The Master Of Disaster

Truth or Consequences in the Budgetary Class War Waged in Congress


By Mitch Gurney

April 29, 2012

The reality is that many of our elected officials no longer believe they are answerable to the people; that the Constitution is merely an outdated piece of paper; and that we the people are largely simpletons whom they mock with their political spin and tales – their smug demeanor evident all the way to the bank. And sadder still is that we mostly prove them correct as we habitually fall along our divisive party lines.  Mitch Gurney

Despite polls indicating 72% of American voters were in support, the Senate, at the hands of the Republicans, recently rejected the Buffet Rule on taxes. Senate Bill 2230 Paying a Fair Share Act commonly known as The Buffet Rule was dead on arrival without even getting an up-down vote. Republicans, using a filibuster against the “motion to proceed” and with the Democrats not having the 60 votes to move forward successfully killed the measure.

The measure, had it passed, would have raised about $47 billion in revenue over a decade, $4.7 billion annually. The general consensus of the legislation had a tone of ‘why bother’ because it wouldn’t have done much toward deficit reduction, collecting only a “smidgen of the $7 trillion in federal deficits expected during that time.” And while this is true doing nothing certainly isn’t a solution either.

The thrust of the public campaign promoting the measure was for the wealthy to pay their fair share. But the real objective should have been what is best in dealing with our nation’s fiscal problems. Most of the arguments on both sides of the aisle either for or against it were largely hyperbole and non-productive. A more productive approach would be to recognize the need for the government to raise revenue and cut spending simultaneously in order to balance the federal budget. This will not be an easy task and recent Congressional actions only exacerbate the problem.

In March the Senate GOP voted down a Democratic measure that would have put an end on big oil subsidies, some of which have been around for nearly a century. The legislation, Ending Big Oil Tax Subsidies Act (H.R.601) was introduced in February in the House by Representative Earl Blumenauer, along with 51 co-sponsors, proposing ending roughly $40 billion over five years in wasteful subsidies to the oil industry.

Federal energy subsidies take three principal forms consisting of several program types that serve differing objectives; direct and indirect, research and development etc., and go beyond those provided for the traditional fossil fuel industry, the biggest benefactor by far. The government also spends billions in subsidies on the nuclear industry. Blogger Bud Meyer observes it’s Not just Big Oil, there’s also Nuclear Welfare:

Nuclear welfare started with research and development. According to the non-partisan Congressional Research Service, since 1948 the federal government has spent more than $95 billion (in 2011 dollars) on nuclear energy R&D.

But all that free federal R&D for the nuclear industry wasn’t enough, they also wanted federal liability insurance too, which it got back in 1957 with the Price-Anderson Act. This federal liability insurance program for nuclear plants was meant to be temporary, but Congress repeatedly extended it, most recently through 2025. [The Price- Anderson Act caps the liability for claims arising from nuclear incidents. It reduces the insurance nuclear power plants need to buy and requires taxpayers to cover all claims in excess of the cap. The benefit of this indirect subsidy has been estimated at between $237 million and $3.5 billion a year.]

In another mind boggling move that demonstrates most in Congress are inept with budget management but also politically grandstanding regarding deficit reduction, the GOP pushed a business tax cut through a divided House via legislation by House Majority Leader Eric Cantor, (R-Va),theSmall Business Tax Cut Act.” The legislation “would provide a one-year, 20 percent tax deduction for companies with fewer than 500 workers. That means firms could generally subtract 20 percent from their domestic incomes before calculating the federal taxes they owe. The tax break would cost the government $46 billion in lost revenue, adding to the deficits that are already huge.” The legislation passed the House predominately along party lines in a 235-173 vote, on April 19. The legislation is expected to die in the Senate, as it should.

Let me emphasize that just in case you missed it; this “tax break would cost $46 billion in lost revenue adding to the deficits that are already huge” Seriously folks, WTF are these people thinking?

While Republicans, the vanguard for the 1%, whimper ad nauseam that government entitlements cause dependency and freeloaders and thus demand cuts to social programs that the elderly, the sick, and the poor need, they hold an opposing view with the transfer of wealth entitlements that benefit the 1%.

In May of last year five of the largest oil companies announced first-quarter profits of $32 billion, up 30 percent from the first quarter of 2010. Shortly thereafter their top executives, before a Senate hearing, defended their billions in big tax breaks and oils subsidies. ConocoPhillips CEO James Mulva (a Republican) went so far as to say ending the tax breaks for the big oil companies would be “un-American” and discriminatory (Sic). Perhaps, now, Mr Mulva has some empathy for the feelings of the poor and disenfranchised as his Republicans cronies call them freeloaders.

