By Joseph Henry and P. Revere of American Citizens for Economic Freedom (http://truecapitalism.org/). We are the Super PAC for the Tea Party and Women's Organizations, founded by prominent business entrepreneur, Peter M. Vessenes.
House Budget Committee Chairman Paul Ryan (R) of Wisconsin recently submitted an eight-year budget plan for America. Much has been written in the last few weeks about the similarity between Ryan’s budget and Obama’s budget. While it would be easy to go through both budgets line by line and point out the differences, the simple fact is only the Ryan plan addresses the core principles needed to get our country moving on a path toward fiscal security. Four of the core principles Ryan tackles are tax reform, spending cuts, military spending and shrinking the government.
Taxes
Over the last 50 years the average tax revenue generated as a percentage of GDP (Gross Domestic Product) has been steady at about 18%, regardless of the tax rate.[1] The GDP for 2011 was around $15 trillion.[2] The Congressional Budget Office projected total tax revenue of $2.2 trillion for 2011.[3] The problem is our annual Federal budget is close to $3.6 trillion,[4] leaving a deficit of $1.4 trillion. These numbers can vary by $200 billion dollars depending on your information source, but the point is we run a huge deficit every year. Obama wants to shrink this deficit by increasing tax rates on the rich, but if overall tax revenue remains at about 18% of GDP, then the only way to increase tax revenue is to increase GDP – in other words, grow the economy.
Growing the economy is a function of lowering the tax rate and increasing consumer confidence. Lowering the tax rate puts more money in the hands of the citizens to spend, invest, or save as they see fit. This in turn increases consumer confidence. When consumer confidence is high and spending increases, the increased number of transactions means more taxes get collected.
The uptick in spending and consumer confidence is what boosts GDP. 18% of a larger GDP pie means larger federal tax revenue. Without increasing the number of transactions that take place, you cannot hope to tax your way out of a deficit by raising taxes on the rich. Doing so will only decrease the number of transactions overall as more money has to be put aside by people to cover the higher tax rates.
Chairman Ryan’s budget plan cuts personal taxes from the current 35% maximum down to 25%.[5] The lowering of the tax rate is what gets extra money into the hands of the people and primes the engine of economic growth.
Spending Cuts
Now that you have increased the GDP you must follow this up with spending cuts. Washington has shown that if you let them spend, they will. As government gets bigger the cost to run it goes up, and this takes more money (in tax revenue) away from the private sector economy.
Chairman Ryan’s plan would reform entitlement spending and do away with ObamaCare.[6] Obama’s Health Care bill alone could cost trillions of dollars in the next 10 years, much more than the American people where told it would cost.[7] [8]
Chairman Ryan’s budget plan also puts a cap on government agencies’ fiscal budgets.[9] Currently, federal agency budgets go up on average 8% per year no matter what. This increase is not tied to taxes or GDP growth; federal agency budgets just go up automatically.[10] By forcing spending cuts, Ryan’s budget plan limits the amount of overspending Washington can do year after year.
Military Spending
President Obama’s budget tries to save money by cutting military spending. Chairman Ryan’s budget preserves necessary defense spending to protect America’s national interests.[11] Conflicts in the world have changed over the years. No longer are large-scale wars fought, rather small regional conflicts and terrorist attacks are the new norm today. The world must know that any country harboring terrorists faces the strength and firepower of the U.S. armed forces.
The reality in today’s world is that some of our enemies find it honorable to die in the fight against us. A weak Armed Forces only emboldens our enemies. The world must know and sense our might.
The effect of a terrorist attack on our GDP, as well as the human cost, is just too high. The U.S. must be safe. A strong military helps to ensure this safety. Balancing the budget should not be done on the backs of our troops. This sends the wrong message to the world.
Shrinking Government
Fundamentally president Obama believes that government is the answer to the problems we face, and if we just get government running more “efficiently” we could save money and solve our problems. The way Washington sees itself running more efficiently is it gets bigger with more oversight and regulation. This larger government takes money to run. A growing government takes more money and resources away from businesses.
Chairman Ryan’s budget will shrink government.[12] The simple act of freezing mandatory federal budget increases will, over time, shrink the federal workforce. A smaller more efficient government frees up more money for GDP growth. Doing away with ObamaCare will also help to shrink the size of our government.
Solutions
The Ryan Budget is a great first step in getting our country on the path to fiscal freedom.
This is the first in a series of articles American Citizens for Economic Freedom will be doing on the Ryan budget plan. We will dig deep into the facts on entitlements, healthcare and how responsible financial management will save America economically. We will expose the lies and hype that politicians in both parties use to help them keep their power and keep you in the dark.
Our very survival as a nation depends on making bold choices on growing jobs, growing our economy, and restoring our freedom from an Obama Administration that is playing with your very livelihood.
Read our articles, send them to your friends, tweet and Facebook to others today. Join us at www.truecapitalism.org, consider giving a donation of $50, or become a monthly contributor to help stop what is happening in Washington today.
Resources
[1] The Real Tax Rate Conundrum - http://www.zerohedge.com/print/446236
[2] Bureau of Economic Analysis - http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
[3] Congressional Budget Office – http://www.cbo.gov/publication/21999
[4] New York Times - http://www.nytimes.com/interactive/2010/02/01/us/budget.html
[6] 2013 Paul Ryan Budget Resolution, p.5 - http://paulryan.house.gov/UploadedFiles/Pathtoprosperity2013.pdf
[7] Investor’s Business Daily - http://news.investors.com/article/522147/201002241922/the-real-cost...
