We are
now in the silly season of American presidential politics.
Both
parties have nominated their candidates for president, written their platforms,
held their conventions, made endless pleas for donations to run political
advertisement. Heeding the advice of Quintus Cicero*, they have distorted
and disparaged the record of their opponents, avoided clear discussion of the
issues, promised everything to everybody, and lied liberally about everything.
Let’s
look at the United
States ’ Federal budget for 2012
Tax
receipts, according the budget, are expected to be 2.469 trillion
dollars. A small increment of additional funding is found in the
budget as line item 950, Undistributed Offsetting Receipts, adding about 98
billion dollars. Total funding is thus expected to be $2.568
trillion dollars, or about 17 percent of GDP.
Spending is shown in the
following chart. Total spending is $3.894 trillion, or 26% of GDP.
The total
Federal deficit for 2012 is about 1.3 trillion dollars. Federal spending exceeds tax
revenue by an astonishing 51%.
Federal
debt held by investors (“public debt”) is now about $11 trillion dollars, or
about 72% percent of GDP. Public debt is growing at a rate of about
20 percent per year, a rate that would double the debt in 3 ½ years.
Foreign investors hold $5.3 trillion, or nearly half of the public
debt. Obligations between government agencies, such as the social
security trust fund, amount to an additional $4.7 trillion, bringing total
Federal debt to $16 trillion (107% of GDP).
Against
this backdrop, Republicans propose an amendment to the constitution requiring a balanced budget. Mitt
Romney proposes to cut
marginal tax rates by 20 percent. He also proposes raising Defense spending by about 5% (excluding war
expenses), adding 100,000 members of the military, modernizing weapons, and
building more ships and aircraft. He said that budgetary
changes will not affect current retirees or veterans.
Defense, Social Security, Medicare, and Interest are about 60 percent of Federal spending. If all tax revenues were applied to these categories
with no reductions and a balanced budget, as proposed by Republicans, it would
eliminate 83% of all other government functions. This is without even
considering the proposed tax cut.
We
cannot eliminate 7/8ths of the functions of the Federal government to pay for
defense, medical subsides and transfer payments to the elderly. It is absurd.
Democrats
have been equally negligent in providing a clear blueprint toward solution of
the crisis.
Both
sides are simply promising everything to everybody.
It is clear that any solution to the budget crisis will require a combination of increased taxes, cuts to defense spending, and reductions in elder care. And these changes must be implemented sooner rather than later.
Mitt Romney
No comments:
Post a Comment