Budget Deficit

Democrats Playing With Tax Fire

For a few years now, Congress has been holding the Alternative Minimum Tax at bay with one-year, stop-gap measures. Without some action by Congress, a whopping 23 million Americans will be subject to the tax.

The Alternative Minimum Tax which will target anyone with an income over $50,000, forces people to recalculate their income tax and pay the greater of their normal calculation or the aptly named Alternative Minimum. Democrats, at a cost of $1 trillion dollars over the next 10 years, are seeking to raise the $50,000 figure to $200,000 or even $250,000.

Sounds great, but under rules Democrats have imposed on themselves, any cut in taxes must be offset by either a cut in spending or another tax. This is where 'playing with fire' comes in to play. To erase a hidden tax that most people don't know about, Democrats will need to either dramatically cut spending or create a new and much more visible tax to replace it.

Specifics are still thin as to suggestions to offset the revenue loss. You can be sure that any alternative tax will have a hard time getting through the Senate where Republicans are sore about Democrats allowing Bush's Tax Cuts to lapse.

100 Hours: Minimum Wage Increase

Another part of Nancy Pelosi's promised first 100 hours of the 110th Congress is a promise to pass an increase in the minimum wage.

As I've previously mentioned on this site, I think this is overdue and perhaps should be indexed so as to avoid this fight in the future; but, in any case, the proposed legislation is likely to call for an increase to $7.25/hour.

I do not wish to rehash arguments put forth in my previous article on the topic (link below), except to point out that without an increase by 2008, anyone working full time at minimum wage will be below the poverty line.

As part of this series on the first 100 hours, I want to touch on another aspect of raising the minimum wage: GDP, Taxes and Social Security.

In states where the state minimum wage is higher than the current $5.15 federal minimum, the GDP per working-age capita is $73,369 compared to $62,671 for states at the minimum. In states with a minimum of $7.00 or higher, the GDP per working-age capita rises to $78,950.

Expect Democrats To Give Bush More Iraq Money

Early next year, as previously reported here, president Bush will go to Congress for some $100 billion to support operations in Iraq and Afghanistan. This money, being outside the budget, goes straight to the national debt.

If you are hoping that the newly democratic congress, elected on the slogan "a new direction for Iraq," will deny the request, think again:

Senior Democrats, who take control of both houses of Congress next year, have indicated they would support additional funds for U.S. troops in Iraq and Afghanistan, even though many want a phased Iraq withdrawal to begin in 2007.

If the extra $100 billion is approved, it would bring the total Pentagon budget for 2007 to $547 billion dollars. That figure is likely to be very close to what the entire rest of the world will spend during the same period.

More Money For Iraq

Defense Secretary Donald Rumsfeld and the U.S. commander in Iraq, General George Casey, are seeking "at least $1 Billion" to expand the size of Iraqi forces and to "accelerate the training and equipping" of those forces.

This additional amount is only part of an unspecified sum the Bush Administration will seek to add to the 2007 Budget.

If I am not mistaken, we have already spent north of $300 Billion on the Iraq war -- which was supposed to cost nearly an order of magnitude less. How is it that the Iraqi government, with all its oil, cannot afford this themselves?

We are throwing more money behind a government that is growing increasingly hostile and is actively thwarting U.S. security efforts. Yesterday, Prime Minister al-Maliki ordered the removal of checkpoints around the Baghdad suburb know as Sadr City, home to a significant Shi'ite militant population.

Sadr City is the base of the country's most feared militia, the Mahdi Army, which answers to Shi'ite cleric Moqtada al-Sadr. Sadr's strongly anti-American bloc is the largest in the Shi'ite governing coalition and was instrumental in making Maliki prime minister five months ago.

Budget Deficit Growing Out Of Control

Most parents and grandparents wouldn't even consider buying a house or a new car and forging the signatures of their children and grandchildren on the loan and mortgage agreements.

That choice lede comes from Minnesota's (a red state) Mankato Free Press and expresses the absurdity at the heart of the Federal Budget.

Fiscal 2006 To End With Incomplete Budget

What issue can bring together the Center on Budget and Policy Priorities and the CATO Institute, two organizations at opposite ends of the political spectrum? Bush's budgets.

"Bush is the second-most fiscally irresponsible president ever" - Richard Kogan, CBPR

"President Bush has presided over the largest overall increase in inflation-adjusted federal spending since Lyndon B. Johnson" - Steven Silvinski, CATO

U.S. Federal Budget Far Worse Than It Seems?

According to this USA Today article, the relatively bad $318 billion dollar deficit for 2005 would really be $760 billion if the Federal government were held to the same standards as public corporations.

Why the discrepancy? It seems it is mostly a matter of liabilities:

Congress has written its own accounting rules — which would be illegal for a corporation to use because they ignore important costs such as the growing expense of retirement benefits for civil servants and military personnel.

The article goes on to say that if the figures included to decline of Social Security and Medicare, the actual deficit would be closer to $3.5 trillion.

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