational decisions and are more easily provoked. Teaching the American people to live in fear, which seems to be the President's plan, puts us at risk of turning against each other. It is essential for communities to band together for their own betterment and be constantly critical of the real reason the President wants such a large military power under his control.
2) Threats to the poor, seniors, and people with disabilities
The President's plan calls for substantial cuts to programs that assist the poor, seniors, and people with disabilities. Just a partial list includes the following:
Eliminates:
-Economic Development Administration- encourages economic development in depressed regions
-Federal Supplemental Education Opportunity Grant- grants to college students with financial need
-Low Income Home Energy Assistance- assists families with energy costs
-Community Services Block Grant- funds programs for low-income individuals
-Community Development Block Grant- for the development of viable urban communities
-Capacity Building for Community Development and Affordable Housing- assists communities in developing affordable housing
-HOME Investment Partnerships Program- low-income housing assistance
-Choice Neighborhoods- assisting struggling neighborhoods
-Self-help Homeownership Opportunity Program- grants to non profits who build low-income housing
-Senior Community Service Employment Program- job training for low-income, unemployed seniors
Reduces:
WIC
Work study
Department of Health and Human Services
Job training grants
Office of Disability Employment Policy
Job Corp
Also, while the budget protects funding to IDEA, which is an agency to protect disabled students under the Department of Education, the institution of vouchers, also outlined in the budget, will put disabled students at risk (see my previous post on education vouchers here). There is also the proposed health care bill, which I have not yet covered but seems to be implied in the substantial cuts to the Department of Health and Human Services, which may result in millions of Americans losing their coverage.
The justification for much of these cuts seems to fall into one of two categories: reducing overlap or that a program is better provided by the states. The former excuse fails on two fronts as many grant programs have specific requirements with slight variations that mean organizations qualify for some but not others though at first look the grants may appear to overlap each other in purpose. It also fails in that it reduces overlap but fails to supplement the remaining programs to ensure continued coverage. The secondary excuse fails because states will be required to make up for the loss of Federal funding which will result in an increase in American taxes on the state level or cuts to programs. In any case these cuts will most likely have a direct impact on some of America's most vulnerable citizens
3) Reckless environmental actions
Not much needs to be said on this front. The President has made it clear that he plans to take no action to prevent climate change and has outlined said goals in his budget. He has also set forth in his budget to strip much of the EPA and give authority instead to the states. Considering there are several bills currently pending in Congress to allow states to permit things like fracking this is a dangerous trend. The actions of one state on the environment can have an effect on the entire nation and so it is important that as a nation we stand together on environmental issues.
4) Dissolution of education system
I have already posted at length about the dangers of voucher programs and much of the threat in the current budget comes from stripping the Department of Education and putting funds instead into so called school choice programs. The budget goes further however in reducing grants and work study programs for college students and doing away with other training programs that insure the public receives quality education to be productive members of society.
5) Disintegration of arts and sciences
Related to education but serving a separate roll, the President seems intent on removing all arts and sciences from the national scene. Between reducing or completely eliminating funding for the Corporation for Public Broadcasting, the National Endowment for the Arts, the National Endowment for the Humanities, public libraries, national heritage areas, and wildlife refuges among other programs he is dismantling much of the vibrancy of our nation. Some, possibly many, of these programs will survive, but the cost will be an additional financial burden at the state and local level with no reduction of Federal obligations.
My final thoughts as I turn you over to my lengthy synopsis are these:
If the President's goal is to make America great his budget is misguided at best, dangerous at worst. National defense is important but without real justification to increase spending the precious dollars in the hands of our government should be going to grow our economy and infrastructure and protect the most vulnerable among us. We need to tell Congress and the President that they can, and in fact must, do better.
