Rescission

The Department of Government Efficiency (DOGE) has identified outrageous ways the federal government is wasting our tax dollars. Unbelievably Congress just re-authorized spending for these wasteful programs.

If you have been paying attention you just witnessed the Trump administration identify and cancel funding for these wasteful programs on one hand, then the Trump administration lobby Congress to pass a continuing resolution (CR) (spending bill) that funds those wasteful programs again.

 

Representative Thomas Massie and Senator Rand Paul vigorously opposed the CR. They pointed out the absurdity of defunding the wasteful programs under DOGE and then funding the same wasteful programs under the CR.

 

Defunding the wasteful programs can be done by a simple majority in Congress, but the President must initiate this process by submitting a rescission package to Congress. There is only a 45-day window under the Impoundment Control Act for these spending cuts to be made permanent by rescission, so time is of the essence.

 

What exactly is the process for consideration of rescissions?

 

Step 1: The President submits a special message formally asking for a rescission. The special message must specify:

 

• How much is proposed to be rescinded.
• The specific accounts where the rescinded budget authority (BA) comes from.
• Projects and functions affected.
• Why the BA should be rescinded.
• The estimated fiscal, economic, and budgetary impacts of a rescission, and the impact on the programs and functions of such a rescission.

The special message starts a 45-day clock. If Congress doesn’t act in 45 days, the President’s proposal expires, and the executive branch must spend the money as prescribed.

 

Step 2: Congress may draft a rescission bill in response to the President's special message, and that bill is referred to the appropriate committee.

 

Step 3: If that committee does not act on the bill after 25 days, a discharge petition for the bill is in order. The motion to discharge is privileged with a limitation on debate and is only subject to a majority vote.

 

Step 4: Once either chamber has a rescission bill (either via the committee process or discharge), they can act on it. In the House of Representatives, debate on the bill is limited to no more than two hours.

 

In the Senate, consideration of the bill is subject to a ten-hour clock for debate, which means it is not subject to the cloture requirement of 60 votes to stop debate (it is not at risk of a Filibuster). Amendments in the Senate must be germane, and no amendment may be debated for longer than two hours.

 

Step 5: If the bill or its conference report passes both chambers, the budget authority is rescinded. If the bill fails, or if the 45-day clock runs out, the President must spend the money and cannot propose its rescission again.

One hundred thousand dollars per second

On November 21st 2024 the US federal debt crossed the 36 trillion dollar threshold.

US Treasury debt to the penny

The debt crossed 35 trillion dollars on July 26th, 2024.

7/26/2024 $35,001,278,179,208.67

11/21/2024 $36,034,994,586,981.97

In 118 days the Federal Government added $1,033,716,407,773.30 (over one trillion dollars) to the national debt. Over this time period the national debt increased at a rate of  $8,760,308,540.45 per day (almost $9 billion per day),  $365,012,855.85 per hour, $6,083,547.60 per minute, or  $101,392.46 per second.

You can watch the increase in debt occur in real time (fun for the whole family)  at:

US Debt Clock

As you are well aware the larger the outstanding balance the larger the interest payment. Interest on the national debt is now larger than defense spending:

The details of this happy story are available at this link:

Looming debt crisis

Another interesting publication is available from the US Treasury:

Financial Report of the USA

Look for these word of encouragement on Page 7 of the Executive Summary:

An Unsustainable Fiscal Path 

The current fiscal path is unsustainable. To determine if current fiscal policy is sustainable, the projections based on the assumptions discussed in the Financial Report assume current policy will continue indefinitely.1The projections are therefore neither forecasts nor predictions. Nevertheless, the projections demonstrate that policy changes need to be enacted for the actual financial outcomes to differ from those projected.

On page 9 of the Executive Summary you will find this:

Conclusion

Projections in the Financial Report indicate that the government’s debt-to-GDP ratio is projected to rise over the 75-year projection period and beyond if current policy is kept in place. The projections in this Financial Report show that current policy is not sustainable.

The USA is not the first empire to find itself in this situation:

Empire Killer

On January 20th, 2025 Donald Trump will earn his self chosen nickname:

The King of Debt

Incomprehensible liabilities

A recent conversation about the US Federal Government's unfunded liabilities caused me to reexamine a statistic that I absorbed several years ago.  Boston University economics professor Laurence Kotlikoff stated that the US Federal Government's unfunded liabilities exceed 200 trillion dollars.  This number is quoted many times, and in many places, but I was not able to find any published details that provide the calculations that establish this number.