The wealthy and corporations do not need government assistance, and they are not overtaxed. Some corporations are quite crafty at dodging taxes.

Despite the rhetoric to the contrary we have a revenue AND a spending problem. The 2012 federal deficit is expected to be $1.327 trillion, 53 percent of the $2.469 trillion 2012 budget. It takes 1000 billion to make one trillion. The first objective should be to raise revenue and cut spending that erases the deficit by $1327 billion annually, but politicians would rather play politics than get serious about dealing with this runaway beast.

So, while the Buffet Rule would have collected “only a smidgen” of what is necessary to alleviate our budgetary crisis, reality indicates even with drastic cuts and revenue increases the challenge facing Congress is immense. To illustrate my point I’ll simulate a hypothetical scenario by placing myself in the “Executive Seat” that’s been granted Congressional executive order authority after the U.S budget has been declared public enemy number one and dubbed ‘Operation Give Me Fiscal Sanity.’ And under this scenario, yes, as G.W. Bush once stated, “being a dictator would be a heck of a lot easier.”

To raise revenue:

I would enact the Paying a Fair Share Act to take effect immediately, collecting $4.7 billion annually; $47 billion over 10 years.

I would end the Bush Tax Cuts to take effect immediately. According to an August 2010 Congressional Budget Office CBO report, The Bush Tax Cuts will result in $2.65 trillion in lost revenue over 9 years (2011 – 2020). Based on those estimates ending the cuts would collect $294 billion annually, $2.94 trillion over 10 years.

In budget reductions:

I would enact the Ending Big Oil Tax Subsidies Act, taking effect immediately. I would however, eliminate the 6 subsidies recommended by Center for American Progress  cutting $7.6 billion annually and $76 billion over 10 years. Essentially these oil subsidies, delivered through the tax code, are no different from government spending programs that provide money directly!

Ideally I’d like to reduce the Department of Defense’s (DOD) budget by $100 billion annually but initially would phase in the reductions by cutting $50 billion, taking effect immediately and call for a minimum 5 percent reduction over the previous year’s budget for the next 6 years – amounting to cuts of about $218 billion, reducing the DOD budget some 68 percent from its current level.

Scaling down the DOD budget would be augmented by ending the wars and systemically shutting down U.S foreign bases around the world. The long term cost of the war in Iraq was conservatively estimated by Economics Nobel Laureate Joseph Stiglitz in 2008 at about $3 trillion, representing nearly one fifth of our accumulated national debt. And the ongoing cost of war in Afghanistan is running about $120 billion per year.

As a side note the annual budget for the U.S Intelligence Community (IC) which consists of 16 separate federal bureaus of the federal government divided into two main programs, the National Intelligence Program (NIP) and the Military Intelligence Program (MIP) is separate from the DOD budget. The CIA is a component of the NIP but is an independent agency of the U.S government and its budget has been considered classified until recent attempts were made to obtain budget information and on several occasions  through accidental disclosures, the most recent in 2005 by a former CIA official and deputy director of national intelligence for collection who stated the annual intelligence budget was $44 billion at the time. The CIA reports to the Director of National Intelligence (DNI), formed in 2005, who reports directly to the President. The DNI also serves as the director of the IC. The 2012 budget for the NIP program was $55 billion and the DOD requests for the MIP for fiscal 2013 was $19.2 billion, for a combined total of $74 billion. The Obama Administration recently announced launching a new spy agency, as if 16 aren’t enough. The new agency, the Defense Clandestine Service (DCS) “will focus on global threats and emerging economic and military powers.”

Combining the budgets enacted for 2012 for the DOD and Homeland Security with the published Intelligence Community budgets is $874.6 billion, which represents 35 percent of the U.S $2.469 trillion 2012 budget.

Next I’d cut subsidies for the wealthy. A recent report by Senator Tom Coburn, M.D. (R-OK) Subsidies of the Rich and Famous illustrates how, “under the current tax code, the federal government is giving billions of dollars to individuals with an AGI of at least $1 million. On average, each year, this report found that millionaires enjoy benefits from tax giveaways and federal grant programs totaling $30 billion. As a result, almost 1,500 millionaires paid no federal income tax in 2009.”

I would end these entitlements taking effect immediately. After all, we don’t need wealthy freeloaders dependent on government assistance. That would cut another $30 billion annually.

