Congress has an idea:
American consumers have shown about as much appetite for the $1 coin as kids do their spinach. They may not know what’s best for them either. Congressional auditors say doing away with dollar bills entirely and replacing them with dollar coins could save taxpayers some $4.4 billion over the next 30 years. The federal deficit for this year is over a trillion dollars.
America is fighting several unconstitutional wars, has a plethora of unconstitutional government spending programs, and a large number of unconstitutional agencies. Yet, somehow, Congressional auditors are recommending a policy that is considerably more inconvenient to citizens in order to save $4.4 billion. That’s not even half a percent of the budget. Are they serious? Or is this just a ploy to look serious about budget cuts?
What’s sad is how they apparently are not able to see a really obvious metric for determining spending cuts: the constitution.
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Vanity of vanities, all is vanity:
This chart basically shows that Republicans are really no different than the mainstream when it comes to specific spending cuts (which, incidentally, is why Rep. Ryan’s budget is a joke). Now, it is true that Republicans are more supportive of spending cuts in general. However, once you start discussing specifics, Republicans are just like everyone else when it comes to spending.
I think the reason for this is simply the difference between the concrete and the abstract. In the abstract, everyone is for cutting spending. Pretty much everyone knows that running trillions of dollars in deficits year after year is unhealthy and unsustainable. We all know this. Yet, when it comes to specific areas in which we should cut spending, suddenly no one seems able to find it in their heart of hearts to actually make cuts. We “need” Medicare, we “need” welfare, we “need” to spend hundreds of billions on the military, we “need” the arts, and so on. There’s nothing we can bring ourselves to part with because it’s all so important.
Really, this is nothing more than the rationalization hamster writ large. We want what we want, and we will always find a way to rationalize it, even when we know that it’s detrimental.
Thus, we are powerless to prevent the systemic breakdown that will eventually occur once it becomes impossible to pay off the federal debt. There will be an unavoidable tightening of the fiscal belt, and it will be painful. Collapse will accompany it. The sad thing is, the collapse was not only predictable, but avoidable as well. The reason why the collapse is unavoidable, though, is simply due to the difference between practicing and preaching. There are many bloggers who keep harping on the dangers of fiscal irresponsibility, yet their warnings continue to go unheeded. And so, the collapse will eventually occur, not because no one was warned, but because no one had the spine to do what was necessary to avoid it. Thus, all the warnings of disaster are in vain.
CFRB compares the candidates’ plans to a “realistic” baseline that assumes the Bush tax cuts are made permanent and the automatic sequesters required by the Budget Control Act of 2011 are waived, among other things. Relative to that extremely pessimistic baseline, Santorum and Gingrich still want huge increases to the national debt; only Paul’s proposals would reduce it. Romney’s proposals would have little impact, but that was before his latest attempt to pander to the base: an across-the-board, 20 percent reduction in income tax rates. [Emphasis added.]
How is this possible, since all of them have promised to cut spending? Huge tax cuts, on top of the Bush tax cuts. Romney, as mentioned above, would reduce all rates by 20 percent, repeal the AMT, and repeal the estate tax. Santorum would cut taxes by $6 trillion over the next decade. Gingrich would cut taxes by $7 trillion. Paul, the responsible one, would only cut taxes by $5 trillion.
Of course, these projections need to be taken with a grain of salt since they are nothing more than an attempt to apply static analysis to a dynamic system.
Nonetheless, it should be quite telling that the two most nominally conservative candidates have the most fiscally irresponsible budgets.
(The penultimate paragraph of this post
deals briefly with this subject).
The moderate businessman has an essentially balanced budget, and the libertarian is the only one of the lot that actually attempts to decrease the national debt.
The reason why the “conservative” candidates’ budgets aren’t fiscally responsible is because they simply do not understand the simple reality that government spending is essentially the same as taxation. Every dollar that government spends must come from taxes. This can happen directly, indirectly (e.g. inflation), or it can be deferred (e.g. borrowing). However, at some point, government spending must come from tax revenue of some form. As such, it is downright irresponsible to cut taxes without also cutting an equal or greater amount of spending. Therefore, both Gingrich and Santorum are nothing more than political parlor magicians who are using sleight of lower taxes to distract from the insufficient budgetary cuts. Sadly, there are too many conservatives who will fall for this, and ignore the plain and simple fact that government dollars must first come from citizens’ pockets.