During my research, I found that there is a publication by the US Treasury each year titled “Financial Report of the United States Government” which provides financial statements for the Federal Government in a format like an annual report for a public corporation.  When reading this report, it is important to note that some of the amounts are listed in trillions and some in billions.  Also, note that trillions and billions are sometimes commingled in the same table or chart.

I am not accustomed to working with numbers this large and I was having trouble keeping the decimal places straight, so I created a chart:

The interesting details of the “Financial Report of the United States Government” are in the notes.  You will find a frank opinion in Note 24 on page 157 (pdf page 166) under the heading:

Sustainability and the Fiscal Gap

“This report presents data, including debt, as a percent of GDP to help readers assess whether current fiscal policy is sustainable. The debt-to-GDP ratio reached 100 percent at the end of FY 2020” ….  “As discussed further in the unaudited RSI, the projections based on this report’s assumptions indicate that current policy is not sustainable. If current policy is left unchanged, the projections show the debt-to-GDP ratio will rise to 200 percent by 2042 and reach 623 percent in 2095. Moreover, if the trends that underlie the 75-year projections were to continue, the debt to-GDP ratio would continue to rise beyond the 75-year window.”

https://www.justfacts.com/nationaldebt#_ftn26

If you are not a fan of tables and charts you can read the highlight of the “Financial Report of the United States Government” in plain English and in 1 sentence on page ii (pdf page 9):

An Unsustainable Fiscal Path

 

“The continuous rise of the debt-to-GDP ratio projections based on the assumptions in this Financial Report indicates that current policy is not sustainable.”

A recent report from Truth in Accounting titled Financial State of the Union 2020 calculates the Federal Government's unfunded liabilities as $123.11 trillion ($123,110,000,000,000).

Also, there is the US debt clock website that displays a real-time calculation of US Unfunded Liabilities.  This calculation is the sum of unfunded liabilities in Social Security, Medicare Part A, B, and D, Federal Debt held by the public, Federal Employee Benefits, and Veteran Benefits.  The total at the time of writing this blog post is $147.684 trillion ($147,684,000,000,000).  Note that this number is increasing by 12 million dollars every minute so when you visit the US Debt Clock webpage the number will be larger.

 The current estimate of US GDP from the Bureau of Economic Analysis is $22.05 trillion.  Therefore, if total unfunded liabilities (UL) are $147.684 trillion then the UL to GDP ratio is 670%.  This means that if the total economic production of the USA were dedicated to paying down the unfunded liabilities it would take 6.7 years to achieve 100% funding.

The current estimate of world GDP is $30.191.   Therefore, if US total unfunded liabilities are $147.684 trillion then the UL to world GDP ratio is 490%.  This means that if the total production of the world were dedicated to paying down the US unfunded liabilities it would take 4.9 years to achieve 100% funding.

The current population of the USA is 330,246,485.  Therefore, if US total unfunded liabilities are $147.684 trillion then the total UL per person living in the USA is $447,193.  You might be inclined to think that such a level of unfunded liabilities for each man, woman and child is not possible, but if the Federal Government continues deficit spending and continues to increase future obligations, there is no upper limit to how high this number can go until there is a complete collapse of the monetary system.

Since the financial crisis of 2008 interest rates have been lower than historical averages.  If (when) interest rates rise to historical averages the increase in US total unfunded liabilities will accelerate due to larger interest payments on the outstanding national debt.

I could not find proof that supports 220 trillion dollars as the US total unfunded liabilities.  Based on the sources listed above, I am confident that the Federal Government's unfunded liabilities are rapidly approaching $150 trillion.

Please use the comment button below to provide questions, comments, or clarifications on this topic.

Five key reasons to pull plug on wind subsidies

Committee For A Constructive Tomorrow (CFACT) published an article by Larry Bell which can be viewed at this link:

Five key reasons to pull plug on wind subsidies

The five reasons are listed below, and more details for each are in the article linked above:

1. First, consider that even gargantuan wind installations covering thousands of acres generate only small amounts of unreliable power.

2. Those intermittent outputs require access to a “shadow capacity” which enables utilities to balance power grids when wind conditions aren’t optimum . . . which is most of the time. Anti-fossil energy promoters aren’t eager to mention that those “spinning reserves” (which must equal the total wind capacity) are fueled by the same sort of coal or natural gas turbines that those friendly breezes were touted to replace.