Next I would put the scalpel to funding for Foreign Aid that is administered by USAID.

United States Agency for International Development (USAID) is an agency overseen by the U.S State Department and is primarily responsible for administering civilian foreign aid. Its goal is to “extend a helping hand to people overseas struggling to make a better life.” It is part of a long U.S history of foreign assistance “that both advances U.S. foreign policy interests as well as reflects the American people’s compassion and support of human dignity.” The program has been widely supported by both parties throughout the years.

If Republicans can support billions of dollars spent annually in foreign aid to “extend a helping hand to people overseas struggling to make a better life” surely they should have compassion for our own, the ones they refer to as freeloaders.

USAID administers over 150 funds in foreign aid. A list of these funds and the respective countries that receive support can be reviewed here.

The U.S first began spending on foreign aid sporadically as early as 1915 but consistently since 1946 when the government created the Economic Cooperation Administration (ECA), aka the Marshall Plan, which implemented the European Recovery Act. In 1951 Congress created the Mutual Security Agency (MSA) that replaced the ECA to manage foreign assistance. In 1953 “the United States Foreign Operations Administration (FOA) was established as an independent government agency outside the Department of State to consolidate economic and technical assistance on a world-wide basis. Its responsibilities were merged into the International Cooperation Administration (ICA) one year later.” In 1961, Congress approved the Foreign Assistance Act of 1961 merging the ICA and other foreign aid entities into USAID as a new agency dedicated to managing the U.S foreign aid.

Since 1946, excluding military related expenses the U.S government has spent $1.4 trillion on foreign aid that falls within the jurisdictions of USAID. Between 2000 and 2010, USAID spent $297 billion, on average about $29 billion annually. The State Department’s Congressional budget request for USAID for fiscal year 2011 was $50.3 billion, for 2012 $50.8 billion and for 2013 $51.6 billion – bear in mind these more recent requests include other funding needs for the State Department beyond USAID, however USAID makes up a larger share of the funds requested.

Based on the USAID 10 year spending average I would cut $29 billion to take effect immediately. After all, we don’t want foreign freeloaders dependent on U.S assistance.

By enacting these measures in the first year we’d collect about $299 billion in revenue and $116.6 billion in cuts, a far cry from the $1327 billion needed. Over 10 years we’d collect $2.99 trillion in revenue and (adjusting for the phased in DOD cuts) about $884 billion in cuts. The nation’s total federal debt currently is $15.6 trillion. Based on estimates of another $7 trillion in deficits in the next 10 years the debt will be over $22 trillion.

Granted, in my hypothetical scenario I failed to balance the budget, but keep in mind I only addressed a very small portion of the overall federal budget. The point here is to illustrate just how daunting the task would actually be to cut over $1327 billion annually. Despite whatever actions that might be taken, if any, the most we could hope for is moving the needle only a “smidgen” toward meaningful deficit reduction.

Meanwhile back in the real world we have a choice as we head into another election season. In a very detailed manner Presidential candidate Ron Paul proposes cutting $ 1 trillion in his 2013 budget if elected, perhaps via a write in vote. Whereas Romney outlines his goal “will be to bring federal spending below 20 percent of GDP by the end of his first term”, boost Defense spending, cut taxes, and “put the federal government on a path to a balanced budget.” In an analysis of his proposals, the Center for Budget and Policy Priorities (CBPP) finds in order to achieve his (Mitt Romney) goals massive cuts would be required of 35 percent in 2016 and 56 percent in 2022 to Social Security (unless it’s exempted by policymakers), Medicare, Medicaid, and all other non-defense programs.

The cronyism connection cannot be ignored in that many of our elected policy makers and candidates, and in particular Mitt Romney, are among the elite 1%; that Romney wants to cut taxes should come as no surprise when he, his corporate sponsors, the policy makers and the corporate lobbyists are those whom stand to benefit the most.

Obama’s $3.8 trillion 2013 budget proposal, submitted to Congress on February 13, 2012 projects a deficit of $901 billion. The CBO estimates that his proposed 2013 budget will add $3.5 trillion in deficits over 10 years.

There are automatic 11 percent cuts in non-defense discretionary programs mandated by current law in the Budget Control Act of 2011. The bill directly specified $917 billion in cuts over 10 years, the first $21 billion in cuts were applied in the 2012 budget. The bill established the “Super Committee that was to produce further debt reduction legislation by November 23, 2011. The goal of the committee’s legislation was to cut spending by at least $1.5 trillion over 10 years. But the committee failed to reach a bipartisan agreement, announcing on November 21:

“After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee’s deadline.

