Tonight was President Obama’s fourth State of The Union (SOTU) address (2009 was technically just a speech before a joint session of Congress, not a State of The Union). Just as in previous SOTU’s by President Obama, and former President’s, there is quite a lot to digest. As you can imagine, the Taxpayers Protection Alliance (TPA) listened intently as the President talked more about his spending and taxation plans for the year. An article in The Hill earlier today gave us a sneak preview of what to expect, “President Obama will use his State of the Union speech Tuesday to turn public opinion against automatic spending cuts and argue that some of the money to replace the cuts should instead come from higher taxes. He will use the prime-time TV address to argue the economy would be damaged if $85 billion in automatic spending cuts were to go ahead on schedule on March 1, and will seek to set up Republicans to take the blame if they do.” Well, President Obama kept true to his word. He railed against the sequester (automatic spending cuts), asked for more revenue, and called for additional spending. The trifecta of what not to do considering that the nation is $16.5 trillion in debt and the deficit this year will eclipse the $800 billion mark.
Today, the Taxpayers Protection Alliance joined with 7 other groups to urge Congress to pursue a minimum of $50 to $100 billion in annual Pentagon budget savings over the next decade—savings taxpayers were promised in the Budget Control Act of 2011. The wars in Afghanistan and Iraq are ending, and our defense leaders admit the spending boom that more than doubled the Pentagon budget since the wars’ launch a decade ago must end. Consensus exists among civilian and military experts that DOD can absorb at least sequestration levels of spending cuts while retaining a robust force to meet the nation’s security needs. The bottom line is that sequestration will not weaken our military and should only be the first step in realigning the Pentagon’s priorities. Reforms such as eliminating outdated, Cold War-era weapons; cutting programs the military doesn’t even want; reforming military health care programs; and closing unneeded bases will not only save taxpayers billions, they will also make our nation stronger by helping safeguard our financial security.
In the culmination of the fiscal cliff talks and despite what politicians said, taxes increased for all working Americans. Now is the time for all taxpayers to join together and seize the opportunity to pursue the long overdue reform to our nation’s tax code. Fortunately, some members of Congress agree and understand the need for change. In a Politico op-ed from last week, Senator Rob Portman (R-Ohio) wrote, “Our tax code has become an obstacle to growth, and only a robust, growing economy can create the new jobs (and future tax revenues) that we need.” Senator Portman also stated that, “Since 2001, taxes on everything from salaries and small business income to investment earnings and gifts have been temporary — a source of economic uncertainty and perennial fiscal fights. New permanent rates create a clear starting point for tax reform and end disputes over the baseline that have vexed past reform attempts.” Another problem with the shenanigans of the past several years is the significant uncertainty Washington’s game playing imposes on businesses. With so many unknowns, businesses are cautious about making large investments (and creating new jobs in the process) for future gains because they lack any assurance that Congress won’t change the tax rates with its next whim.
On Friday, January 18, the Taxpayers Protection Alliance (TPA) sent a letter to Minnesota Governor Mark Dayton urging him to not raise taxes in order to balance the budget in Minnesota (read the letter here). Tax increases are the siren song of politicians across the country, as politicians look to fill budget holes. The problem is that tax increases hurt taxpayers and consumers. One popular tax increase has been tobacco and Governor Dayton is reportedly looking at raising that tax, a dramatic shift in policy considering that Governor Dayton once opposed a tobacco tax increase. According to the Minnesota State News, “During Wednesday’s budget negotiations with legislative leaders, Governor Mark Dayton offered two new budget proposals, both featuring substantial tax hikes. Dayton's options included a temporary 2% income tax increase on Minnesota millionaires or, alternatively, a $1-per-pack cigarette tax increase.” The same article noted that “Since 2003 there have been 57 cigarette tax increases across the nation and 68% of them have failed to meet projected revenues. In 2006, New Jersey raised cigarette taxes with the hope of pulling in $30 million in extra revenue each year. Not only did the tax hike fail to bring in extra revenue, but the state actually collected $20 million less in cigarette sales.” TPA urged Governor Dayton to cut spending. The Minnesota Budget Solutions Coalition has identified reforms that could save Minnesota taxpayers more than $6 billion, including eliminating all corporate welfare including corporate subsidies, incentives, and credits; abolishing ethanol grants; and reducing legislators’ and constitutional officers’ pay by 5%.
Many people are accustomed to waking up on January 1 with a headache. This year taxpayers woke up to not only the usual headache from a night of excess, but also a headache from the excesses of Congress and the President. In the early morning hours of today (January 1, 2013) the Senate passed a bill to soften the blow of going over the fiscal cliff. In reality, the bill may do more harm than good. The bill extends the 2001 and 2003 Bush tax cuts for individuals making less than $400,000 and families making less than $450,000. In addition, the payroll tax cute will expire meaning that payroll taxes will increase from 4.2 percent to 6.2 percent, a real tax increase on the Middle Class. The real kick in the wallet is a two-month delay in the automatic spending cuts (sequestration). As reported by Breitbart.com, “According to the Congressional Budget Office, the last-minute fiscal cliff deal reached by congressional leaders and President Barack Obama cuts only $15 billion in spending while increasing tax revenues by $620 billion—a 41:1 ratio of tax increases to spending cuts.” UPDATE (3:00 pm): The Congressional Budget Office has pegged the spending cuts at $25 billion. Click here here for a full list of provisions as reported by Politico. With a $1 trillion deficit and a debt that has eclipsed $16 trillion, the lack of spending cuts is shameful. Even if all the revenue is used for deficit reduction (which it likely won’t be), the total impact to the $1.1 trillion deficit will be $64.5 billion (if no more spending cuts are approved and the sequestration is avoided).