3. A major study of nearly 3,000 on-shore British wind farms found that the turbines have a very short –12- to 15-year– operating life, not the 20- to 25-year lifespans applied in politicized government and industry projections.

4. Along with high life-cycle investment and operations costs, let’s also add environmental costs to the mix. A Sierra Club official described them as giant “Cuisinarts in the sky” for bird and bat slaughters. Other local wind critics have legitimate health concerns about land-based installations. Common symptoms include headaches, nausea, sleeplessness, and ringing in ears resulting from prolonged exposure to inaudibly low “infrasound” frequencies that even penetrate walls.

5. The existence of the entire wind power industry depends upon federal subsidies.

ObamaCare-Lite

Michael F. Cannon of The Cato Institute published an article today that evaluates the House of Representatives ObamaCare reform legislation.  The entire article can be read at this link:

https://www.cato.org/blog/house-gop-leaderships-health-care-bill-obamacare-lite-or-worse

Below are some highlights from the conclusion of this article:

The House Republican leadership bill does not replace ObamaCare. It merely applies a new coat of paint to a building that Republicans themselves have already condemned. Since the most important asset health reformers have is unified Republican opposition to ObamaCare, at least in theory, it would set the cause of affordable health care back a decade or more if Republicans end up coalescing around this bill and putting a Republican imprimatur on ObamaCare’s core features. If this is the choice, it would be better if Congress simply did nothing.

Making health care better, more affordable, and more secure requires first repealing all of ObamaCare’s regulations, mandates, subsidies, and taxes. Next, Congress should block-grant the Medicaid program, giving each state a fixed sum of money that does not change from year to year, combined with full flexibility to target those funds to the truly needy.

Finally, and crucially, Congress needs to enact reforms that make health care more affordable, rather than just subsidize unaffordable care. To make health insurance more affordable, Congress should free consumers and employers to purchase health insurance licensed by states other than their own. To drive down health care prices, Congress should expand existing tax-free health savings accounts into “large” HSAs. Large HSAs would be a larger effective tax cut than the Reagan and Bush tax cuts combined, adding $13,000 to the wages of a typical worker with family coverage. Large HSAs would drive down prices by making consumers cost-conscious at every margin, and would reduce the problem of preexisting conditions by freeing consumers to buy portable coverage that stays with them between jobs. Sen. Jeff Flake (R-AZ) and Rep. Dave Brat (R-VA) have introduced legislation to create Large HSAs.

Independence in 1776; Dependence in 2014

The following article was published by Chris Edwards  in the Cato Institute's blog "Cato at Liberty":

Since the 1960s, the Catalog of Federal Domestic Assistance (CFDA) has provided a list of all federal subsidy programs. That includes subsidies to individuals, businesses, nonprofit groups, and state and local governments. The CFDA includes subsidies for farmers, retirees, school lunches, rural utilities, the energy industry, rental housing, public broadcasting, job training, foreign aid, urban transit, and much more.

The chart below shows that the number of federal subsidy programs has almost doubled since 1990, reaching 2,282 today. The genesis of the CFDA was the explosion of hand-out programs under President Lyndon Johnson. Members of Congress needed a handy guide to inform their constituents about all the new freebies.

The growth in subsidies may be good for the politicians, but it is terribly corrosive for American society. Each subsidy program costs money and creates economic distortions. Each program generates a bureaucracy, spawns lobby groups, and encourages more people to demand further benefits from the government.

Individuals, businesses, and nonprofit groups that become hooked on subsidies essentially become tools of the state. They have less incentive to innovate, and they shy away from criticizing the hand that feeds them. Government subsidies are like an addictive drug, undermining American traditions of individual reliance, voluntary charity, and entrepreneurialism.

The rise in the size and scope of federal subsidies means that Americans are steadily losing their independence. That is something sobering to think about on July 4.

Which subsidies should we cut? We should start with these.

