Raising Revenue in a Recession

The phrase ‘debt ceiling’ has probably been used more often on the airwaves and in print over the past two weeks than it has been in the past two decades. The public seems to be more in tune with the political wrangling over this issue than it has ever been in the past, which is making it pretty difficult for our elected officials to simply pass something for the sake of doing business-as-usual.

As observers to the strange dance that is going on in Washington, it surely seems that everyone there has lost their senses and that nothing will ever be accomplished. In order to fully appreciate what is going on however, there are a few things we must keep in mind.

Few of us can remember a time that Congress has debated and argued as much as they have in the past couple of years. Understandably, people get exasperated by watching this process and the news media continues to seek ‘compromise’. Don’t fall into that trap. What you are actually seeing is a rarity, elected officials making a stand on principle and keeping their campaign promises.

As is usually the case, the news media tends to report that Republicans are unwilling to compromise with the President to reach a deal and threatening default rather than reporting that the President is holding out for tax increases and threatening default if he doesn’t get his way. Fortunately, an increasingly aware public sector is less likely to fall for such rhetoric. This increased awareness is making a real difference in Washington, giving newly elected members enough support to allow them to make principled stands that we are not used to seeing.

A case in point would be the recent vote in the House on Cut, Cap and Balance. While the bill did pass, there were some Republicans who voted against the measure. Rep. Morgan Griffith was one of those who opposed the measure. In response to my questions regarding the issue, Rep. Griffith responded: “It’s clear that Washington has a serious spending problem. I support a Balanced Budget Amendment, but if we want to make America better for our children and grandchildren, that must be coupled with significant spending cuts now. The reason I voted against Cut, Cap, and Balance was because, in my judgment, the year one cuts did not go far enough.”

While I certainly agree with Rep. Griffith that the currently proposed cuts do not go far enough, I will have to agree with President Obama that we need to bring in additional tax revenues. Where the President and I part company however, is in the right way to generate those additional revenues. The best plan the President can come up with seems to be higher tax rates, despite his assertion less than two years ago that “You don’t raise taxes in a recession”. I prefer Sen. Marco Rubio’s position that the best way to raise tax revenue is to increase the number of tax payers.

We currently have a vast untapped source of tax revenue in this country, and the President is doing his dead level best to make sure those revenues remain out of reach. According to the Bureau of Labor Statistics, 25.3 million people are either out of work or underemployed. By moving the majority of these people from the ranks of the unemployed to the workforce, we will create new taxpayers and allow them to contribute to the economic recovery. The problem with this solution will be to find a way to create this shift in employment status.

As was recently reported at Business Insider Steve Wynne, CEO of Wynne Resorts spoke out in a conference call about the reasons for the weak economy:

“And I'm saying it bluntly, that this administration is the greatest wet blanket to business, and progress and job creation in my lifetime. And I can prove it and I could spend the next 3 hours giving you examples of all of us in this market place that are frightened to death about all the new regulations, our healthcare costs escalate, regulations coming from left and right. A President that seems, that keeps using that word redistribution. Well, my customers and the companies that provide the vitality for the hospitality and restaurant industry, in the United States of America, they are frightened of this administration. And it makes you slow down and not invest your money.”

The answer is pretty simple. We know that the government does not create jobs that will help the economy, but it is intuitively obvious that government policies can have a profound effect on the private sector’s ability to create jobs. It is also abundantly clear that the policies of the Obama administration are having a major negative effect on job creation. How hard is it to understand that we need to change those policies in a way that will reduce the burden from the job creating machine that our nation depends on?

A Balanced Solution for the Debt Crisis?

These are historic times for our country. We are standing on the edge of a cliff and a sizable portion of our elected officials want us to continue walking in the same direction. Thank goodness we elected those right wing cult fringe Tea Party Republicans who are standing firm in their resolve to turn our country back in the right direction. One of those Republicans is my Congressman, Rep. Morgan Griffith who represents the 9^th district of Virginia. Rep. Griffith is serving his first term in Washington, and he is proving to be a genuine conservative among many who only pretend.

It is a sad truth that there are many in Washington who try to convince us that they are conservative when in fact they are not. Fortunately, it is as easy to recognize a fake conservative as it is to recognize a New Yorker faking a Southern accent. All you have to do is listen to them talk.

A few days ago, it was reported that a bill was being voted on to repeal the silly ban on incandescent light bulbs. As I was preoccupied with other issues, I didn’t pay much attention to it, assuming it would be a no-brainer and the ban would be tossed out. Imagine my surprise when the bill failed, and to make matters worse I discovered that my Congressman was one of those voting against the measure. Knowing his political leanings as I do, I knew there had to be a reason, and in a press release, Rep. Griffith explained that his no vote was because the bill contained provisions that would have violated the 10^th Amendment to the Constitution. Frankly, I had to read the press release twice before I could believe that a member of Congress is actually aware of and concerned about violating the 10^th Amendment!