Proposed Budget Synopsis
Department of Agriculture
- $4.7 billion reduction (21%)
- Fully funds Food Safety and Inspection Service
- $6.2 billion to WIC (reduction of $400 million)
- $2.4 wildland fire preparedness and suppression- fully funded
- Reduces funding for National Forest System "lower priority activities"
- $350 million for farmer-focused research
- Reduces funding for statistical capabilities while maintaining funding for the Census for Agriculture
- Eliminates duplicate water and wastewater loan and grant program ($498 million) stating that rural communities can be serviced by the private sector or other funds such as the EPA's State Revolving Funds
- Reduce staffing to the USDA Service Center Agencies to reflect reduced workload and encourage private sector conservation
- Eliminate discretionary activities of the Rural Business and Cooperative Service ($95 million)
- Eliminate McGovern-Dole International Food for Education
Department of Commerce
- $1.5 billion reduction (16%)
- Strengthen International Trade Administration enforcement and compliance functions while reducing export promotion and trade analysis
- Increase of $100 million to Census Bureau to prepare for the 2020 Census
- Consolidates parts of the Economics and Statistics Administration, US Census Bureau, and Department of Commerce's Office of the Secretary
- Eliminate Economic Development Administration ($221 million)
- Eliminates the Minority Business Development Agency
- Discontinue Manufacturing Extension Partnership Program ($124 million)
- Eliminates certain National Oceanic and Atmospheric Administration grants and programs ($250 million)
- Maintains polar orbiting and geostationary satellites for weather forecasting
- Savings from the Polar Follow On program by utilizing commercial data
- Maintains National Weather Service forecasting with $1 billion in investments
- Maintains National Telecommunication and Information Administration
Department of Defense
- $52 billion increase (10%)
- Repeal of defense sequestration plus an additional $2 billion in funding
- Providing resources to "accelerate the defeat of ISIS"
- Use funds for war fighting readiness
- Increase/improve training, equipment, and infrastructure
- "Lays the groundwork for a larger, more capable, and more lethal joint force"
- Reduce cost of military programs wherever "feasible"
- Rebuild readiness of US Army
- Increase number of Navy ships- "This budget reflects a down payment on the President's commitment to expanding the fleet"
- Ensure a ready and fully equipped Marine Corps
- Invest in Air Force maintenance, training, and additional F-35 Joint Strike Firghters
Department of Education
- $9 billion reduction (13%)
- Increase funding for school choice such as private and charter schools ($1.4 billion)
- Maintains current IDEA funding for students with disabilities
- Eliminates Supporting Effective Instruction State Grants program ($2.4 billion)
- Eliminates 21st Century Community Learning Centers program ($1.2 billion)
- Eliminates Federal Supplemental Educational Opportunity Grant ($732 million)
- Maintains the Pell Grant while cancelling $3.9 billion in unobligated carryover funding
- Maintains funding for programs that serve high percentage minority students
- Significant reduction to Federal Work Study
- Reduce Federal TRIO Programs and GEAR UP (reduction of $193 million)
- Reduce or eliminate over 20 additional programs including Striving Readers, Teacher Quality Partnership, Impact Aid Support Payments for Federal Property, and International Education programs
Department of Energy
- $1.7 billion reduction (5.6%) however a $1.4 billion increase to the National Nuclear Security Administration (11%)
- Restart Yucca Mountain nuclear waste repository ($120 million)
- Eliminate defense sequestration for the National Nuclear Security Administration
- $6.5 billion to the Environmental Management program to clean up nuclear waste
- Eliminates the Advanced Research Projects Agency-Energy, Title 17 Innovative Technology Loan Guarantee Program, and the Advanced Technology Vehicle Manufacturing Program
- Prioritization of projects within the Office of Science (reduction of $900 million)
- Limits scope of the Office of Energy Efficiency and Renewable Energy, the Office of Nuclear Energy, the Office of Electricity Delivery and Energy Reliability, and the Fossil Energy Research and Development program as well as eliminating the Weatherization Assistance Program and State Energy Program (reduction of $2 billion)
- Support cyber security and grid resiliency within the Office of Electricity Delivery and Energy Reliability
- Continues and enhances research, development, and construction of expanded Navy fleet
Department of Health and Human Services
- $15.1 billion reduction (17.9%)
- Maintain direct health care services such as community health centers
- Increase Health Care Fraud and Abuse Program funding by $70 million
- Support "efficient operations" of Medicare, Medicaid, and the Children's Health Insurance Program
- Increase opioid misuse prevention efforts and access to treatment and recovery services ($500 million)
- Increase the FDA medical product user fees (revenue increase of $1 billion)
- Reduce National Institute of Health ($5.8 billion) including eliminating the Fogarty International Center and consolidating the Agency for Healthcare Research and Quality
- Creates a new Federal Emergency Response Fund and a new $500 million block grant within the CDC
- Invest in "high-performing entities" to focus on "high priority" mental health activities
- Eliminate some health and nurse training programs ($403 million)
- Eliminate discretionary programs in the Office of Community Service including the Low Income Home Energy Assistance Program and the Community Services Block Grant ($4.2 billion)
Department of Homeland Security
- $2.8 billion increase (6.8%)
- $2.6 billion for border security technology including planning of a border wall
- $324 million to recruit, hire, and train Border Patrol, ICE Agents, and support staff
- Increase funding for detention, transport, and removal of illegal immigrants ($1.5 billion)
- Mandatory implementation of nationwide E-Verify usage for employers ($15 million)
- Safeguard cyber space ($1.5 billion)
- Increase Passenger Security Fee to recover 75% of TSA operation costs and eliminate NFIP's Flood Hazard Mapping Program ($190 million)
- Eliminate or reduce FEMA state and local grant funding and require a 25% non-Federal cost match for preparedness grants ($667 million)
- Eliminate or reduce certain TSA programs ($80 million)