[9] 2013 Paul Ryan Budget Resolution, p.72 – http://paulryan.house.gov/UploadedFiles/Pathtoprosperity2013.pdf
[10] Cybercast News Service - http://cnsnews.com/news/article/house-votes-eliminate-automatic-spe...
[11] 2013 Paul Ryan Budget Resolution, p.13 - http://paulryan.house.gov/UploadedFiles/Pathtoprosperity2013.pdf
[12] Ibid, p.5-6
Comment
Comment by Mickie Johnson on August 13, 2012 at 1:04am I agree with Debrajoe. They need to have retirement like we have. Also they need to only be in WA for a certain amount of time and not be flying back and forth. They need to do like the states do and have a certain amount of time to do what they need to do and then come home among us and I think things would change. Also when they make the laws they need to be for them and not just for the people they are representing. None of them would have the health care like we would. Just because they are in WA makes them no different than we are in my opinion. Then they would wouldn't be hounded my "special interests" Groups and wouldn't be there for the money but for what they were sent to do and that is represent us!
Comment by Carolyn Sims on August 12, 2012 at 2:19am I have now seen 2 ads (good, I might say) regarding repealing obamacare(tax). Let's works on getting rid of that monstrosity,. We can still hold our elected representatives to a pay cut (instead of voting themselves a raise) and cut out the cadillac pension and insurance plans. I think they should have a moderate insurance plan and their retirement plan should be a vested plan...not automatically given like we do for 1 term service. No more big perks like Nancy Pelosi has had for years.
Remember, it's going to take a few election cycles to drain the swamp!!!!
Comment by Billy Bowlegs on August 11, 2012 at 8:02pm Now that it is Romney and Ryan (Almost typed RUBIO), let us stop HEE HAW Junction and get busy on research.
31 USC Sec. 1519 01/03/2012 (112‑90)
TITLE 31 ‑ MONEY AND FINANCE
SUBTITLE II ‑ THE BUDGET PROCESS
CHAPTER 15 ‑ APPROPRIATION ACCOUNTING
SUBCHAPTER II ‑ APPORTIONMENT
Sec. 1519. Criminal penalty
-STATUTE‑
An officer or employee of the United States Government or of the
District of Columbia government knowingly and willfully violating
section 1517(a) of this title shall be fined not more than $5,000,
imprisoned for not more than 2 years, or both.
Sec. 1517. Prohibited obligations and expenditures
‑STATUTE‑
(a) An officer or employee of the United States Government or of
the District of Columbia government may not make or authorize an
expenditure or obligation exceeding ‑
(1) an apportionment; or
(2) the amount permitted by regulations prescribed under
section 1514(a) of this title.
(b) If an officer or employee of an executive agency or of the
District of Columbia government violates subsection (a) of this
section, the head of the executive agency or the Mayor of the
District of Columbia, as the case may be, shall report immediately
to the President and Congress all relevant facts and a statement of
actions taken. A copy of each report shall also be transmitted to
the Comptroller General on the same date the report is transmitted
to the President and Congress.
BB: Since there has been no budget where is all the money being appropriated from. There are some extensions, but where is all the new money going out that adds up to the 5+ Trillion shortfall.
All extensions were just extensions to get through paying current government - not new budget items not approved.
Who out there knows Budget Accounting well enough for us to get a team together - follow the money - and get rid of all BASTARDS spending without authorization.
Any takers. Do not need HEE HAW responses. Real action people wanted for helping.
Comment by Monica Babcock on August 11, 2012 at 5:37pm I'm with you Debrajoe- let congress live like the rest of us.
Comment by P Revere on August 11, 2012 at 4:26pm Peter, I understand how you feel...we only have to look back to the Bush years and see the effects after 9-11 to see how crazy spending got in the years afterward. We have to be realistic that it will really take 2-3 election cycles to really change America. We must hold politicians accountable, our PAC is building a method to do that, and if they don't keep there promises we "throw the bums out!"
We The People must take back control of the beast that is Washington to tame it's corruption and seduction that hits everyone that goes there. I'm waiting for the candidate that runs on the platform that says, "I will serve one term only and go back to the private sector to live with what I have voted for." Citizens with a willingness to serve selflessly and to live day to day with what they have done by their votes.
We can and must do this, this is what we fight for at www.truecapitalism.org
Join us and tell others!
Comment by Peter D Sowatskey on August 11, 2012 at 3:22pm I see this as a succinct overview.
In my mind you can split up a fifteen inch pie or argue over splitting a seven inch pie as the left wants to do.
Assuming we get to 2013 and have R&R in the White House we can experience a small sigh.
Then we need to look around and ask, "Was that wild fire an act of nature, or not?"
How about that train derailment? That gas line rupture?
Vast amounts of disasters are, I think, being waved off as natural, to dampen border tightening talk. Were these to magnify the whole R&R plan could be for naught.
Yeah, I know, I write too many books about doom, but then...
Comment by Debrajoe Smith-Beatty on August 11, 2012 at 1:36pm Cut congressional pensions and perks. Cut Congressional travel perks. Cut Congressional salaries. Cut Congressional health care, put them on Obamacare.
© 2013 Created by Judson Phillips.
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