Dems Use Creative Accounting and Denial with Federal Budget – Meanwhile, Obama suggests the VAT - How to Get our House in Order for Dummies

National Debt 2010 - from The US National Debt Clock.org graphic: Trinity.edu


A recent article fromPolitico: entitled “Dem Budget Plan Postpones Pain”, suggests that in order for Democrats to attempt to appear fiscally sound prior to the November elections, they are busy finagling the budget. In this case, drawing the budget out over a five year period in a move that portends to trim the deficit by 2015 – however, Politico notes there will be 3.9 trillion dollars in new debt accrued during the same period.

The President’s answer, a VAT (Value Added Tax) should be on the table. The President made the VAT an option during an interview this past week on CNBC. The VAT, which is in force in Europe, has appeared to have driven the economies of those participating into oblivion – the rich get richer, the poor, very poor, as a VAT is an across the board tax affecting every single citizen. The problem with instituting a VAT in the U.S. is that it is not a replacement tax for the current tax programs, including the income tax, federal gasoline tax, ad naseum. It would be an additional tax – and with the current crew in charge, any additional monies are immediately put towards the every growing government and its entitlement programs.

Were the current administration and congress in concert serious about trimming the fat and getting the budget under control quickly, there are several simple steps that could be taken in order to accomplish this seemingly overwhelming feat. The problem lays in complacency – with entrenched politicians used to a specific “lifestyle” and government agencies, for years, taking advantage of the taxpayers largesse. The concept is simple (which is why it eludes those inside the beltway)

1. Overhaul the budget process. The current budget process is a sham – each federal department receives an annual budget, should they not spend the entire budget and the fiscal year is ending, instead of returning the balance (and being rewarded for being fiscally conservative), each department must spend whatever the balance is, or they will not receive sufficient funds the following year. In other words, each department is penalized if they do not spend their entire budget. For example, if there is a surplus of $1 million dollars and two months until the budget ends, that department must use every means possible to spend that money. There is a lot of redecorating going on – at the taxpayers’ expense. Would it not be more sensible to offer each person within each department who found ways to save money and come in under budget an incentive in the form of a bonus? With a growing Federal Government, (the list of government agencies here , if each agency were able to save 10%, per year (and that is a conservative estimate), it would have an immediate impact on the deficit. It would also have the added benefit of allowing those government employees to become part of the savings process and would encourage these employees to find ways to streamline departments, ultimately creating a more efficient government.

2.In the case of a financial emergency (which we have found ourselves in), there should be an immediate end to pork. The stimulus was designed to create jobs, however, the Congers created a spending spree – on pet projects that were, in almost every instance, unnecessary given the circumstance. One can view the 2010 projects here at Citizens Against Government Waste. One will find an increase in the 2010 budget in every single Congressional District, each Congressional Representative bringing home the bacon. Including appropriates for projects involving blueberries – three Congressional reps appropriated a combined $919,000 to research blueberries – in an era where government needs to cut spending.

3. Keep the Bush Tax cuts in force and go further by increasing the individual and business tax cuts by a percentage point, allowing more money to flow back into the hands of the citizens and giving business the incentive to stick around and create some jobs. At the same time, eliminate the earned income credit that allows those earning under $48,000 to pay no tax at all, rather receive monies above any taxes they may have been liable for in the first place.

To recap: 1) Restructure the budget process whereby saving the Federal government money is rewarded, and departments are not penalized for the following budget year, 2) no pork that is not specifically geared towards a project that is obviously necessary (as in a bridge about to collapse), 3) tax cuts across the board coupled wit the elimination of tax rebates to those who pay no taxes.

If Barack Obama, Nancy Pelosi and Harry Reid can push through a Health Care Reform bill in record time (which is rife with problems, and the majority of Americans are in favor of repealing), then certainly the steps above could be implemented in the same span of time and one could bet the house that it would have bi-partisan support (or at the very least, the support of the citizenry.)

Playing fast and loose with the budget, adding tax after tax and creating more programs at a time when we need to tighten our fiscal belt, is a recipe for disaster.