Department of Housing and Urban Development
- $6.2 billion reduction (13.2%)
- Provides $35 billion for HUD rental assistance programs
- Eliminates the Community Development Block Grant ($3 billion)
- Eliminate "low priority" programs such as HOME Investment Partnerships Program, Choice Neighborhoods, and the Self-help Homeownership Opportunity Program ($1.1 billion)
- Increase funding to promote lead-safe homes ($20 million)
- Eliminate Section 4 Capacity Building for Community Development and Affordable Housing ($35 million)
- Support FHA mortgage insurance programs
Department of the Interior
- $1.5 billion reduction (12%)
- Increase funding to develop energy on public land and streamline permitting
- Maintains Office of Natural Resources Revenue
- Eliminates "lower priority" programs including Abandoned Mine Land grants, National Heritage Areas, and National Wildlife Refuge payments
- Maintains "stewardship capacity" operations for National Park Service, Fish and Wildlife Service, and Bureau of Land Management
- Maintains tribal sovereignty and self-determination but reduces funds for "more recent" projects and initiatives that only serve a few tribes
- Reduces funds for land acquisition ($120 million)
- Increases funding for deferred maintenance but overall reduces funds for construction and major maintenance programs in National Park Service
- Provides $900 million for US Geological Survey
- Public/private matching plan for wildlife conservation, historic preservation, and recreation grants
- Maintain wildland fire suppression funding
- $1 billion for water resource management in western US
- Minor reduction to Payments in Lieu of Taxes program
Department of Justice
- $1.1 billion reduction (3.8%)
- Increase FBI funding ($249 million)
- Increase law enforcement component funding ($175 million)
- Link prosecutors and intelligence attorneys with investigations and the intelligence community
- Increase number of immigration judges ($80 million)
- Increase number of border enforcement prosecutors and deputy US Marshals
- Increase number of attorneys for immigration legislation and for obtaining land for border wall
- Increases detention space ($171 million)
- Maintain grants to protect state, local, and tribal law enforcement as well as grants for victims of crime
- Eliminates outdated programs ($700 million)
- Reduce prison construction spending (estimated almost $1 billion) however, provides $80 million for prison activation and $113 million for repair and modernization (Net reduction estimate of $800 million)
- Increase bankruptcy-filing fees ($150 million in increased revenue)
Department of Labor
- $2.5 billion reduction (21%)
- Expands Reemployment and Eligibility Assessments
- Reduce certain job training grants including elimination of the Senior Community Service Employment Program ($434 million)
- Eliminates Bureau of International Labor Affairs grant funding ($60 million)
- Closes low performing Job Corps locations
- Decreases funding for job training and employment services
- Fund states to expand apprenticeships
- Refocus the Office of Disability Employment Policy with less funding for technical assistance grants and more funding for early intervention projects
- Eliminates OSHA training grants ($11 million)
Department of State, USAID, and Treasury International Programs
- $10.1 billion reduction (28%) for Department of State and USAID, $12 billion to fund Overseas Contingency Operations, and $803 million reduction (35%) for Treasury International Programs
- Maintains embassy security and core diplomatic functions with $2.2 billion towards embassy construction and maintenance
- Increases funding to $3.1 billion for Israel security assistance
- Eliminates Global Climate Change Initiative and ends all funding to UN climate change programs
- Maintains funds to Gavi, the Vaccine Alliance
- Maintains funding for AIDS, Tuberculosis, and Malaria programs
- Turn some foreign assistance from grants to loans
- Reduce funding for international peacekeeping operations, cap contributions to UN at 25% of peacekeeping costs
- Adjust economic and development assistance to countries that are of greater strategic importance to the US
- Eliminates Emergency Refugee and Migration Assistance
- Reduces funding to Educational and Cultural Exchange programs and focuses remaining funds on the Fulbright Program
- Eliminates certain peacekeeping and security building efforts including the Complex Crisis Fund and small organizations that also have non Federal funds such as the East-West Center
- Consolidates and Reorganizes the DOS and USAID
- Reduces funding of development banks such as the World Bank ($650 million over 3 years)
Department of Transportation
- $2.4 billion reduction (13%)
- Privatize air traffic control
- Reduce Amtrak subsidies, particularly those associated with long distance service
- Only allocate funds for currently approved grants under the Capital Investment Program (New Starts)
- Eliminates Essential Air Service funding ($175 million)
- Eliminates TIGER grant program ($499 million)
Department of the Treasury
- $519 million reduction (4.1%)
- Preserve IRS funding but reduce paper based review ($239 million)
- Enhance cyber security capabilities
- Prioritize funds for economic enforcement tools
- Eliminate Community Development Financial Institutions Fund grants ($210 million)
- End taxpayer bailouts and advance financial regulatory reform
- Reduce federal workforce
Department of Veterans Affairs
- $4.4 billion increase (6%)
- Increase $4.6 billion to improve VA health care
- Extend and fund Veterans Choice Program- set to expire in August 2017
- Fund programs to aid homeless and at-risk veterans
- Fund programs to assist veterans transitioning to civilian life
- Continue funding efforts to optimize the VA claims process
- Fund IT systems to improve quality of services
Environmental Protection Agency
- $2.6 billion reduction (31%) including the elimination of 3,200 jobs
- Marginal increase to funding for drinking and wastewater infrastructure including the State Revolving Funds and Water Infrastructure Finance and Innovation Act ($4 million)
- Defunds the Clean Power Plan and climate change initiatives ($100 million)
- Reduce Hazardous Substance Superfund Account ($330 million)
- Reduce EPA enforcement budget to focus on programs not delegated to the States ($419 million)
- Reduce Office of Research and Development activities by half ($233 million)
- Reduce Categorical Grants ($482 million)
- Eliminate region specific efforts such as Great Lakes Restoration Initiative and Chesapeake Bay ($427 million)
