The Numbers Game on Capital Hill

Posted on July 19, 2011

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Our boys and girls on Capital Hill all think they are good with numbers. THEY ARE NOT!

Let’s start with the Democrats. Every time they raise taxes to increase revenue, it doesn’t. They invest spend billions on ethanol subsidies to reduce our dependence on foreign oil, it doesn’t. They invest spend nearly a trillion dollars to stimulate the economy, it didn’t.

The Republicans are not any better. They negotiate a deal to reduce spending by a hundred billion. It turns out to be only $53 million. They defend a balanced budget amendment. It doesn’t balance the budget.

It probably wasn’t planned this way; but, because the Democrats chose not to put up a budget for the last 800+ days and because the Republicans didn’t stand their ground on the last Continuing Resolution, everything has come to a head on the current debt ceiling debate. And I think that is probably a good thing over all.  It has forced all of our boys and girls on the Hill, including the President, to focus on the real problem facing America; the debt and the deficits.

So, although none of our boys and girls are good with numbers, they had better learn real fast. The issue of debt/deficits has become the proverbial hot potato that no body wants to hold on to. But folks, it’s not a hot potato. It is more like  a delicate crystal ball filled with a highly unstable explosive.  Dropping this ball is not an option.

As usual, this old man wants to be helpful. I have some numbers that might be useful for our boys and girls to understand.

Let me address the Democrats first. You and your President whine and whine that the rich must be forced to pay their fair share of federal taxes. Well, Pat Slattery, of The Free Market Project, has recently reported on the true tax burden distribution in America  today. All of you Democrats should read this article. But if that is asking too much, here in round numbers are some figures you need to understand:

  • 50% of wage earners pay ZERO federal income tax.
  • The top 1% of wage earners pay 38% of all the federal income tax.
  • The top 5% of wage earners pay 60% of all federal income tax.

Now, my Democrat friends, do you really want to talk about fair share? If that is not enough, maybe a picture (a graph actually) will help you understand that raising taxes does not necessarily raise revenue. I pick this graph of a great post the other day at Questions and Observations:

Tax Revenues as a Percentage of GDP by Year, 1933-2010

 What you Democrats learn from this graph? Let me explain. What you see is that from the time of President Eisenhower to the present; that’s over 60 years, the tax revenues have averaged with very little variance 18% of GDP. Now here is the kicker. In that same time period, top tax rates have varied from a high of 90% to a low of 28%; yet revenues have remained at 18% of GDP.  Why is that you might ask? The answer is when tax rates are higher, the economy slows down and the higher tax rate is applied to a smaller pie and the government ends up with 18% of a smaller GDP. Conversely, when tax rates are lower, there is generally economic growth and the government receives 18% of a bigger pie. So please Democrats, get off this idea that you can raise revenue by increasing taxes. We have over sixty years of data that says it won’t work.

Okay, Republicans, it’s your turn, Please pay attention. i know that you all are much better with numbers than the Democrats. But, I want to direct you to a recent article  at Fox News.Com.  The article has a lot of useful numbers, but for now i want you to focus on just one number. Actually it is a range of numbers.

The author of the afore mentioned article estimates that  80 to 120 House Republicans who will not vote for a debt ceiling increase, no matter what. To those of you who make up this group, I applaud you for standing on your principles. Personally, I too would like to see us bite the bullet now and not raise the debt ceiling. However, my fellow conservative Republicans we need to be pragmatic because we could come out on the losing end of this battle. Let me spell it out for you. If you stand your ground to the bitter end, Boehner and the rest of the RINOs will cave in on a plan that will get 80 to 120 Democrats to side with the Republican majority and we will all be worse off for your efforts.

Now, fortunately, there does seem to be one adult among the Republican ranks on the Hill. I am referring to Senator Coburn. Senator Coburn has come out with a 600 page plan to cut spending by over $9 trillion. Yes, I know his plan calls for eliminating some tax deductions and we conservatives automatically want to reject any such plan. But, come on folks we all know that there are a lot of really stupid tax deductions in our current tax code and Senator Coburn has a good handle on most of them. (For more details on Senator Coburn’s plan, checkout today’s post at Political Realities.)

I don’t think that Senator Coburn expects to get every thing he has included in his plan. But it just might be possible to find within his plan something tha will satisfy both sides. It should be possible to get some serious spending reduction for the next fiscal year, as well as, the out years and by eliminating some tax deductions and loop holes, satisfy the Democrats on their desire for increasing revenues.

In my opinion, the last thing we need is some kind of stop gap measure. we need to put and end to the debt ceiling debate for the rest of Obama’s present term in office. We need our House Republicans and all Republicans to focus defeating the Obama in 2012. we need our House Republicans to focus on using the purse string that they control to stop Obama and his Czars from strangling the last bit of life out of our ailing economy. Also, our House republicans need to throw more support behind Darrel Issa’s oversight investigations.

Well, that’s what I’m thinking. What are your thoughts?

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