The social safety net

Several times each year, John Allison President and CEO of the Cato Institute circulates a memorandum to the Directors, Sponsors, and Friends of the Institute.  In his July/August 2013 Report John makes the following statements:

A trend that disturbs me is the effort by some of those who want to change political results to try to appeal to egalitarianism for the purpose of electing "compassionate" conservatives to Congress. On several occasions, I have heard the leaders of conservative policy organizations lead with the comment "We all agree about the need for a social safety net" (of course, government financed and controlled). Well, not me. In fact, once we agree the government has the right to use force to redistribute wealth (which is mandatory to create a government-based safety net) the fight is over. The only logical stopping point for this argument is equal outcomes. Equal, that is, except for the elitists in the government and power positions who control the redistribution of wealth.

As libertarians, we believe the sole role of government is to protect individual rights. Our position is logically defendable across all political activities and demands a limited government.

In addition, we are the true advocates of human flourishing. In fact, as libertarians we are the defenders of the pursuit of happiness in the Aristotelian concept of happiness. Happiness earned by a life well lived. Hard work, blood, sweat, and tears happiness. The type of happiness we advocate is only possible in a free society where each individual has the personal responsibility for his life and has the right to live that life consistent with his beliefs and values as a free and independent person.

I believe the welfare state creates very destructive incentives in multiple ways. Mike Tanner's recent study, The Work versus Welfare Tradeoff: 2013, outlines the significant economic incentives that the welfare state provides.

On the noneconomic front, many (most) long-term welfare recipients are not happy as evidenced by high rates of alcohol consumption, drug use, domestic violence, etc. They are numbed into a destructive state of dependency that destroys personal responsibility, undermines a sense of purpose, and makes the true pursuit of happiness impossible.

What if the welfare state had not been created? Would markets have solved the welfare problem better than governments, based on private contributions? I believe the answer is unequivocally yes. In fact, there were many private mutual-support societies that provided voluntary assistance to the poor before the government welfare state was created.

A current example is Goodwill Industries, which relies primarily on donations of used goods (clothing, etc.). Their philosophy is to teach people how to be personally responsible, to teach them work skills, and to help them understand the healing power of work. Goodwill has many inspiring success stories. Compare this outcome to the results of government-based welfare. Unfortunately, organizations like Goodwill have a difficult challenge competing against a free lunch from the government.

If the welfare state had not been created, I am confident the pre-welfare private charitable organizations would have experimented and learned radically different solutions to many social issues. The market-discipline process would have supported innovation that would have led to significantly better outcomes for many beneficiaries (victims) of the current welfare system.

So, I do not agree that a government-financed and controlled safety net is a morally defendable idea. When government expands beyond its important but very limited role, it crowds out private institutions that are far more effective. History teaches us that when force is used to achieve so-called "positive" goals, instead of in the proper role of defending individual rights, the "good intentions" practically always produce bad results.

On Spending: No Sacred Cows

The following is an advertisement currently being circulated by the Cato Institute.

We face another budget crisis and possible government shutdown as early as January, unless Congress can come together on a bipartisan basis to cut spending.

The Affordable Care Act is far from the only program that should be repealed. Both Democrats and Republicans must be willing to cut programs that are championed by special interests in their parties. There can be no more “sacred cows.”

Policy experts at the Cato Institute have put together a plan that balances the budget and reduces our dangerously high debt burden by cutting more than $3 trillion over 10 years. It builds on good ideas from both liberals and conservatives to expand individual freedom and reduce the burden of government.

You can read more about needed reforms at DownsizingGovernment.org, a project of the Cato Institute.

CORPORATE WELFARE | Farm aid distorts agriculture, harms the environment, and nearly all goes to well-off businesses. Energy subsidies have been disastrous—from a $500 million loss on Solyndra to $700 million wasted on a clean coal project in Mississippi. Phasing out farm and energy subsidies would save $160 billion.

SUBSIDIES FOR THE STATES | Washington runs more than 1,100 aid-to-state programs. They are hugely bureaucratic and stifle state and local innovation. Phasing out federal subsidies for K-12 schools would save $180 billion and free states to improve the quality of their own education systems.

PRIVATIZATION | President Obama has suggested privatizing the Tennessee Valley Authority. TVA and other businesses may “no longer require federal participation,” his budget noted, which would “help put the nation on a sustainable fiscal path.” Other candidates for privatization include Amtrak, the Corps of Engineers, federal dams, airport screening, and air traffic control—which would save at least $110 billion.

SUBSIDIES FOR INDIVIDUALS | The government’s vast array of individual aid programs would be better handled by state and local governments and private charities. Programs such as food stamps should be turned over to the states. Phasing out federal food stamp subsidies over 10 years would save $400 billion.