- Eliminates more than 50 additional programs deemed low priority or poorly performing including Energy Star and infrastructure assistance to Alaska Native Villages and the Mexico Border ($347 million)
National Aeronautics and Space Administration
- Funded at $19.1 billion (0.8% decrease)
- Increase use of public-private partnerships
- Allocates $624 million for aeronautics research
- Allocates $1.9 billion for the Planetary Science Program but no funding for a mission to land on Europa
- Allocates $3.7 billion to send astronauts into deep space but cancels the Asteroid Redirect Mission
- Allocates $1.8 billion for Earth science portfolio, eliminates PACE, OCO-3, DSCOVR, and CLARREO missions as well as reducing Earth science grants ($102 million)
- Eliminates Office of Education ($115)
- Restructures robotic satellite refueling demonstration mission ($88 million)
- Strengthen cyber security capabilities
Small Business Administration
- $43.2 million reduction (5%)
- Maintain loan guarantees
- Reduce duplication and coordinate best practices for outreach center programs
- Maintain disaster relief lending
- Eliminate grant programs covered by the private sector ($12 million)
- Provide training and support for transitioning veterans towards business ownership
- Maintain funding for microloan financing
- Ensure SBA can advocate and assist small businesses in accessing government contracts and research opportunities
Saturday, March 11, 2017
Taxed onto Death
Taxes are an unfortunate, necessary evil in organized society with a centralized government. The reality is that laws must be made and enforced, roads built and maintained, treaties with other government negotiated, etc. There is no getting out of the fact that our government must receive money from the people in order to provide the protection and services that it does. In politics, however, there is a substantial debate over what the government (particularly on the Federal level) is responsible to provide and on the flip side how much money they need to carry out their duties. I have touched on the Federal governments responsibilities in the past and will surely discuss it many more times in the future. Today I will be focused purely on where the money comes from to pay for said services. Both the Senate (S.18) and House of Representatives (H.R.25) have bills pending to demolish the IRS and our entire tax system as we know it and put in it's place a national sales tax. This is such a bad idea that it borders on ridiculousness but I plan to unpack this plan in all seriousness to show just how ridiculous it is.
I will be the first to tell you that our current tax system is deeply flawed. It is overly complicated with abundant loop holes. Its convoluted nature makes it nearly impossible for the common man to navigate the best results without help while the rich and savvy exploit the system to avoid paying their fair share. Even when they do pay their fair share those of low income, without government support, are left with no way to save and get ahead. To illustrate this point I will use three different examples: a low income family of four, a middle class couple, and a single person with a high income. I will be relying on the 2015 Consumer Expenditure Survey for much of my data but will be rounding and in some cases adjusting my numbers to the particular cases at hand. Since wages, rents, food costs, etc. vary so dramatically across the nation I have tried to use fairly conservative numbers in the different categories.
Case 1)
A family of four (a couple with 2 children) lives off of a gross income of $30,000 a year. Because they are below the poverty line they pay nothing in taxes. They pay $1,000/month ($12,000 annually) on rent because their family size requires a certain minimum amount of living space. They pay annual utilities of about $3,000 (10% of gross income). They budge $500 a month for food and incidentals ($6,000 annually). They allow no more than $100 per person per year for new clothes and shoes which makes a total of $400 (this number is not only conservative, it is next to impossible to maintain but I'm going to roll with it). They have a single, older car that is paid for but between gas, insurance, and oil changes they spend about $3,000 a year on transportation (this does not include any car repairs that may be needed). Finally the family is fortunate enough to have modest health insurance. They avoid going to the doctor or getting medication unless absolutely necessary but still spend about $3,500 per year in health care costs between insurance premiums, co-pays, and medications. After all of these expenses the family is left with $2,100 for the year. This is their entire budget for any emergencies (medical, car breakdown, appliance replacement, etc.), care of pets, recreation, any overages on their already tight budget, plus any necessary child care over the course of the year. In a perfect world each member of the family could be allocated just over $40 per month for recreation and the family could just break even for the year. There is no room for saving money for a rainy day or for their children's education.
Case 2)
A middle class couple lives off of a gross income of $50,000 a year paying 25% of their income in taxes or about $12,500 annually. They also pay $1,000/month ($12,000 annually) on rent/mortgage but because they require less space they can afford a smaller place in a nicer neighborhood. Like the poorer family they pay 10% of their income on utilities or $5,000 annually. They have the same $500 per month ($6,000 annually) food budget but with only two mouths to feed they can make this budget stretch a lot farther on a wider variety of healthier foods as well as some luxury food items. They also have more money for clothing and can afford a nicer wardrobe at $200 per person annually or $400 total. They have a modest car payment in addition to gas, insurance, and oil changes and pay about $6,000 annually on transportation. Finally, they pay a bit more for a better insurance plan and are comfortable going to the doctor regularly for check ups. They spend about $4,500 annually on healthcare. This leaves $3,600 annually for emergencies, pet care, and recreation. That calculates out to $150 per person per month. This leaves enough money to put a small amount away in savings and still be able to go out and enjoy themselves on occasion. They are better able to take care of their physical and mental health and are less likely to get sick. Also, because they have better insurance coverage they are less likely to be financially devastated in the event of a major illness.
