To truly understand the state of the nation’s finances, you only need to take a gander at the latest Monthly Treasury Statement. In October and November, the first two months of fiscal year 2019, U.S. government collected a record $458.653 billion in federal taxes. At the same time, Washington spent a whopping $764.046 billion. So, if you add, subtract, and carry the one, that’s a deficit of $305.393 billion. Only in the swamp can politicians take a record amount of taxes and still be in the red.
This has been the case for decades, politicians from both parties mismanaging the public purse. For the deficit hawks who expected something different, they are more likely disappointed with this class of Republicans who continue to abandon fiscal conservatism in favor of political expediency to cling to power every 24 months.
But one non-partisan federal agency thinks it is time that policymakers put on their big boy pants, pull up their bootstraps, and start taking the nation’s fiscal mess seriously.
The Congressional Budget Office (CBO) has 121 options to tackle the deficit – and maintaining the status quo ain’t one!
Recently, the CBO released its annual compendium of proposals to bring down the swelling deficit over the next ten years. With the budget hole totaling just under $800 billion – and growing – the CBO has presented a panacea of new taxes, tax hikes, cuts, and entitlement reforms. Since these recommendations typically draw the ire of elephants and donkeys, creating the fiscal calamity the nation is in now, the report will collect dust and reckless spending will persist.
That said, if you have some hope that Washington can turn things around, let’s look at some of the most prominent suggestions.
The number crunchers think there’s plenty of room for cuts. Despite incoming Speaker of the House Nancy Pelosi (D-CA) noting during the last government shutdown that the cupboard is bare, the CBO says otherwise.
First on the list is the Pentagon’s budget. The CBO purports that the Department of Defense could reduce its expenditures by as much as $51 billion through 2028. Like entitlements, the DOD budget is usually off-limits for each side of the aisle. President Donald Trump, though approving an increase, has been critical of the massive spending occurring at the Pentagon.
In 2017, the president signed a mandate for NASA: Return to the moon, travel to Mars, and make space exploration a U.S.-led effort. However, the CBO believes it would be fiscally responsible to pass on the final frontier because the country could save $89 billion through 2028.
For decades, the federal government has attempted to influence geopolitical policy, attain allies, and advance specific causes by shelling out billions. Not anymore, if the CBO had its way. Researchers propose reducing international affairs funding – money for diplomatic programs and global health initiatives – by 25% beginning in 2020. This would create a savings of $116 billion.
Head Start, the early childhood education program, has been a disaster since its foundation in 1965. It has only gotten worse in recent years. While the White House’s 2019 budget would allocate more money to the federal pre-K program, the CBO wants to eliminate it to save $92 billion within the next decade.
What about education and housing for low-income families? The CBO would scrap the Housing Choice Vouchers Program, yielding a savings of $125 billion. It would also downsize Pell Grants, resulting in $62 billion in savings.
Anytime a politician – incumbent or candidate – even hints at entitlement reform, they are put through the meat grinder and sent to the gallows. Speaker of the House Paul Ryan (R-WI) was portrayed as a Ladykiller in 2012 because he thought it would be in the nation’s best interest to put forward some sensible changes to Social Security.
But reform is an inevitability due to its size and the pending insolvency – and, no, higher taxes on the rich will not solve the problem.
What will? The CBO thinks these solutions can rescue these programs and save taxpayer dollars:
- Cap federal Medicaid spending ($705 billion).
- Reduce federal Medicaid matching rates ($394 billion).
- Increase premiums for Medicare Part B and D ($418 billion).
- Raise payroll tax rate for Medicare hospital insurance ($1.79 trillion).
- Boost payroll tax rate for Social Security ($1.42 trillion).
- Enhance the maximum taxable earnings for the Social Security payroll tax ($1.22 trillion).
These will be nearly impossible to enact because politicians need to save their own skin.
Americans are inundated with taxes. A day doesn’t go by without a politician at any level of government conjuring up new ways to nickel and dime the country. Liberty Nation recently reported that California is considering a levy on text messages, leaving many residents to ROFLMAO.
Moving forward, the CBO purports that a mix of new taxes and hikes could generate more revenues and potentially shrink the deficit. Some of these consist of increasing individual income tax rates ($905 billion), raising excise levies on motor fuels ($515 billion), and introducing an excise penalty on overland freight transportation ($358 billion).
But the three most egregious and controversial tax policy proposals are:
- A 5% value added tax ($2.97 trillion).
- A charge on financial transactions, like the purchase of stocks ($777 billion).
- A fee on emissions of greenhouse gases, otherwise known as a carbon tax ($1.1 trillion).
Should the Democrats seize control in 2020, then it is conceivable that these could be in your future.
Same Song and Dance
Nothing ever really changes.
It’s like a dusty oil painting of Teddy Roosevelt that’s been hanging behind the barkeep you’ve frequented for a long time and only now just noticed – and you still don’t like it.
Administrations come and go, and the two parties swap power every other election cycle. Nothing ever really changes. It’s hard to fault President Trump because he never campaigned on a fiscally conservative platform. Yet deficit hawks may have anticipated a change in attitude based on the rhetoric of “drain the swamp.” Two years in, there’s a multi-billion-dollar budget hike here, a new federal program there, and another gaping hole way over there. It’s always the same.