Budget Lies and Distortions

Budget Lies and Distortions
By Bruce Bialosky
7/11/2011

It’s amazing how often an absurd idea becomes an article of faith among Democrats, who then – with the help of their puppets in the media – repeat it over and over again. Not too long ago, seemingly intelligent adults believed that playing dodge ball at elementary school was the causing undo harm to the psyche of American youth. Today’s nightmare – and if you believe our President, the reason for the budget imbalance – is corporate jets. Obama has become so fixated on the subject that he mentioned it six times – yes, six times! – in one press conference.

The President seems to have a short memory. In 1991, George H.W. Bush mistakenly agreed to a 10% luxury tax on autos, furs, boats, and jewelry. The tax brought in almost no revenue while destroying thousands of good manufacturing jobs, including 480 well-paid positions at the Beech Aircraft Company. The tax, which some propeller-head economists projected would collect $6 million every year, actually brought in the princely sum of $53,000. Fortunately, a wiser Congress repealed the tax shortly thereafter.

President Obama and his over-educated cronies think that potential jet buyers will behave in the same manner after the depreciation schedule for these non-commercial jets is revised. That is never true. This change will bring in nowhere near the $3 billion over ten years that its proponents claim. The supporters of this ludicrous proposal never once considered the revenue lost as a result of decreased economic activity, the (predictable) reduction in manufacturing and service jobs in the airline industry, and higher costs for unemployed workers.

Then there’s the budgetary practice of projecting revenues for ten years, which leads many people to speculate whether they have Sister Anasztazia and her Ouija Board locked in a basement somewhere. These people really think we should fall for this fantasy – as if anyone knows what economic conditions will be like ten years from now. After all, Congress has this bad habit of changing tax laws and budget priorities every year, so what good are these ten- year projections anyway? The federal government rarely even get one-year budgets accurate! This could be vastly improved if the government adopted zero-based budgeting, in which every agency and department starts from zero each year. Right now, it’s “We spent $10 billion last year, so give us $11 billion this year. Don’t worry, we’ll spend it responsibly.”

There’s been some talk of changing to two-year budget cycles. Democrats in the Senate, led by the always dependable Harry Reid, clearly endorse this idea, seeing as they haven’t even submitted a budget for over two years. They probably really like the CBO’s (Congressional Budget Office) projections, which go out 35 years. Hopefully, we’ll be retired by then, even though we’ll all be paying for these ridiculous deficits for the rest of our lives. Maybe even longer than that – this tends to dampen one’s desire for reincarnation.

But I digress. Our President still hasn’t identified any specific cuts in expenditures, claiming only that we need increased revenues as part of a balanced approach to a budget resolution. He has perfected the art of keeping a sober face while delivering the same tired liberal nonsense about all the imminent anguish for babies, puppies, college students, grandmas, disabled children, aardvarks and a myriad of other helpless creatures if “The Rich,” Hedge Fund operators, corporate jet flyers, and Oil Barons don’t pony up more money.

Obama’s goal is not to increase economic growth, like the Bush Administration did from 2003-2006, when federal revenues shot up $750 billion even while tax rates were lowered. What Obama wants is a permanent expansion of government. With the help of Reid and Nancy Pelosi, he has overseen an explosion in federal spending. And now what he craves are new taxes to pay for everything, all the while warning of impending doom if any government program – no matter how pointless or inconsequential – is reduced or, God forbid, eliminated. Only because the public is so agitated about the tremendous deficits is Obama even suggesting $3 expenditure reductions for every $1 of additional revenue.

Let’s hypothetically say that Republicans agree to Obama’s 3-to-1 ratio (unlikely as that may be), and that they decide to cut the $1.5 trillion deficit by $600 billion next year. Under this proposal, the federal government would take $150 billion in additional taxes out of the private sector (accompanied by $450 billion in spending cuts) to reduce the deficit by $600 billion. Now seriously, do any of you really believe that $150 billion would be better spent by the federal government than by individual Americans? Is there anyone – other than perhaps Paul Krugman – who believes that having Obama and his cronies squander this money would be better for the economy than having it spent or invested by private citizens? But more to the point, does anybody still believe that if the government imposes new taxes that will supposedly bring in $150 billion, people will not alter their behavior in response, resulting in revenue far short of what was projected?

In addition let us focus on the new in vogue term – tax expenditure. THERE IS NO SUCH THING AS A TAX EXPENDITURE. The person who came up with this odious term should be shackled in the town square and flogged for their manipulation of the English language and the development of this pathetic term. In its essence it means that all monies belong to the government and any means by which it ends up in your hands is a gift from the anointed.

Then there’s the issue of borrowed money. A good chunk of our debt is owned by the Chinese, but actually more is owned by U.S. citizens. When so much debt is issued to cover federal deficits, capital markets that finance private industry become squeezed, and businesses can no longer grow (nor hire new employees). Liberals just don’t understand that using debt to finance their cherished programs cripples growth in the private sector, and ultimately reduces the tax revenue needed to pay for these programs.

For the first time in many, many years, we have elected public officials standing up at the federal and state level and telling us the truth: we cannot have our cake and eat it too.

People like Paul Ryan, Scott Walker, Chris Christie, and even the mayor of Atlanta, Kasim Reed, have put their necks out and told people that we cannot continue this pattern of debt and overspending. Many other Americans are emboldened by the courage and honesty of these men. Every responsible citizen hopes that their message seeps its way into our national principles before it’s too late.

Regrettably, there are still people like President Obama, Harry Reid, and Chuck Schumer who prefer to use fear to maintain the status quo. Now is the time for the grown-ups to stand tall and firm, and not be swayed by demagoguery. Victory is in sight for the American people – let us march forward together and slay the deficit dragon.
_____________________________________________

To read another article by Bruce Bialosky, click here.