Case 3)
A single individual with a gross income of $100,000 a year pays 30% of their income in taxes or about $30,000 annually. They have a nice home for which they pay $2,000 a month ($24,000 annually). Like the other cases they pay about 10% in utilities or $10,000. They eat well paying an average of $750 a month ($9,000 annually) on food and incidentals. While the poorest family spends $100 per person in a year the wealthy individual spends $100 a month ($1,200 annually) on clothes for themselves. They also drive a fancy car and spend about $15,000 a year on transportation. For health care they have the best coverage available and can afford regular visits for massage and chiropractic at $6,000 a year. Even after all of this luxury the individual still has $4,800 left over at the end of the year for investment, savings, and entertainment.
I've summed up these three circumstances with the graph below:
I will be the first to tell you that our current tax system is deeply flawed. It is overly complicated with abundant loop holes. Its convoluted nature makes it nearly impossible for the common man to navigate the best results without help while the rich and savvy exploit the system to avoid paying their fair share. Even when they do pay their fair share those of low income, without government support, are left with no way to save and get ahead. To illustrate this point I will use three different examples: a low income family of four, a middle class couple, and a single person with a high income. I will be relying on the 2015 Consumer Expenditure Survey for much of my data but will be rounding and in some cases adjusting my numbers to the particular cases at hand. Since wages, rents, food costs, etc. vary so dramatically across the nation I have tried to use fairly conservative numbers in the different categories.
Case 1)
A family of four (a couple with 2 children) lives off of a gross income of $30,000 a year. Because they are below the poverty line they pay nothing in taxes. They pay $1,000/month ($12,000 annually) on rent because their family size requires a certain minimum amount of living space. They pay annual utilities of about $3,000 (10% of gross income). They budge $500 a month for food and incidentals ($6,000 annually). They allow no more than $100 per person per year for new clothes and shoes which makes a total of $400 (this number is not only conservative, it is next to impossible to maintain but I'm going to roll with it). They have a single, older car that is paid for but between gas, insurance, and oil changes they spend about $3,000 a year on transportation (this does not include any car repairs that may be needed). Finally the family is fortunate enough to have modest health insurance. They avoid going to the doctor or getting medication unless absolutely necessary but still spend about $3,500 per year in health care costs between insurance premiums, co-pays, and medications. After all of these expenses the family is left with $2,100 for the year. This is their entire budget for any emergencies (medical, car breakdown, appliance replacement, etc.), care of pets, recreation, any overages on their already tight budget, plus any necessary child care over the course of the year. In a perfect world each member of the family could be allocated just over $40 per month for recreation and the family could just break even for the year. There is no room for saving money for a rainy day or for their children's education.
Case 2)
A middle class couple lives off of a gross income of $50,000 a year paying 25% of their income in taxes or about $12,500 annually. They also pay $1,000/month ($12,000 annually) on rent/mortgage but because they require less space they can afford a smaller place in a nicer neighborhood. Like the poorer family they pay 10% of their income on utilities or $5,000 annually. They have the same $500 per month ($6,000 annually) food budget but with only two mouths to feed they can make this budget stretch a lot farther on a wider variety of healthier foods as well as some luxury food items. They also have more money for clothing and can afford a nicer wardrobe at $200 per person annually or $400 total. They have a modest car payment in addition to gas, insurance, and oil changes and pay about $6,000 annually on transportation. Finally, they pay a bit more for a better insurance plan and are comfortable going to the doctor regularly for check ups. They spend about $4,500 annually on healthcare. This leaves $3,600 annually for emergencies, pet care, and recreation. That calculates out to $150 per person per month. This leaves enough money to put a small amount away in savings and still be able to go out and enjoy themselves on occasion. They are better able to take care of their physical and mental health and are less likely to get sick. Also, because they have better insurance coverage they are less likely to be financially devastated in the event of a major illness.
Case 3)
A single individual with a gross income of $100,000 a year pays 30% of their income in taxes or about $30,000 annually. They have a nice home for which they pay $2,000 a month ($24,000 annually). Like the other cases they pay about 10% in utilities or $10,000. They eat well paying an average of $750 a month ($9,000 annually) on food and incidentals. While the poorest family spends $100 per person in a year the wealthy individual spends $100 a month ($1,200 annually) on clothes for themselves. They also drive a fancy car and spend about $15,000 a year on transportation. For health care they have the best coverage available and can afford regular visits for massage and chiropractic at $6,000 a year. Even after all of this luxury the individual still has $4,800 left over at the end of the year for investment, savings, and entertainment.
