Budget and Taxes

Taxpayers beware: your fiscal situation might feel good today, but don’t be fooled.

There are ominous flashing red lights on the horizon. The Budget, plus Earmarks overlaid with the Tax Cuts and Tax Extenders, plus the Trade Wars on multiple fronts, should cause all Republican voters to pause before automatically voting for a questionable ‘fiscal conservative’.

As Republican former Members of Congress, one of the most painful observations about the last five Republican-led Congresses is the consistently flagrant violation of a core Republican-tenet: fiscal responsibility.

This fiscal irresponsibility flies in the face of the Republican Party’s 2016 platform vow to “eliminate as many special interest provisions and loopholes as possible and to curb corporate welfare.” Saying one thing, doing another?

The 2017 Tax Act and the 2018 Budget were rushed into law without sufficient hearings, bi-partisan collaboration or apparent concern for their long-term impacts on the vast majority of Americans.

In September 2019, the US budget deficit widened to $1.067 trillion for the first 11 months of the fiscal year, an increase of 19% over this time last year, according to the Treasury Department.

The Committee for a Responsible Federal Budget estimates that the 2017 tax cuts [combined with new spending by Congress will add more than $4.1 trillion to the federal debt by 2029.

In 2018, Federal tax revenue declined 0.4%, the first full calendar year under the new tax law, despite robust economic growth and the lowest unemployment rate in nearly five decades.

The Treasury Department reports federal revenue totaled $3.33 trillion in 2018, while federal spending totaled $4.2 trillion, a 4.4% increase from the previous year.

● The current tax cuts function like a mid-term “election bribe” that can blind us to the financial fine-print embedded within the 726-page “tax reform” law and the 652-page government budget. (Many Members of Congress and Senators admitted to not even reading the bills - just ‘going along, to get along’.)

  • Congress’ financial actions are driving us closer to a financial cliff
  • Unless we select fiscally responsible Senators, there is a growing probability that America will have a growing deficits, a surging national debt and back-breaking interest payments, as described below
  • It is very possible that American taxpayers will again risk the loss of their jobs, homes and savings, while again having to bail out both the public and private sectors.

Of course a few of us can appreciate today’s gains in the stock market. But, at what cost to society as a whole? We all know that what goes up, must come down.

Gee-Whiz Facts: THE TAX CUTS

Below is a very small sample of financial decisions that could dramatically harm our ability to buy groceries, pay our mortgage, send our children to college, save for retirement and much more.

  • Banks got rich - According to the FDIC, Q2, 2018 bank profits were the largest in history - a record $60.2B – more than half of which resulted from the Republican-enacted Tax Act
  • Our individual tax cuts are temporary but corporate tax cuts were made permanent!
  • If we own a home or want to buy one, the mortgage interest we can deduct was reduced substantially in the 2017 Tax law
  • The 2017 Tax Bill also limits the amount of property taxes, state income taxes or local sales taxes that we can deduct
    • These points are taken from the Congressional Budget Office’s (CBO’s) own analysis

TAX EXTENDERS

Tax extenders are actually “tax-cut extenders.” They extend the duration of expired legislative gifts and are slipped into much larger funding packages with little or no debate.

While some extenders provide needed support, e.g. for disaster areas, most are hand-outs of our tax dollars to companies, industries, districts or states that specific legislators favor.

Estimated cost over the next decade: roughly $16B in lost revenue that the federal government could have used for infrastructure, veterans’ healthcare or other critical-need areas.

To cite just a few of the several dozen extenders enacted:

  • Senate Majority Leader Mitch McConnell got a tax break for thoroughbred racehorse owners!
  • The tax bill preserves the subsidy for golf course maintenance, much to President Trump’s delight.
  • The tax bill gives new tax breaks to private jet owners for expenses they incur for maintenance, storage and fueling their jets.


THE NATIONAL DEBT

The national debt is the total amount of money that is owed by the federal government based on the sum of its cumulative deficits and surpluses from both Democratic and Republican administrations. To both finance its projects and to fulfill its debt obligations, the government borrows money from foreign governments and private lenders. According to Taxpayers for Common Sense:

  • Today’s $20.5T debt has ballooned during the 2008 – 2018 Republican-controlled Congresses. It now exceeds the size of the U.S. economy – at about 105% of gross domestic product
  • Over the next 10 years, our national debt is projected to increase by more than $7T!

For a sobering real-time look at how quickly our national debt (and other financial indicators) are increasing, take a look at the U.S. Debt Clock

Annual Interest Costs on the Debt - Paid by Taxpayers

The financial elephant in the room, the Republican elephant, is the net interest that taxpayers fund to service the national debt. Taxpayers for Common Sense reports:

  • 2017: $263B, which is 1.4% of GDP
  • 2018: Projected debt payments are $316B – a $53B increase in one year
  • 2028: Projected debt payments are $915B, which is roughly $150B more than all FY 2028 defense spending and represents 3.1% of GDP