A classic example of a fake conservative can be found in the ranks of the Senate’s famous “Gang of Six”. Sen. Saxby Chambliss of Georgia has long been considered a conservative by the media and the pundits. Those of us who know him however, are not surprised by his willingness to sell the country down the river. When the TV cameras are on him, and when he’s standing in a room full of Republicans, he knows all the key words and tricky phrases needed to pass himself off as a right-winger, but behind the scenes it has always been apparent that he was a Democrat at heart. He has done an admirable job of hiding it all these years but his defection to the Progressive side comes as no real surprise to me. It is disappointing however, that he chose this crucial time to come out of the closet.

Now is the time for the real conservatives in Washington to stand up and stand tall, and for those of us who appreciate their courageous stand to let them know that we are behind them. Republicans have the upper hand in this debate, but the news media is doing its best to convince them otherwise. Have you noticed that they constantly report that Republicans are refusing to compromise because they won’t accept tax increases, but they never say that Democrats are refusing to compromise because they won’t give up their tax increases? It is clear that once again, the word ‘compromise’ means giving Democrats everything they want.

I am proud of our freshmen Republicans for standing their ground on this issue, and I can only hope they will continue to do so. If the Democrats continue to threaten the country with default if they don’t get their way on tax increases, Republicans need to up the ante. I would suggest they agree to the Democrats’ demand for a “balanced solution”, and come up with a proposal that includes spending cuts and tax cuts.

Washington vs. Main Street

Have you ever tried to do anything involving a government program? If you have, you most likely discovered that the government has a knack for making things harder than they have to be. This is certainly the case now as Congress debates raising the debt ceiling. I have often heard the idea that we just as good a job of electing our Congress by selecting random names out of the phone book, and I am beginning to think that this is literally true. Sometimes, the simple answers are the best. For some reason Congress appears to be totally unable to see the simple answers and dive headlong into complicated debates that are totally unnecessary.

Part of the problem is that words don’t mean the same thing in Washington that they mean in Main Street America. For instance, when most Americans cut their spending, they spend less money; while in Washington, a spending cut results in more spending. Of course, for most Americans the word ‘limit’ refers to a line which cannot be crossed.

Let’s inject some common sense into this debate. We can begin with the notion that there is a ‘debt ceiling’. Up until this point the ‘debt ceiling’ was simply a point at which Congress was required to gather together and reaffirm their earlier decisions to spend way too much money on stupid things we don’t want or need. We are rapidly approaching that point again, but this time there are actually members of Congress who don’t understand this point and are acting as though the debt ceiling actually represents a limit on our national debt. Did they not get the memo?

My suggestion here would seem to be controversial, but I think it is entirely possible to set a limit at which Congress is not allowed to spend any more of our money. I know this might seem to be entirely unreasonable to some in Congress, but I feel sure that they can eventually come to terms with this once they get a grip on another concept known as ‘spending cuts’.

Yes, I said spending cuts, and I’m not talking about smaller increases in spending spread out over a dozen or so decades. What I’m talking about is a simple formula which begins with taking the total amount of money in the 2011 federal budget ($3.83 Trillion) and then reducing that figure by a reasonable amount such as 10%, which then results in a 2012 budget total of $3.447 Trillion. Of course, this still leaves us with a deficit, so our debt will still continue to increase. We will then project what our expected revenues will be for 2012, forecast the amount of total debt, and set the debt ceiling at that level. On a quarterly basis Congress will be required to balance the books and make sure our revenue projections are in line with reality. If, during that time our tax revenue fails to reach expected levels, Congress would be required to revisit the budget and find additional cuts to eliminate the need to borrow in excess of the debt ceiling.

If we take a look at current income to the government and divide that into current spending levels, we will arrive at a number that represents the level of our excess spending in percentages. For instance, for fiscal year 2011, total direct revenue to the federal government is projected to be $2.57 Trillion, and expenditures are set at $3.83 Trillion. Using my formula, we can see that we are spending 149% of what the government takes in. Here on

Main Street

, that is a number that is unsustainable and entirely inexcusable. Now that we know where we stand however, we can set goals to reduce that figure that will put us on a path to a balanced budget.