INTELLIGENCE BUDGET | The budgets of the CIA, NSA, and other intelligence agencies have become bloated with spending on vast and often invasive data collection efforts and armadas of drone aircraft. Cutting intelligence spending by one quarter would save $110 billion.

MILITARY OVERREACH | The Constitution envisioned a military to “provide for the common defense” of the United States, not one that serves as the world’s policeman. Congress should reduce overseas military commitments, avoid foreign wars, and create a leaner force structure. Making reforms to meet the budget caps for 2014 and beyond could save at least $200 billion.

DRUG WAR | The war on drugs wastes a huge amount of resources in our police and justice systems. It also harms civil liberties, foments violence, and does little to curb drug use. Ending the federal drug war and returning drug policy to the states where it belongs would save $110 billion.

MEDICARE | Medicare spending is the largest factor pushing the budget into crisis. Raising premiums and increasing cost-sharing would save $330 billion. Policymakers should also restructure the program by directing payments to enrollees, not insurers or providers. That would generate greater choice, spur innovation, and improve access to care.

SOCIAL SECURITY | Social Security has huge unfunded obligations, and it causes ongoing damage by reducing personal savings and harming labor markets. Meanwhile, spending on federal disability programs has soared as the number of recipients has multiplied. America should move to a system of personal accounts for retirement and disability, but meanwhile we would save $640 billion by indexing initial benefits to prices, modestly raising the retirement age, and trimming the disability rolls by one quarter.

MEDICAID | Medicaid’s open-ended matching grants to the states have led to huge cost growth, but not better health care. Congress should give each state a fixed amount of funding and free them to experiment with better ways of providing care for the needy. Limiting annual growth in the block grant to five percent would save $760 billion.

Dollar amounts are savings over 10 years. Cuts are assumed to be phased in over 10 years. Total cuts include estimated interest savings.

Funding Government by the Minute

Please take 4 minutes to watch this very well made video from LearnLiberty.org.  You have seen and heard other discussions of our current Federal budget crisis but this video is extremely compelling.

http://www.youtube.com/watch?v=p0RkWqyn1y4&feature=youtu.be

A Federal Deficit Space Jump

I checked the math (because I live for that sort of thing) and these number are correct.  To pay for 1 year of our Federal Budget deficit in $100.00 bills, the stack of bills would be 746.5 miles tall!

Economic Freedom of the World

The Fraser Institute a Canadian “think tank” publishes an annual report concerning the economic freedom of each country.

The annual Economic Freedom of the World report is the premier measurement of economic freedom, using 42 distinct variables to create an index ranking of countries around the world based on policies that encourage economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of private property. Economic freedom is measured in five different areas: (1) size of government, (2) legal structure and security of property rights, (3) access to sound money, (4) freedom to trade internationally, and (5) regulation of credit, labor, and business.

The complete 2012 report is at this link:

http://www.freetheworld.com/2012/EFW2012-complete.pdf

An executive summery of the 2012 report can be viewed at this link:

http://www.freetheworld.com/2012/EFW2012-exsum.pdf

Here are the rankings from the current report:

In this year’s index, Hong Kong retains the highest rating for economic freedom, 8.90 out of 10. The other top 10 nations are: Singapore, 8.69; New Zealand, 8.36; Switzerland, 8.24; Australia, 7.97; Canada, 7.97; Bahrain, 7.94; Mauritius, 7.90; Finland, 7.88; and Chile, 7.84.

The rankings (and scores) of other large economies in this year’s index are the United Kingdom, 12th (7.75); the United States, 18th (7.69); Japan, 20th (7.64); Germany, 31st (7.52); France, 47th (7.32); Italy, 83rd (6.77); Mexico, 91st, (6.66); Russia, 95th (6.56); Brazil, 105th (6.37); China, 107th (6.35); and India, 111th (6.26).

