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New Year's Resolution: Deficit Reduction?
Posted By: Michael Tasselmyer - 12/28/13

As the year comes to a close, undoubtedly we begin to reflect on the ups and downs of the previous year. But lawmakers in Congress may be looking back a little further than that after reading the Congressional Budget Office's (CBO) latest report on the federal debt and deficit.

Last week, the non-partisan budget agency released an update to its November report, "Choices for Deficit Reduction." The report offers some sober analysis of the country's mounting debts and deficits, which are at historically high levels. The graphic below puts things into some perspective:

cbo options dec 2013

As CBO shows, not only are total outlays higher than they've been over the previous three decades, they are on pace to grow even more, and the revenues they're funded by are coming in relatively slowly. That particular trend illustrates the fact that for all the talk of a recovery, the U.S. economy still has a long way to go before things return to pre-recession levels of prosperity. As CBO explains:

"Making the task of deficit reduction more complicated is the economy's slow recovery from the severe recession. By CBO's estimate, the economy is now about 5 million jobs short of where it would be if the unemployment rate was down to its sustainable level and participation in the labor force was back up to its trend. The shortage of jobs has occurred mostly because demand for goods and services has been weak relative to the productive capacity of the economy."

But historical trends mean very little if we can't draw some conclusion for policy and outcomes going forward. CBO paints a rather harsh picture of where the current path of spending and borrowing at such high levels may lead:

"Because federal debt is already unusually high relative to GDP, further increases in that debt could be especially harmful. ... Higher debt would lead to larger interest payments; making those payments would eventually require some combination of lower noninterest spending and higher taxes. In addition, increases in debt tend to reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn reduces people's future income relative to what it would otherwise be. Also, when debt rises, lawmakers are less able to use tax and spending policies to respond to unexpected challenges, such as economic downturns or international crises. Rising debt could itself precipitate a fiscal crisis by undermining investors' confidence in the government's ability to manage the budget."

At the end of the day, deficit reduction matters a great deal, and is ultimately a matter of either reducing spending, increasing taxes significantly, or both. Lawmakers will have to make a decision about which direction to pursue when they return to Washington for 2014.

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Per-Mile Fees Would Drive Up Transportation Costs
Posted By: Michael Tasselmyer - 12/26/13

In a recent edition of The Taxpayer's Tab, we here at National Taxpayers Union Foundation highlighted a bill offered by Congressman Tom Graves (R-GA) and Senator Mike Lee (R-UT) that would phase out federal control of certain roads and other infrastructure in order to transfer that authority to the states. The Transportation Empowerment Act was introduced in the wake of warnings from the Congressional Budget Office that the Highway Trust Fund, which finances the construction and maintenance of most of those transportation projects, is in poor fiscal condition.

Among the recommendations for keeping the Fund solvent? A nearly 83 percent increase in the federal gas tax, up to 33.3 cents from its current level of 18 cents.

That particular suggestion came from the office of Congressman Earl Blumenauer (D-OR), who also recently introduced H.R. 3638, the Road Usage Fee Pilot Program Act of 2013. Rep. Blumenauer’s bill would authorize $35 million to study how a mileage-based fee program might be implemented in place of the gas tax.

The Congressman has called for similar studies before. In January, NTUF highlighted legislation that Blumenauer introduced in the 112th Congress that would have authorized nearly $155 million for review of the same scenario.

A per-mile fee would likely be instituted in one of three ways:

  • A GPS-based system would use satellite technology to track the total mileage a registered vehicle travels during a pre-determined period of time. That information would then be sent to a central database, where bills would then be processed and sent to drivers.
  • A "pay-at-the-pump" system would also rely on wireless tracking systems to log drivers' travels, but the fee would instead be charged at gas stations across the country whenever drivers decide to fill up.
  • A prepaid system would require drivers to buy "mileage licenses," authorizing their use of public roads for a certain period of time or total mileage before requiring renewal.