The Medium Extended Air Defense System (MEADS) is struggling to remain relevant and alive as Congress looks at real spending cuts to avoid the fiscal cliff. The Taxpayers Protection Alliance explained in a recent blog post that, “MEADS has rightly earned the moniker the ‘"Missile to Nowhere.’" And, according to a December 4, 2012 Politico article, “Senate Armed Services Committee Chairman Sen. Carl Levin said today he feels strongly that the Medium Extended Air Defense System is a ‘waste of money,…’” Because of the prohibitive cost ($2 billion over budget), schedule delays (10 years behind schedule) and the system's poor performance, the U.S. Army has said it doesn't want MEADS and that it would never use the missiles.” Now, in nothing more than a dog and pony show, there was a test of MEADS. And, a misleading title of a news story, “MEADS Successfully Completes First Intercept Flight Test,” shows that even more education about this unneeded program is necessary.
The Maine Heritage Policy Center recently released its “Maine 2012Piglet Book,” which details “hundreds of millions of dollars of wasteful government spending. A new version of a similar publication released in 2009, the 2012 Piglet Book highlights government’s big-spending habits, as well areas where leaders can save taxpayers big money.” The compilation with its aptly given subtitle, “The book Augusta doesn’t want you to read,” is a dose of reality that should prompt elected officials to change their tendency of wastefully spending taxpayer dollars. The small size, geographically speaking, of Maine in no way reflects the hefty spending the taxpayers of the state bear. To get right into the numbers, the “Maine 2012Piglet Book,” breaks down just how the state’s per year spending, $7,595,151,209, hits taxpayers’ pocketbooks throughout the state. This hefty sum breaks down to $13,781 per household and $5,718 per person. After its thorough analysis of the costs Mainers are burdened with, the piglet report explains, “So, if the state can spend $14,450 per minute and the median household income is $46,993, it follows that Maine government can spend what a household makes in an entire year in just over 3 minutes.” This startling set of numbers is something that should wake up all of Maine’s taxpayers, including its legislators, and prompt them into action. There’s little way to imagine that spending at this rate and amount could possibly be justified, but that doesn’t mean the bureaucrats at state agencies in Augusta and elected officials throughout the state don’t try.
Every Halloween children and adults alike get their fair share of tricks and treats. The government doesn’t wait until the end of October to shower taxpayers with tricks or treats; it shares these treats or tricks all year long. Let’s take a closer look at some of the tricks and treats from this past year. This year’s tricks include: non-profit environmental organizations receiving tax dollars, The Medium Extended Air Defense System (MEADS), government funded broadband, and a tax increase proposed by the World Health Organization. Treats include: the selling of wireless spectrum, The Department of Treasury trying to recoup money from a failed energy company, and the passage of enhanced whistleblower protection in the House of Representatives. These are not the only tricks or treats by the government, but the folks at TPA were concerned that if we showed you too many tricks you may not be able to sleep at night, and it was really difficult finding many treats with a debt of $16 trillion and a Congress (especially the Senate) that refuses to cut spending.
(Drew Johnson is a Senior Fellow with the Taxpayers Protection Alliance) Congress returned to Washington this week for what will likely be a short session focused on doing as little as possible besides ensuring that government doesn't shut down when the federal fiscal year ends on Sept. 30. Doing as little as possible has become a common theme for this Congress. Congress has failed to pass any of the 12 required appropriations bills necessary to keep government open for business. Lawmakers have also failed to pass a budget since 2009 and done little to meaningfully addressed entitlement reform or the debt. Perhaps worst of all, Congress failed to make the spending cuts required by the Joint Select Committee on Deficit Reduction -- a.k.a. the Supercommittee -- before the deadline to prevent automatic cuts. (Those automatic spending cuts will also likely never take place if this do-nothing attitude continues into the next session.) This lack of action has led many pundits to use words such as, "lazy," "pathetic" and "failed" to describe the gridlocked Congress. Perhaps not surprisingly, Congress' job approval ratings are reaching all-time lows. In poll conducted jointly by NBC News and the Wall Street Journal in August, only 12 percent of Americans approved of the job Congress was doing. Despite doing next to nothing in recent months, United States senators and representative receive a salary of $174,000 per year -- a pay that puts members of Congress among the top 5 percent of wage earners in the United States. But that hefty income is only the beginning.
Everybody in Washington, DC is talking about the fiscal cliff but nobody is doing anything about it. That is very reminiscent of Mark Twain’s old adage about the weather when he quipped, “everybody talks about the weather but nobody does anything about it.” The only difference is that politicians have an opportunity to act and prevent the country from going over the fiscal cliff. A recent headline of The Washington Post, “CBO warns of significant recession if Congress doesn’t act to avoid fiscal cliff,” should be a wakeup call if the tax cuts aren’t extended. Pretty frightening indeed, and even worse, it’s reality. Citing the nonpartisan Congressional Budget Office (CBO), the Post explains, “The nation would be plunged into a significant recession during the first half of next year if Congress fails to avert nearly $500 billion in tax hikes and spending cuts set to hit in January.”