The researchers who wrote this study felt compelled to include the following section:

The United States, long considered the standard bearer for economic freedom among large industrial nations, has experienced a remarkable plunge in economic freedom  during the past decade. From 1980 to 2000, the United States was generally rated the third freest economy in the world, ranking behind only Hong Kong and Singapore.  After increasing steadily during the period from 1980 to 2000, the chain-linked EFW  rating of the United States fell from 8.65 in 2000 to 8.21 in 2005 and 7.70 in 2010. The chain-linked ranking of the United States has fallen precipitously  from second in 2000 to eighth in 2005 and 19th in 2010 (unadjusted ranking of 18 th ).  By 2009, the United States had fallen behind Switzerland, Canada, Australia, Chile, and Mauritius, countries that chose not to follow the path of massive growth in government financed by borrowing that is now the most prominent characteristic of US fiscal policy. By 2010, the United States had also fallen behind Finland and Denmark, two European welfare states. Moreover, it now trails Bahrain, the United Arab Emirates, Estonia, Taiwan, and Qatar, countries that are not usually perceived of as bastions of economic freedom. The United States has now reached a point where  even small additional decreases in the rating will cause large ranking changes because  there are so many more countries clustered in this range of the index.

US ratings have declined in four of the five Areas of the EFW index. The rating in Legal System and Protection of Property Rights (Area 2) dropped by more than  2 points between 2000 and 2010. While it is difficult to pinpoint the precise reason for this decline, the increased use of eminent domain to transfer property to powerful political interests, the ramifications of the wars on terrorism and drugs, and the violation of the property rights of bondholders in the bailout of automobile companies have all weakened the United States’ tradition of the rule of law and, we believe, contributed to the sharp decline of the Area 2 rating. The rating for Freedom to Trade Internationally (Area 4) fell by over one point, and the ratings for Size of Government (Area 1) and Regulation (Area 5) by more than a half point. The only Area where the United States’ rating was basically unchanged was Access to Sound Money (Area 3).

Government consumption, transfers and subsidies, and government investment  all rose during the decade, while their private-sector counterparts were lower. These changes were the major reason underlying the decline in the rating for Area 1. The time cost of clearing customs increased and government borrowing consumed a substantially larger share of the credit market, contributing to the rating reductions in Areas 4 and 5. Some of the declines between 2000 and 2010 in the ratings of individual components and sub-components were very large. For example, the rating for Protection of property rights (2C) fell to 6.8 from 9.1. The rating reflecting import and export compliance costs (4Bii) fell to 7.2 from 9.5. Reflecting the large fiscal deficits of recent years, the private-sector credit rating (5Aii) plummeted to 0.8 from 9.4. The rating reflecting burdensome administrative regulations (5Ci) plunged to 4.0 from 7.9.

The approximate one-point decline in the summary rating between 2000 and  2010 on the 10-point scale of the index may not sound like much, but scholarly work on this topic indicates that a one-point decline is associated with a reduction in the long-term growth of GDP of between 1.0 and 1.5 percentage points annually (Gwartney, Holcombe and Lawson, 2006). This implies that, unless policies undermining economic freedom are reversed, the future annual growth of the US economy will be half its historic average of 3%.

This report along the the above discussion of the decline of the USA's ratings answer many of our questions and confirm many of our intuitions.  The decline of the middle class, the feeling of economic unease and despair, and the growing consensus that "America's best days are behind it" all stem from our loss of economic freedom.

The federal budget has become a contemporary morality play.

The following link leads to an article written by Roger Pilon who is vice president for legal affairs at the Cato Institute and director of Cato's Center for Constitutional Studies.  This article was published in the April 7, 2010 issue of the Wall Street Journal.

http://www.cato.org/pub_display.php?pub_id=12969

This article was written as a response to several advertisements from religious organizations that depict federal spending in a moral light.  Some highlights Roger’s article are as follows:

"We the People" constituted ourselves for the several reasons set forth in our Constitution's Preamble, but chief among those — the reason we fought for our independence — was to "secure the Blessings of Liberty to ourselves and our Posterity." Yet nowhere today is that liberty more in jeopardy than in a federal budget that reduces us all, in so many ways, to government dependents.

The ads' signers imagine that the Good Samaritan parable instructs us to attend to the afflicted through the coercive government programs of the modern welfare state. It does not. The Good Samaritan is virtuous not because he helps the fallen through the force of law but because he does so voluntarily, which he can do only if he has the right to freely choose the good, or not.

Americans are a generous people. They will help the less fortunate if left free to do so. What they resent is being forced to do good — and in ways that are not only inefficient but impose massive debts upon their children. That's not the way free people help the young and less fortunate.

