Tag Archives: National Deficit

National Debt – Could a tax of just 1% eliminate our national debt?

Rep. Chaka Fattah (D-PA) has offered a national debt reduction plan: 1% of every transaction (or 1 cent on the dollar) — aka H.R. 1125, the Debt Free America Act.

Fine print: those earning under $250,000 get a rebate.

Fattah claims that his plan retires the national debt within 10 years and shows the way to overhauling our tax system.

So, Fattah has been drinking from the same water fountain as the wishful thinking Republicans that would cut taxes in order to pay off the debt — because we would all run out and magically buy so much stuff that the new less tax revenue would multiple like voracious rabbits and overwhelm Washington with hundreds of billions of new little tax rabblets.

I don’t think so.

For Fattah’s plan to make sense it would need to be closer to 5-6% WITH NO EXEMPTIONS for anyone.

In 2010, the interest alone on our national debt  was $413,954,825,362.17 billion.

A 1% tax would require a $40.2 trillion GDP just to handle the annual interest payment.

Since our GDP is $14.4 trillion then the tax would have to be at least 3% just to handle the interest payment.

A 6% tax would pay off the annual interest and reduce the debt by roughly $400 billion per year.

And for any of this to make sense we need to factor in that much of the wealth within that $14.4 trillion GDP escapes taxation — such as the rebate for those earning $250,000 or less per year, and less not forget all those folks with expensive CPAs and software programs to maximize their deductions for other things.

Calculators and calculations should be required of all solutions. Representative Fattah shows absolutely no fiscal calculations on his website announcing his plan. Fail, but an idea in the right direction.

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Conservative schism in the fight over tax sharia and corporate welfare

“For anti-tax purists, including many in the Republican Party, … measures that roll back corporate subsidies, individual deductions or loopholes of any sort without comparable tax cuts elsewhere are considered tax increases.”
Washington Post, 2011.04.15

Conservatives are beginning to divide into pragmatists and dogmatists as they move to quickly address the impending debt ceiling reaching its limit at some time in May 2011 and to begin negotiations over the 2012 budget which should be relatively complete by late July 2011.

Some tried and true conservatives believe that corporate welfare — the subsidization of business operations, or discounting of taxes due — must be eliminated if we are to move towards a balanced budget and reduced deficits and national debt.

Willingness to sacrifice corporate welfare includes Saxby Cham­bliss (R-Ga.), Sen Mike Crapo (R-Idaho), and Sen Tom Coburn (R-OK) as well as support from such conservative-movement fixtures as the Heritage Foundation, and the Wall Street Journal editorial board.

After Reagan agreed to raise taxes to offset huge growth in government defense spending, Grover Norquist of ‘Americans for Tax Reform’ gave us the Taxpayer Protection Pledge in the mid-1980s, which asks Republican lawmakers to take an absolute oath that they will not vote for any tax increase of any kind.

Norquist’s pledge has become dogmatic doctrine for the Republican Party.

Norquist now finds this dogma being challenged and he is personally being branded with the conservative buzzword of the year: sharia — Norquist is now being publicly called the “chief cleric of sharia tax law.”

Read more: http://www.washingtonpost.com/politics/no-tax-hike-pledge-creates-republican-rift-potential-roadblock-to-deficit-deal/2011/04/13/AFgWFdfD_story.html

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NATIONAL DEBT – The End Run: S.163 and H.R. 142, aka ‘Full Faith and Credit Act’ or ‘Pay China First’

NATIONAL DEBT – The End Run – Within 6 weeks the U.S. government will run out of money. There are two bills being pushed by Republicans that require close watch: S.163 (Senate) and H.R.421 (House). If these pass then we should expect Republicans to vote not to raise the national debt.

These bills are called the ‘Full Faith and Credit Act’; passage requires that the government pay our creditors first (China et al) and then adjust satisfaction (payments) to all other federal debts: national budget, social security, medicare, wars, etc.

As a conservative I believe in balanced budgets, although balanced budgets are not uniquely a conservative concept.

What successful passage of these bills would do, prior to any national debate on bringing our debt under control, would be to force the federal government to radically slash federal programs. The real question is whether programs would be slashed equally — all priorities being of equal priority to someone else — or whether certain programs would be exempted, like defense.

If defense is included, an across the board expenditure reduction may be 20-22%. Without defense included then all non-defense programs would probably face almost 40% cuts.

The short version explanation of what these bills do: allows Republicans to vote not to raise the national debt level and then force the government to pay our creditors first (China et al) and then to slash any remaining expenses (social programs) so that the expenses match taxes collected.

It does not say that defense will be spared, but that is the Republican way, and Republican leadership have declared that defense will not be touched. To the Tea Party’s credit many Tea Partyers have been vocal that defense must be on the table.

I support the concept of both bills if it were implicit that ALL federal expenses were to be cut equally. But that is most unlikely.

It is also most unlikely that Republicans would engage in any real dialogue or negotiation of federal budget and national debt reduction discussions if these bills pass without there being an agreed upon federal expense reduction agreement in place first.

The Democrats would be fools to allow these bills to pass just so the Republicans could pillory them on being weak on defense by cutting defense equal to other federal programs. Yet the majority of the debt and discretionary spending causing our massive national deficits is directly attributable to defense and to security which represents $2 out of every $3 of discretionary spending.

Text of Senate Bill S.163
http://thomas.loc.gov/cgi-bin/query/z?c112%3AS.163:

Text of House Bill H.R. 421
http://thomas.loc.gov/cgi-bin/query/z?c112:H.R.421:

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DEBT & DEFICITS | Cut Your Stuff Not Mine — Republicans Most Resistant To Cuts. Go Figure.

NBC and the Wall Street Journal (WSJ) conducted a poll to see who supports what from the Deficit Commission’s preliminary list of recommendations.

One amazing survey finding: Republicans were more negative than Democrats on the plan, which cut just about everything.

Nearly half of Republicans called it a “bad idea”. Only one-third of Democrats saw it that way.

Republicans have been hot to trot on making cuts … but if they don’t like what the commission proposed and they can’t name any specific cuts that they would make on their own … then what is the plan?

Read Story http://online.wsj.com/article/SB10001424052748703688704575620891838063332.html

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