There is very little that distinguishes Romney from Obama or, as most now realize, that distinguishes Obama from Bush, or for that matter that even distinguishes most in Congress from any of them or between each other. It doesn’t really matter who we vote for; they all have identical ideas about the role of government and are servants to the corporate-military complex. The only one that stands out above the fray is Ron Paul!

While I have battered the GOP here, both parties are political fiscal lunatics and equally responsible for the mess in Washington. I don’t expect them to stop this madness anytime soon.

I think we are LONG overdue for a citizen’s independent AUDIT of all government expenditures and commitments.

Mitch Gurney

Related Topics:

U.S Budget Woes – Getting a Grip on a Hungry Beast

Editor’s Note:

In my opinion, Mitch Gurney is far too humble in his opinion(s) and writing. It was me that added most of the emphasis (bold type and/or colors that emphasize his remarks.) you will find in this excellent Op-Ed, and when it comes to laying it on the line, Mitch has outdone himself with this composition. As I read through this article, I was struck by the immense number of “Alphabet Agencies” that are paid for by the American Taxpayer and in fact found it hard to keep them all in perspective. IMO, this many Federal Agencies that we reply upon for “intelligence” to protect us from terrorist attacks (Sic) is nothing more than a recipe for disaster! Each one of these agencies are vying for recognition, and it is a well-known fact that they refuse to “play like adults” and continually withhold vital intelligence from other agencies in an attempt to be “the one” agency that is best suited for funding; it’s also well known that they distrust one-another, as well as the intelligence they create and/or report upon. The competition that exists between these agencies places all of us at risk and results in massive amounts of taxpayer money being flushed down the drain.

The American Taxpayer, as Mitch pointed out, is experiencing the lowest tax rates that we have witnessed for decades, and with that in mind, the GOP is constantly promising to lower taxes. How can anyone expect to address the budget crisis we are in by lowering taxes? Can’t those idiots add and subtract? It’s impossible to lower taxes and expect to lower the deficit. The true definition of insanity is to perform the same thing over and over again and expect a different result. Our tax base was eviscerated by greedy corporations who were already highly profitable that decided to outsource American manufacturing as well as some of our most critical high-tech jobs to foreign countries, all of which was aided and abetted by the government, Congress, and the MSM. Their actions were ruled by the marriage of corporations, greed and politics, and now their unmitigated greed has evolved to the extent that they want more, even if it is at the expense of those that depend on Social Security, Medicare, Food Stamps, and any/all of the safety-net programs that distinguish industrialized nations from Third World countries. Fascism and authoritarian governance has engulfed Washington and is poisoning the future of our children and grandchildren as they spit on those whom originally built this once great nation. As Mitch stated in his opening quote, they (the enemy) believe we are simpletons and can do as they please, all the while, using the tired rhetoric that they are “protecting us from Terrorists.”

From what we have witnessed lately, it is Congress, the Elites, and Corporations whom “own” our legislative bodies as well as the United State Supreme Court who are terrorizing the American people – and it has to stop. The people have to awaken to the fact that a huge group of millionaires/billionaires whom create and vote upon our legislation do not represent anyone but themselves, and those who believe differently are either “sleeping with the enemy” or are downright ignorant because they refuse to turn-off their televisions and thus disable the immense propaganda machine we refer to as The Mainstream News Media, who are just as guilty and complicit as those in Congress and other high places that are participating in a coup against our nation via legislation rather than using bullets and violence. Depending on whether or not it is the people or the fascists who eventually gain complete control of the United States, our MSM should remember the Nuremberg Trials and how they found those who incited violence and were essential to Hitler’s rise to power and eventual destruction of the German State were found guilty of criminal behavior, some so shocking to the conscience that one particular individual was executed, and appropriately so! Those who have murdered the Fourth Estate by and through their quest for power and greed need to remember their fate and know that the American people will one day hold them accountable as well as those elected officials that have sold-out the people and now represent nothing more than money and power rather than those whom sent them to represent us. The people who built and maintain what is left of a nation which is on its way to financial and moral disaster – thanks to American Fascism/Theocracy and all those that envision their ideology for the “New Amerika.”

William Cormier

The GOP’s Budget Plan Will Make The Obama Conundrum A Reality – The Only Solution Is To Vote Every One Of Them Out Of Office

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