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Tuesday, September 27, 2005

Budget Concerns

Joe and Mary have been discussing having children ever since they got married. They both work well paying jobs, but feel that at least one parent should stay home to raise any children they have. After a couple of years of careful planning and building up their savings, Joe and Mary feel that they are ready and actively work to get pregnant.

Finally, all their efforts succeed and Mary is pregnant. She’s going to work until the baby arrived. At least, that was their original plan.

The first kink to their plan came when the obstetrician told them that Mary was carrying triplets, possible a boy and two girls. It meant that their expenses were going to be much more than thought. Mary and Joe, however, were still certain that they could afford the new expenses. It simply meant that they would have to forgo some luxuries but they felt it was doable.

The next hiccup came when doctor’s informed them that the boy had Down’s Syndrome and one of the girls might have Spina Bifida. Joe and Mary took a deep breath and thanked God for their insurance plan.

Because of more complications, Mary had to stop working when she was nearly 7 months pregnant cutting short 2 months of income. Their savings account had already been depleted due to the added expenses of having triplets such as cribs, diapers, strollers, and a bigger car.

The triplets were born and the doctor’s predictions about their health were true. Ian had Down’s Syndrome and also had a hole in his heart that would require surgery if it didn’t close on its own. Kate had Spina Bifida and was going to need surgery to correct the spinal anomaly. Both babies were going to need more care than originally thought. Only Ruth seemed to be a normal baby.

Shortly after the twins were born, Joe lost his job when the company he worked for downsized. Luckily he was able to get a new one within 3 months but he wasn’t going to be earning nearly the same amount of money he was earning before.

The three months that Joe was out of work wiped out the couple’s savings. Their expenses kept increasing, and they borrowed from both sides of the family. Mary could no longer consider going back to work due to the special needs of the babies.

Mary and Joe’s situation may seem extreme, but it is a situation that is facing this country today. Income (i.e. taxes) have been cut and the Bush administration plans to cut even more. Luxuries (i.e. Medicare, children’s programs, education spending, veteran’s benefits, etc) have been cut nearly to the bone. Expenses (Iraq, Katrina, Rita) are increasing. We’ve borrowed heavily from China and Japan.

Sooner or later something will have to give. We can not afford to continue cutting income and adding expenses. The plan to cut programs aimed at the most needy in this country only hurt the people that funding for rebuilding after Katrina and Rita are supposed to help.

The cover of Newsweek after Bush’s recent speech in Jackson Square in New Orleans only needs a slight modification to address Rita. An update of that cover would say Katrina + Rita + Iraq – Taxes = How Much?.

The Bush Administration and many Republicans feel that the tax cuts are sacrosanct. Prior to Rita hitting the Gulf Coast, Texas Representative Jeb Hensarling (R) stated, “We do not have to raise taxes. We do not have to pass debt onto our children."

The current suggestions being offered by Republicans, though, don’t even have support from a “working majority” in Congress according to Senate Budget Committee Chairman Judd Gregg, R-N.H.

Sen. Barack Obama (D-IL) said September 18, 2005 on Face the Nation

"This I think is where the problem comes in. You can't fight a war in Iraq that's costing upwards of 200 billion dollars and rebuild Katrina-rebuild N.O. and respond to the aftermath of Katrina-and try to deal with all the other domestic needs that we have, and- then cut taxes for the wealthiest 1% of Americana. I mean there was talk right-immediately after the hurricane that the republicans in the senate were still going to push forward with the repeal the estate tax which is mind boggling I think. We need some adult  supervision of the budget process...”

Rather than be accused of not offering any solutions, here are my suggestions to attempt to balance this growing problem.