This is not to say that taxes should not be cut. To the contrary, the relatively high-rate of federal taxes are undoubtedly stifling the economy. Ultimately, though, these tax rates are nothing other than a reflection of the high rate of government spending. Thus, it is government spending that is stifling the economy, and therefore the federal budget must be cut if the United States are going to recover. At this point, it should be clear that there is only one candidate who grasps this underlying reality. We all know who he is.
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GOP presidential candidate Rep. Ron Paul will unveil his economic plan Monday afternoon, calling for a lower corporate tax rate, cutting spending by $1 trillion during his first year in office and eliminating five cabinet-level agencies, including the Education Department, according to excerpts released to Washington Wire…
But Mr. Paul does get specific when he calls for a 10% reduction in the federal work force, while pledging to limit his presidential salary to $39,336, which his campaign says is “approximately equal to the median personal income of the American worker.” The current pay rate for commander in chief is $400,000 a year.
The Paul plan would also lower the corporate tax rate to 15% from 35%, though it is silent on personal income tax rates, which Mr. Paul would like to abolish. The congressman would end taxes on personal savings and extend “all Bush tax cuts.”
He would also allow U.S. firms to repatriate capital without additional taxes. Some lawmakers have recently proposed such legislation as a way to spur job growth. Its critics argue that a tax holiday for companies with money abroad has not historically led to domestic investment.
But the plan, at its heart, is libertarian. While promising to cut $1 trillion in spending during his first year, Mr. Paul would eliminate the Departments of Education, Commerce, Energy, Interior and Housing and Urban Development. When former Massachusetts Gov. MItt Romney unveiled his economic plan last month, he said he would submit legislation to reduce nonsecurity, discretionary spending by $20 billion.
Mr. Paul would also push for the repeal of the new health-care law, last year’s Wall Street regulations law and the Sarbanes-Oxley Act, the 2002 corporate governance law passed in response to a number of corporate scandals, including Enron.
I think this is a good start to addressing the problem.
I also think this is the most serious proposal from any of the current candidates, Democrat and Republican alike.
Some may call for incremental changes. We’re past that point. We’re going to face an economic collapse. There’s no sense in strengthening federal power when this happens. And there is no point in continuing the policies that led to this problem.
Ultimately, Paul’s plan is the best out there, though it could certainly be improved upon. My proposal would be to cut all unconstitutional spending. I think that would solve a lot of problems in fell swoop.
The Budget Speech of February 2010 had announced a `Technical Advisory Group for Unique Projects’ (TAGUP). The press release about creation of this group is out.
Anil Padmanabhan looks back at year 6 of the UPA.
Heather Timmons and Hari Kumar in the New York Times on the carnage on India’s roads.
NSE does Fix.
SEBI’s order on front-running at HDFC AMC. Bhave’s SEBI is a new world of enforcement in Indian finance.
Somasekhar Sundaresan in the Business Standard on the mess in India’s capital controls.
Bibek Debroy in the Indian Express, and an editorial in the Business Standard, on India’s problem with land titles. Most of us in India don’t know about how far back this story goes in other countries : to the Domesday book of 1086 AD, or 924 years ago, in the UK.
Jayanth Varma in the Financial Express on the new world of exchanges. Roughly a decade ago, I had started using intra-day data from NSE and at the time had checked that their trading system clocks were synchronised by NTP — they were.
Ila Patnaik in the Indian Express on the importance of the BSST countries instead of the BRIC countries.
Vikas Bajaj in the New York Times on the difficulties of rail transportation in India.
Gary Schmitt, in the American, worries about the finlandisation of Taiwan.
Nixon’s Nose by Xiaoda Xiao, in Guernica and Angel factories by Anne Applebaum in the New Republic.
Ali Sethi in the New York Times with a piece titled One myth, many Pakistans.
Sebastian Mallaby in the Atlantic on Paul Romer’s work on `charter cities’.
Scott Sumner has an interesting take on the performance of neoliberal policies worldwide.
Rent a white guy.
Scott Adams guide to investment.