And it's not as if we were bereft of a plan for determining our priorities as a nation. Our Constitution does that quite nicely. It authorizes a focused but limited public sector, enabling a vast private sector of liberty. But early 20th-century Progressives — politicians and intellectuals alike — deliberately shifted that balance. Today the federal government exercises vast powers never granted to it, restricting liberties never surrendered. It's all reflected in the federal budget, the redistributive elements of which speak to nothing so much as theft — and that's immoral.

This article illustrates the basic political struggle of our modern society. Over time a moral standard has been assigned to government spending. This has lead to the current great divide between our citizens. Advocates for big government view spending as a necessary moral action that can right all of the wrongs perceived in society. Therefore in their minds anyone who opposes government spending is evil.


There is nothing virtuous about being forced to provide charity. For charity to be truly virtuous it must be voluntary and personal. The great hypocrisy in the belief of government spending as a moral obligation is the fact that it is immoral to take another person’s property.

Cut Federal Spending Act of 2011

Thanks to Senator Rand Paul we now have a bill before the US Senate that will reduce Federal spending by 500 billion dollars in 2011.  The title of this bill is the “Cut Federal Spending Act of 2011”.  The bill can be viewed at this link:

http://www.randpaul2010.com/wp-content/uploads/2011/01/500Bcutsbill.pdf

This is a relatively short bill considering the amount of spending cuts that it entails.  You can easily read all 12 pages in a few minutes.  If you do not read the entire bill the highlights are as follows:

The following departments or agencies will be defunded:

The Government printing office

The Agriculture Research Service.


The National Institute of Food and Agriculture.


The Resources Conservation Service.


The Foreign Agricultural Service.


All Department of Education programs are defunded effective on the date of enactment of this Act, except for the Pell grant program which shall be capped at $16,256,000,000.


All accounts and programs of the Department of Housing and Urban Development.


The Bureau of Reclamation.


All accounts and programs of the Bureau of Indian Affairs.


All accounts and programs of the Office of Justice Programs.


International Organizations and Conferences.


International Commissions.


All Amtrak Federal subsidies are terminated.


Affordable Housing Program.


Commission on Fine Arts.


Consumer Product Safety Commission.


Corporation for Public Broadcasting.


National Endowment for the Arts.


National Endowment for the Humanities.


State Justice Institute.



All other Federal Agencies and departments will have their budgets cut by various amounts except for the following:


The Occupational Safety and Health Administration.


The Mine Safety and Health Administration.


The Employment and Training Administration (including all unemployment compensation).


Department of Veterans’ Affairs


Social Security Administration


MISCELLANEOUS BUDGET SAVINGS.


The following programs shall be implemented or repealed in fiscal year 2011 with the savings provided:


Collect delinquent taxes from Federal Employees, $3,000,000,000.


Freeze Federal Government employee pay, $2,000,000,000.


Reduce Federal Government travel, $7,500,000,000.


Davis- Bacon is repealed, $6,000,000,000.


Prohibit union labor project agreements, $2,000,000,000.


The Troubled Assets Relief Program is repealed, $4,481,000,000.


Unused Federal assets shall be sold, $19,000,000,000.


Reduce Federal vehicle budget, $600,000,000.

I sent the lettter listed below to  both of my Seantrors:
 

Dear Senator _______________________


I enthusiastically support the “Cut Federal Spending Act of 2011” which was sponsored by Senator Rand Paul. I encourage you to consider the detrimental effects that our current Federal spending will have on the future financial stability of our nation. I know that you have the best interests of your continuants in mind and that you realize that our current federal spending is unsustainable. Your vote to pass the “Cut Federal Spending Act of 2011” will make America stronger and more self sufficient. I know that you will put your constituents future above politics.  I strongly encourage you to vote in favor of the Senate bill “Cut Federal Spending Act of 2011”.

Sincerely yours,

Just cut it

The Cato Institute is running the following full page advertisement in these publications, Wall Street Journal, Washington Post, New York Times, Los Angeles Times, Washington Examiner and Politico:

http://www.cato.org/files/DownsizingAd.pdf

If my math is correct the federal spending cuts suggested in this ad would total $650 billion per year.  That’s a lot of money, even in Washington D.C.