  1. At the very least, allow the tax cuts to sunset. Simply allowing the Bush tax cuts to sunset will gain $52.6 billion from the wealthiest 1% during the next 5 years. Allowing the tax cuts to sunset for everyone will add back $355 billion into the budget over the next 5 years. The majority of that (69.79%), btw, comes from the wealthiest 19% of the tax payers.
  2. Cut the pork from the budget. DeLay may think that there is no fat left to cut from the budget, but he’s sadly mistaken. Citizens Against Government Waste have found “13,977 pork projects totaling $27.3 billion in the fiscal 2005 appropriations bills.” Unless I’m confused about what pork barrel spending is, I’d say that $2 million for the buy back of the USS Sequoia Presidential Yacht is money that could be well spent in the hurricane relief efforts.
  3. Re-address transportation bill. The transportation bill includes $95 million to widen Highway 23 in Sheboygan and Fond du Lac counties in Wisconsin. It’s an admirable project that the Wisconsin Department of Transportation estimates will be needed. . . in 15 to 20 years. While we’re looking at the transportation bill, let’s not overlook the $1.5 million that is in the bill to pay for a bus stop in Anchorage, Alaska. Yes, a bus stop.
  4. Re-address the equally bad energy bill. That bill authorizes $125 million to reimburse 115% of the costs of remediating, reclaiming, and closing orphaned wells. Section 105 of the energy bill mandates that $500 million be spent on contracts that will not make back their costs in earnings.

Either we start with these steps, or we continue to borrow money from China and Japan. Personally, I think that the $6,846 that I already owe to foreign investors thanks to our government is enough.

Cross posted on Can't Keep Quiet!

Posted by Mulligan at 10:04 AM in Current Affairs, Politics | Permalink

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Comments

Adult supervison over the budget? Boy, would I like to see THAT. We are hauling ass into insolvency as fast as this administration can whip us to it.

Great Post!

Posted by: Jet | Sep 27, 2005 7:33:52 AM

There was a time that a "conservative" was someone who was at least smart enough to realize that when one party controls all the estates, they will run amok. To be a conservative today, is to be a moron.

Posted by: Jersey McJones | Sep 27, 2005 8:14:30 AM

You're a poo poo head!

Posted by: Ann Alsex | Sep 27, 2005 12:06:13 PM

Damn, we have been reduced to "poo poo head" I gues it's better than fucktard! Or "liberal scum"?

Posted by: The Bastard | Sep 27, 2005 12:49:54 PM

Fiscal responsibility is about as prevalent in the halls of politics as restraint is in a five year old in a candy store. It just doesn't exist, and politicians from both sides of the barrel are to blame.

That's why I was pleasantly surprised to hear about Nancy Pelosi's offer to give back upwards of 70 million from earmarked transportation funds for California to help offset Katrina related costs.

It's certainly not enough, but it is a start.

Posted by: ken grandlund | Sep 27, 2005 12:56:08 PM

poo poo head? I like that; it makes me laugh

Great post Mulligan. Unfortunately New York can't give back money from pork barrel programs because they only go upstate which should be a different state

And my city and state taxes are higher than my fed taxes which is very sad--it's very easy for a good accountant to figure out deductions from the fed.

I have thought a lot about the estate tax, and there's something that I don't understand. Pride. My sister and I were proud to pay taxes on my mother's estate in 2001--her estate wouldn't be taxable today.

It took a lot of time, and cost more than you would think percentage wise and when New York City and New York State is added, but we kept on telling ourselves that we were doing this for our country.

Most really "rich" people have different types of trusts, so the taxable amount is still much lower than the real estate.

Yes, money should go to the kids, yes there are a lot of cases to be made against the estate tax, but when a person has a taxable estate of three million or more, you know it's usually really twice that.

Our country allowed them to make that, and yes I do mean "allow" They should feel pride in having made enough so that they can and should pay estate taxes.

they call themselves patriots because they support a stupid war, but when it comes to really giving to this country they stand on the sidelines. well, they ain't giving their kids to Iraq, so what do they have to feel patriotic about?

this is a very emotional and mixed subject to me and my sister. Had we asked our mother to put her money into a trust, she would have (as long as we promised to always get along)but we knew that even a trust in name only would have made her feel that she was giving up her independence.

So we paid her bills as she couldn't and went through the whole farce of her being independent. Got yelled at a lot by our accountant, who did talk his parents into trusts. But when we paid that money, we felt like we were helping our country.