I've summed up these three circumstances with the graph below:
| Family size | 4 | 2 | 1 |
| Yearly gross income | 30,000 | 50,000 | 100,000 |
| Taxes paid | 0 | 12,500 | 30,000 |
| Annual rent/mortgage | 12,000 | 12,000 | 24,000 |
| Annual utilities | 3,000 | 5,000 | 10,000 |
| Annual food/incidentals | 6,000 | 6,000 | 9,000 |
| Annual clothing expenses | 400 | 400 | 1,200 |
| Annual transportation | 3,000 | 6,000 | 15,000 |
| Annual medical expenses | 3,500 | 4,500 | 6,000 |
| Remainder | 2,100 | 3,600 | 4,800 |
With all of this data it is no wonder that the rich get richer while the poor are unable to get maintain their current circumstances. When one major illness or an unexpected car repair can devastate your entire financial circumstances you live in constant stress which can negatively impact your long term health and wellness both mentally and physically. It is no wonder that low income families rely on public assistance just to make ends meet.
This clearly shows how our economic system, including taxes, favors the wealthy and it only gets worse when you look at incomes that range to $1 million and more. A poor family that pays no taxes takes home $30,000 annually. A single person who makes $100,000 takes home 70% or $70,000. Since our tax brackets cap out at $39.6% for incomes greater than $500,000 a person who grosses $1 million will have a take home of about $600,000.
Now that I have covered our current tax circumstances let's take a look at the congressional proposal. House Bill 25 and Senate Bill 18 both call for a flat 23% sales tax across the board. There does not seem to be any exceptions for necessary items such as food or health care costs but there is a "Family Consumption Allowance" which consists of a monthly rebate to low income families to offset tax collection. Let's see how this works by the numbers using my previous 3 cases.
Case 1)
A family of four (a couple with 2 children) lives off of a gross income of $30,000 a year. They pay $1,000/month ($12,000 annually) on rent. They pay annual utilities of about $3,000 (10% of gross income). They budge $500 a month for food and incidentals ($6,000 annually). They allow no more than $100 per person per year for new clothes and shoes which makes a total of $400. They spend about $3,000 a year on transportation (this does not include car repairs). They spend about $3,500 per year in health care costs. This means the family's total annual spending is $27,900. At a rate of 23% they would be charged an additional $6,400 for taxes. Which means their actual yearly spending would be $34,300 or more than their yearly income leaving them in perpetual debt. If the family is able to navigate the application process and are approved for the "Family Consumption Allowance" then they would, theoretically, be back to net 0 on taxes with their $2,100 reminder, but this money now has less buying power as they would still be required to pay taxes on any purchases they make with said money.
Case 2)
A middle class couple lives off of a gross income of $50,000 a year. They also pay $1,000/month ($12,000 annually) on rent/mortgage. They pay 10% of their income on utilities or $5,000 annually. They have the same $500 per month ($6,000 annually) food budget. They have a clothing budget of $200 per person annually or $400 total. They pay about $6,000 annually on transportation. Finally, they spend about $4,500 annually on healthcare. Their annual outflow would be $33,900 on which they would pay 23% in taxes or $7,800. They do not qualify for the rebate and so this leaves $8,300 annually for emergencies, pet care, and recreation. This is substantially more than the current system but the loss of buying power will reduce the amount of actual benefit the couple receives from this money.
Case 3)
A single individual with a gross income of $100,000. They pay $2,000 a month ($24,000 annually) on their home. Like the other cases they pay about 10% in utilities or $10,000. They pay an average of $750 a month ($9,000 annually) on food and incidentals. The wealthy individual spends $100 a month ($1,200 annually) on clothes for themselves. They also spend about $15,000 a year on transportation. For health care they pay about $6,000 a year. Their annual outflow is $65,200 and at 23% tax they would pay approximately $15,000, or half of their previous tax contribution. This means that they are now left with a surplus of $19,800, almost four times their previous surplus. Like the other cases they suffer a loss of buying power but this is insignificant in the face of their monetary gains.
To look at the situation as pure numbers we see the following:
A family of four (a couple with 2 children) lives off of a gross income of $30,000 a year. They pay $1,000/month ($12,000 annually) on rent. They pay annual utilities of about $3,000 (10% of gross income). They budge $500 a month for food and incidentals ($6,000 annually). They allow no more than $100 per person per year for new clothes and shoes which makes a total of $400. They spend about $3,000 a year on transportation (this does not include car repairs). They spend about $3,500 per year in health care costs. This means the family's total annual spending is $27,900. At a rate of 23% they would be charged an additional $6,400 for taxes. Which means their actual yearly spending would be $34,300 or more than their yearly income leaving them in perpetual debt. If the family is able to navigate the application process and are approved for the "Family Consumption Allowance" then they would, theoretically, be back to net 0 on taxes with their $2,100 reminder, but this money now has less buying power as they would still be required to pay taxes on any purchases they make with said money.
Case 2)
A middle class couple lives off of a gross income of $50,000 a year. They also pay $1,000/month ($12,000 annually) on rent/mortgage. They pay 10% of their income on utilities or $5,000 annually. They have the same $500 per month ($6,000 annually) food budget. They have a clothing budget of $200 per person annually or $400 total. They pay about $6,000 annually on transportation. Finally, they spend about $4,500 annually on healthcare. Their annual outflow would be $33,900 on which they would pay 23% in taxes or $7,800. They do not qualify for the rebate and so this leaves $8,300 annually for emergencies, pet care, and recreation. This is substantially more than the current system but the loss of buying power will reduce the amount of actual benefit the couple receives from this money.