Increased tax revenue leads to increased spending

Recently there has been much discussion about enacting a Value Added Tax in the USA. Experience in the real world shows us that this new tax will solve nothing. The following article from Investor’s Business Daily examines this subject:

http://www.investors.com/NewsAndAnalysis/Article/545596/201008311833/If-VAT-Is-Rx-For-Deficits-And-Debt-Why-Are-VAT-Users-On-The-Brink-.htm

The moral of this story is summed up in this paragraph:

The Organization for Economic Co-Operation and Development reported that since the 1960s, when the VAT began to be widely adopted, government spending by OECD member countries with a VAT soared from 30% of their GDP to 50%. Governments tend to spend all available revenue, and then some.

Just say no to raising taxes.

A deadly virus

The following editorial is from the 8/19/10 edition of the Washington Times:

http://www.washingtontimes.com/news/2010/aug/19/we-cant-afford-this-government/

The title “We can't afford this government” and subtitle “Costs of bureaucracy spread like a deadly virus” are strongly worded but are directly to the point.

Consider these 2 facts referenced in the editorial:

…Congressional Budget Office estimate that this year's federal deficit will be well above $1.3 trillion for a second straight year and remain above $1 trillion next year as well - causing as much debt in three years as government built up in the previous 219.

…the announcement by Americans for Tax Reform (ATR) that yesterday (8/19/10) was the 2010 "Cost of Government Day," which is "the day on which the average American has earned enough gross income to pay off his or her share of the spending and regulatory burdens imposed by government at the federal, state and local levels." Just two years ago, Cost of Government Day fell an astonishing 34 days earlier. This year, the average American worked 231 days just to support government, which consumes 63.41 percent of national income.

Uncle Sam wants you

The Cato Institute’s newest project “Downsizing the Federal Government” has a website that is a treasure trove of useful information. Here is the latest post:

http://www.downsizinggovernment.org/federal-employees-continue-prosper

If you do not think that government spending is out of touch with reality you need to review this chart:

Clearly the Federal Employees have commandeered the levers of spending. This is one of the reasons that the Federal Government continues to grow larger as the rest of the real economy flounders.

Downsizing the Federal Government

The Federal Government is consuming a larger share of gross domestic product each year. Those who wish to study Federal spending may find it difficult to adequately research this subject. Thankfully the Cato Institute has codified the statistics and provided a website with a plan to downsize the Federal Government.

http://www.downsizinggovernment.org/

Cato describes the purpose of this website as follows:

The federal government is running massive budget deficits, spending too much, and heading toward a financial crisis. Without a change of direction in Washington, average working families will be faced with huge tax increases and a lower standard of living.

Some people have lofty visions about how government spending can help society. But the essays on this website put aside such “bedtime stories” about how government programs are supposed to work, and instead focuses on how they actually work in the real world.

Downsizing the Federal Government is a project of the Cato Institute. Scholars at Cato believe that cutting the federal budget would enlarge personal freedom, increase growth and prosperity, and leave a positive fiscal legacy to the next generation.

Federal Pay Continues Rapid Ascent

The Cato Institute summarizes a study on Federal Employee wages at this link:

http://www.cato-at-liberty.org/2009/08/24/federal-pay-continues-rapid-ascent/

The distressing results:

• In 2008, federal worker compensation averaged a remarkable $119,982, which was more than double the private sector average of $59,909.

This is unconscionable. The size and expense of the Federal Government must be reduced.

Lessons from China

The following article discusses the government of China’s economic stimulus policy:

http://www.reuters.com/article/businessNews/idUSTRE5740B620090805?feedType=RSS&feedName=businessNews

These paragraphs are significant:

• But Huang Yiping, a professor at Beijing University and former chief Asia economist at Citigroup, argued that the government needed to adjust its fiscal policies to prevent the economy from becoming too reliant on public investment.
• 
  "The government should be more cautious in approving new projects in the coming months, as the investment rush could sow the seeds of an increase in bad bank loans and could also crowd out private sector investment," Huang said at a forum.
• 
  Beijing wants to keep its budget deficit to within 3 percent of GDP this year, a target that economists say will be tough to hit given current spending and revenue trends. The deficit in 2008 was about 0.5 percent of GDP.

This article discusses the Congressional Budget Office forecast for the US deficit:

http://www.reuters.com/article/topNews/idUSTRE52J3SR20090320

• The Congressional Budget Office forecast a record $1.8 trillion deficit for the fiscal year that ends September 30 under Obama's budget proposal -- or 13.1 percent of gross domestic product.

Which country is presenting a brighter future for its children? Is it the USA with a budget deficit of 13.1% of GDP or communist China with a budget deficit of 3% of GDP?