Though now I wonder to what pork barrel programs that money went to.

I also wonder why so many Republican patriots are so hesitant to help support their country. Guess they think it's up to the suckers.

Sorry for the length; I get riled about many subjects but this is one that really hits nerves

Posted by: pipia | Sep 27, 2005 1:39:22 PM

"The Bush Administration and many Republicans feel that the tax cuts are sacrosanct."

The problem is that if you raise taxes you will actually take in less revenue. We are now taking in more revenue than any other time in history because of the cuts.

The real problem is that we are spending like drunken sailors. Under Clinton our federal budget was $1.98 tillion. Under Bush it is a whopoping (and wasteful) $2.6 trillion. That is something like a 38% increase in spending. That is out of control.

"At the very least, allow the tax cuts to sunset. "

Bush lowered the lowest bracket from 15% to 10%. Do you really want to raise taxes on them? You say that $52 billion will be raise from the wealthiest 1%. That is something like 2% of spending for the year. Given how much money our government spends foolishly on social and corporate welfare, shouldn't we find the waste in federal spending first before we confiscate more money from hard working American families. Delay was an embarrassment when he said there is nothing that can be cut out. Frankly that was surprising.

"Re-address transportation bill."

Right on the money.

"Re-address the equally bad energy bill."

Right on the money.

Over all I agree with your point. I just disagree on the best way to close the budget gap.

Posted by: gindy | Sep 27, 2005 2:05:23 PM

Wow. Simply crazy. Good job 08.

Posted by: Brad | Sep 27, 2005 5:05:49 PM

And they call LIBERALS moonbats. Holy hell.

"The evidence I’ve compiled and my reasoning has made it quite easy to see that Iraq WAS a threat"

So perhaps you should share this information with us and, oh, with the administration who desperately needs it.

You're polishing the brass on the Titanic, son. This administration's done.

Posted by: Brad | Sep 27, 2005 5:09:11 PM

So that Brad won't look like he's crazy, the comment he is responding to has been deleted by me. The person who left it obviously did not read my post and was simply doing a word search for the word Iraq and putting a post of his own up as a comment.

Since this post is about the budget and not about the war in Iraq, I had no qualms at all about deleting the spam.

Posted by: mulligan | Sep 27, 2005 5:18:57 PM

The song ringing through my head is by Bruce Springsteen: Bob should have pulled out, but he stayed in. Janey had a baby, but wasn't that a sin...

I love the analogy, but best of all the equation and quotes from Sen. Obama. I'm linking up.

Posted by: windspike | Sep 27, 2005 5:22:39 PM

Hey, just wondering... Why is our government collecting record tax revenue and closing the deficit if Bush cut taxes?

See here.

See here.

See here

See here

See here

See here

Just wondering since you are are economists and the author has written this mindblowing article regarding a couple with triplets (which occur roughly 1:8100 births). I guess the boy was George and the girls were named Katrina and Rita...

And the reason I pointed this 1:8100 chance is, I wonder the chances of a presidency having a major homeland attack by an enemy and two severe hurricanes, one of which was the worst one this country has ever had.... But nobody thought this through when Bush went and finished Daddy's war without the French and Germans... Did they? Bush did.

Posted by: steve | Sep 27, 2005 10:35:10 PM

Close the tag Steve... Close the tag...

Sorry...

Posted by: steve | Sep 27, 2005 10:36:03 PM

Really, Steve, I expect better from you. Most of your sources greatly inflate the blip in the deficit in May 2005. A one time increase in revenues does not equate to a "rapidly" decreasing deficit. Your last source in that list does caution that the event may be a one time deal.

But senior budget analysts, including the Republican who heads the Congressional Budget Office, cautioned this week that higher tax revenues may be a one-time phenomenon that in no way addresses the nation's grave deficit challenge.

I also said that my example was extreme. I was only using it to illustrate a point.

As for Bush finishing his daddy's war, well, that hasn't happened yet. Has it? I mean if it's "finished" then why do we still have troops over there?

Posted by: mulligan | Sep 28, 2005 12:03:25 PM

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