Case 3)
A single individual with a gross income of $100,000. They pay $2,000 a month ($24,000 annually) on their home. Like the other cases they pay about 10% in utilities or $10,000. They pay an average of $750 a month ($9,000 annually) on food and incidentals. The wealthy individual spends $100 a month ($1,200 annually) on clothes for themselves. They also spend about $15,000 a year on transportation. For health care they pay about $6,000 a year. Their annual outflow is $65,200 and at 23% tax they would pay approximately $15,000, or half of their previous tax contribution. This means that they are now left with a surplus of $19,800, almost four times their previous surplus. Like the other cases they suffer a loss of buying power but this is insignificant in the face of their monetary gains.
To look at the situation as pure numbers we see the following:
| Family size | 4 | 2 | 1 |
| Yearly gross income | 30,000 | 50,000 | 100,000 |
| Annual rent/mortgage | 12,000 | 12,000 | 24,000 |
| Annual utilities | 3,000 | 5,000 | 10,000 |
| Annual food/incidentals | 6,000 | 6,000 | 9,000 |
| Annual clothing expenses | 400 | 400 | 1,200 |
| Annual transportation | 3,000 | 6,000 | 15,000 |
| Annual medical expenses | 3,500 | 4,500 | 6,000 |
| Total expenses | 27,900 | 33,900 | 65,200 |
| Taxes paid | 6,400 | 7,800 | 15,000 |
| Rebate | 6,400 | 0 | 0 |
| Remainder | 2,100 | 8,300 | 19,800 |
To get a real comparison let's look at what remains to each group under the current system vs. the proposed sales tax:
| Family size | 4 | 2 | 1 |
| Yearly gross income | 30,000 | 50,000 | 100,000 |
| Remainder current | 2,100 | 3,600 | 4,800 |
| Remainder proposed | 2,100 | 8,300 | 19,800 |
| Difference | 0 | 4,700 | 15,000 |
It is clear that this system does nothing to aid low income families, makes marginal gains for the middle class, and substantially benefits the wealthy. Given that the necessities of life require spending 93% of a low income family's wages, 67.8% for the middle class, but only 65.2% for the wealthy individual it is clear that this system can do nothing to help low income individuals. Furthermore, a wealthy individual can choose to spend less and save their money, further reducing their input into the tax system. Low income families, who are barely getting by, have no such luxury.
If the spending percentage holds steady for wealthy individuals (and it is more likely to go down considering the trend) then a person who earns $1 million in a year would spend about $652,000 (65.2%) and pay taxes of approximately $150,000 (23% of money spent). Under our current system, if they don't find a way to get out of it, a millionaire would contribute almost $300,000 in taxes annually. From this single individual it would be a loss of $150,000 annually in tax revenue. The loss of tax revenue would be substantial across the population necessitating steep cuts to Federal programs. Since there seems to be no move to reduce military spending, which accounts for the greatest portion of government funding, these cuts would almost certainly come at the expense of social programs, many of which are geared at assisting the poor and elderly. This would, of course, make it more difficult for low income families to make ends meet, let alone get ahead in life.
A solution to our tax problems needs to be found, but a national sales tax is not the answer. Closing loop holes, simplifying tax code, and ensuring the wealthy pay their fair share is the only way we can protect the poor and insure adequate government funding.
Monday, February 27, 2017
H.R.727 - To amend the Communications Act of 1934 to prohibit Federal funding for the Corporation for Public Broadcasting after fiscal year 2019
The Corporation for Public Broadcasting (CPB) has been the back bone of public media in our country for 50 years. Their goals and objectives page, updated in 2016, states:
1) Content and services:
GOAL: Promote an educated and informed civil society by supporting high-quality engaging content and services delivered across multiple platforms.
2) Innovation:
GOAL: Strengthen the quality of public media's content and services, and deepen the engagement with audiences and users, by supporting innovative projects.
3) Support for Public Media:
GOAL: Strengthen the quality of public media’s content and services by supporting strong public media entities that are vital to and reflective of the people they serve.
This gives a great glimpse into their focus but what exactly is CPB? Well, Congress, in a bipartisan move, passed the Public Broadcasting Act of 1967 which created CPB. The Federal government wished to invest in public broadcasting and CPB was created to act as a steward for these Federal funds. It is a private, nonprofit organization and is the "single largest source of funding for public radio, television, and related online and mobile services".
What is important about CPB is their funding model. CPB receives their funding allocation from the Federal government 2 years in advance. What this means is that their Federal allocation for 2016 was decided upon and approved by Congress in 2014. This is important as it reduces the amount of political interference in CPB's operations for any given year. The government can't suddenly remove funding from the organization if they make a move that the current administration disapproves of. Having their funding allocated in advance means that CPB doesn't have to bend to the whims of those in power, an independence that is fundamental to free media.