In order to reach those goals, it is time for America to decide what the proper role of the federal government really is, and limit our spending to only those areas that fit the description. The guide of course, would be the Constitution which clearly defines the authority given to each branch of the government. As I read the Constitution, it appears to me that Congress has the authority to spend money when the government receives goods or services. Obviously, there are those who would disagree with my assessment, and that is perfectly okay with me. We need to have the discussion however, and come to a logical agreement based on the Constitution.

When we do this, we will find several things

1.      Some items are allowed by the Constitution, and if there is an identifiable need we should continue the programs while examining them to determine if they are working efficiently and effectively. If the answer is no, we need to make the effort to change the situation.

2.      Some items are not allowed by the Constitution, but they are worth doing anyway. In this case we have the choice of either amending the Constitution to give Congress the authority to implement these programs, or we need to find a constitutional alternative.

3.      Some items are not allowed by the Constitution, and are not worth pursuing. Naturally, these programs need to be scrapped.

Can we ever accomplish such a wide reaching plan? It will take time, but with the right people in Washington, it is possible. The key is for the American people to start demanding more of our elected representatives.

Independence Day Remembered

Most of us are busy making our plans for the upcoming holiday we have all gotten into the habit of referring to as the 4^th of July. I have decided to make a concerted effort to calling the holiday by its real name, Independence Day.

It is sad to note that a recent poll revealed that 1 in 4 Americans could not name the country from which we declared our independence (Great Britain for those of you in that number). This recent poll however, isn’t the only evidence we have that Americans are forgetting our heritage. We only have to spend a little time reviewing the shift in attitudes and values over the past several decades to get a clear picture of the extent to which we have forgotten the lessons of history.

There was a time in America when it was normal to be patriotic. Where has that America gone? It has become common to read news articles about someone being denied the ‘privilege’ of flying the American flag, and even our President acts as though patriotism is a character flaw. Our first lady has only been proud of her country for about three years now. Perhaps this shift in attitude is a result of the fact that many Americans have lost sight of what America stands for and why.

This great nation was born on July 4^th 1776 when the Continental Congress voted to declare our independence from Great Britain, then under the rule of King George III. The reasons for doing so were laid out in the Declaration of Independence, written by Thomas Jefferson. While our Constitution is the document that gives shape and form to our federal government, it is the Declaration of Independence that gives it the spirit that has made America great. Our nation would benefit greatly if each of her citizens would take the time to read this document every year on the day we celebrate its signing.

While the entire document is important and worthy of study, it is the preamble that gives us the basis for the creation of what has become the greatest nation on Earth.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

This simple but powerful statement makes it clear that, in the view of our Founding Fathers, our rights as human beings come not from government, but from God. They have established that these rights are unalienable, which means they cannot be taken away by law. The second sentence establishes the only legitimate role of a government, to secure, or protect, our freedom to exercise those rights; and that no legitimate government can exist without the consent of the governed.

The men who drafted the Declaration laid out the case that Great Britain had wrongly sought to take away those rights. They believed that the British Parliament had exceeded its constitutional authority with measures such as the Stamp Act and the Townsend Acts of 1767, and for that cause, the colonists had not only a right, but a duty to dissolve the ties that bound us to the Crown

Two hundred and thirty-five years ago, our Founding Fathers were a people who loved freedom and were willing to sacrifice everything to attain it. The final sentence of the Declaration clearly illustrates the commitment these men had to the cause of freedom:

And for the support of this declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our lives, our fortunes and our sacred honor.

Since that time, we have created for ourselves a government that is even more oppressive than the one our Founding Fathers sought to escape. For the sake of comfort and security, we have embraced the bonds that rob us of our freedom. We now serve a government that seizes our earnings and our property to fund programs and bureaucracies that are clearly not legitimate functions of government. We tolerate a government that dictates how we are to raise our children, and which tells us what we should and should not feed them. We work and struggle to earn enough to feed our families while those who are supposed to represent our interests live like kings while they spend our tax dollars irresponsibly and then demand more of what we earn to cover the costs.

In December of 1773, the Boston Tea Party galvanized resistance to the oppressive government of Great Britain that had exceeded its constitutional authority and helped to lead our nation to freedom. Today another Tea Party is helping to galvanize resistance to the oppressive government in Washington that has exceeded its constitutional authority. The colonists had no other means of throwing off those bonds than to take up arms and engage in a shooting war with the most powerful nation on earth, yet they had the will and the courage to do so. Because of the genius of our Founding Fathers, we are not so limited. We have been given the power of the ballot box, reinforced by our freedom of speech and assembly.

It remains to be seen if the American people have the will and the courage to throw off the shackles in which we have grown so comfortable. If we do, our children will have the privilege of living in the kind of America our Founding Fathers fought and died for. If we do not, we have only ourselves to blame.