How much does the government put into CPB? In 2014 CPB had an operating budget of $445.5 million with all but $500 thousand of that in direct allocation. This should be compared to the Federal budget of $3.5 trillion in 2014. This means that CPB was approximately 0.012% of our Federal government's spending for 2014. The average cost per American was just $1.35 for the entire year of 2014.
And where does CPB's funding go? "CPB does not produce programming and does not own, operate or control any public broadcasting stations" it does, however, provide substantial grants to local stations and content developers. Nearly 70% of their budget goes to support local radio and television stations. If you would like to see how this funding benefits your state see here. Conversely, less than 5% of their budget is used for CPB operations. In raw numbers that means about $22 million dollars a year for national operating costs with the remaining $423.5 million going to local stations and content development. It should also be noted that CPB is a separate entity from PBS and NPR though many of the local stations who receive money from CPB partner with these organizations to take advantage of their proprietary content.
Finally, where does this all lead us? To HR727 and it's desire to cut all funding from CPB after 2019. Since CPB receives almost all of their funding through Federal allocation this would mean a dissolution of CPB entirely and immediately as of 2019. The 1,123 radio stations and 366 television stations that rely on CPB for funding would either have to find new revenue sources or close down.
Will this reduce out Federal deficit? At .012% of the overall budget hardly at all.
Does CPB cause a financial burden for Americans? Only if $1.35 a year is a financial hardship.
Does this reduce the size of government? Technically yes, but only by the amount of time it takes Congress to approve CPB's funding each year and for the Congressional Budget Office to disburse said funds.
This bill is Congress "doing something" that's really doing nothing. This bill will reduce the accessibility of free, quality media in our country and should not be allowed to pass.
Who's responsible:
Rep. Lamborn, Doug [R-CO]- Sponsor
Rep. Biggs, Andy [R-AZ]- Cosponsor
Rep. Rooney, Francis [R-FL]- Cosponsor
The purpose of public media is to provide programs and services that inform, educate, enlighten, and enrich the public and help inform civil discourse essential to American society.This page also outlines 3 areas of impact:
1) Content and services:
GOAL: Promote an educated and informed civil society by supporting high-quality engaging content and services delivered across multiple platforms.
2) Innovation:
GOAL: Strengthen the quality of public media's content and services, and deepen the engagement with audiences and users, by supporting innovative projects.
3) Support for Public Media:
GOAL: Strengthen the quality of public media’s content and services by supporting strong public media entities that are vital to and reflective of the people they serve.
This gives a great glimpse into their focus but what exactly is CPB? Well, Congress, in a bipartisan move, passed the Public Broadcasting Act of 1967 which created CPB. The Federal government wished to invest in public broadcasting and CPB was created to act as a steward for these Federal funds. It is a private, nonprofit organization and is the "single largest source of funding for public radio, television, and related online and mobile services".
What is important about CPB is their funding model. CPB receives their funding allocation from the Federal government 2 years in advance. What this means is that their Federal allocation for 2016 was decided upon and approved by Congress in 2014. This is important as it reduces the amount of political interference in CPB's operations for any given year. The government can't suddenly remove funding from the organization if they make a move that the current administration disapproves of. Having their funding allocated in advance means that CPB doesn't have to bend to the whims of those in power, an independence that is fundamental to free media.
How much does the government put into CPB? In 2014 CPB had an operating budget of $445.5 million with all but $500 thousand of that in direct allocation. This should be compared to the Federal budget of $3.5 trillion in 2014. This means that CPB was approximately 0.012% of our Federal government's spending for 2014. The average cost per American was just $1.35 for the entire year of 2014.
And where does CPB's funding go? "CPB does not produce programming and does not own, operate or control any public broadcasting stations" it does, however, provide substantial grants to local stations and content developers. Nearly 70% of their budget goes to support local radio and television stations. If you would like to see how this funding benefits your state see here. Conversely, less than 5% of their budget is used for CPB operations. In raw numbers that means about $22 million dollars a year for national operating costs with the remaining $423.5 million going to local stations and content development. It should also be noted that CPB is a separate entity from PBS and NPR though many of the local stations who receive money from CPB partner with these organizations to take advantage of their proprietary content.
Finally, where does this all lead us? To HR727 and it's desire to cut all funding from CPB after 2019. Since CPB receives almost all of their funding through Federal allocation this would mean a dissolution of CPB entirely and immediately as of 2019. The 1,123 radio stations and 366 television stations that rely on CPB for funding would either have to find new revenue sources or close down.
Will this reduce out Federal deficit? At .012% of the overall budget hardly at all.
Does CPB cause a financial burden for Americans? Only if $1.35 a year is a financial hardship.
Does this reduce the size of government? Technically yes, but only by the amount of time it takes Congress to approve CPB's funding each year and for the Congressional Budget Office to disburse said funds.
This bill is Congress "doing something" that's really doing nothing. This bill will reduce the accessibility of free, quality media in our country and should not be allowed to pass.
Who's responsible:
Rep. Lamborn, Doug [R-CO]- Sponsor
Rep. Biggs, Andy [R-AZ]- Cosponsor
Rep. Rooney, Francis [R-FL]- Cosponsor
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