Aside from the obvious privacy concerns and challenges of implementation and administration (especially from a financial and logistical standpoint), these proposals all have one thing in common: they would increase the cost of driving significantly.

The Government Accountability Office recently modeled the effect of a (seemingly modest) 0.9 to 2.2 cent per mile tax on the typical American driver. They found that the average driver would pay between $108 and $248 per year under that system, compared to the $96 they pay now – an increase of at least 12.5 percent.

Current funding for federal transportation infrastructure, under the MAP-21 Act, expires at the end of 2014.

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A Message from NTU Foundation
Posted By: Dan Barrett - 12/23/13

On behalf of the National Taxpayers Union Foundation, I would like to convey our deep appreciation for your support in 2013 and wish you and your loved ones a Merry Christmas, a Happy Holiday Season, and a prosperous New Year.

Thanks to you, NTU Foundation has reached more taxpayers with vital information on Washington's spending addiction, more lawmakers with our special BillTally project data, and more reporters and bloggers in need of analysis that you won't find anywhere else. This year has been a great success and we want you to know that we couldn’t have done it without your help. That is why I am asking you for your continued support in America's time of need.

As Congress continues to avoid the tough choices, Americans are being hit with higher taxes and more spending. The politicians say that we need to spend our way out of this economic slump, but you know better. You can't run a household by borrowing: you have to cut back your costs. Congress doesn't understand that. They think that more legislation and regulations will put Americans back to work, but the reality is that taxpayers are the real job creators, not the government.

You know how to balance a checkbook -- to prioritize -- and I'm asking for you to keep NTUF in your thoughts as you do your end-of-year planning. We need your continued support because NTU Foundation is entirely member-supported. Unlike some other organizations in and around the nation's capitol, we don't take government handouts. Instead, we rely on contributions from taxpayers like you, who understand that the more transparency there is regarding the cost of bills in Congress, the closer we can get to a balanced budget and lower taxes.

Did I mention that all contributions to NTUF are fully tax-deductible?

With your $100, $50 or $25 gift, not only will NTUF be better able to cut through the political rhetoric with clear-cut data but you can also help ensure that Washington's big spenders will get that much less from you on Tax Day! Next year, we plan to score more legislation, show more Americans the cost of government, and help educate the next generation of policy experts ... and you can help us make a difference!

Again, I wish you and your family a Merry Christmas and appreciate your continued support!

With gratitude and thanks,

Duane Parde
President

P.S. Remember, to receive a 2013 tax deduction, you must make your contribution to NTUF by December 31st. To donate via credit card or PayPal, you can visit our secure online donation page. Please don't wait. Support NTUF today!

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Latest Taxpayer's Tab: What Did Congress Miss?
Posted By: Michael Tasselmyer - 12/21/13

Tab Insert

The Murray-Ryan budget compromise cleared all of the Congressional hurdles this week, capping off a tumultuous negotiation process that began after the government shutdown earlier in the year. In this week's edition of the Taxpayer's Tab, National Taxpayers Union Foundation has a detailed breakdown of what exactly is in the bill, as well as some of the other deficit-reduction options that Congress left on the table.

The compromise bill:

  • Increases federal spending by $65 billion (75 percent of which will be seen in the first two years alone);
  • Raises the self-imposed budget caps Congress recently agreed on;
  • Offsets additional spending by $78 billion -- but 75% of that amount won't be realized for another six to ten years;
  • Accounts for half of its proposed savings by way of increased user fees.

Congress did, however, have other options for budget cuts throughout the year. A list of all the savings bills we identified as part of the BillTally research program is available for browsing and download in this week's edition.

Check out the Tab online here and be sure to subscribe to our mailing list for future updates.

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Shining a Light on Government Advertisements
Posted By: Brandon Arnold - 12/20/13

We’ve been exposed to all sorts of ads promoting Obamacare lately – from beer-guzzling fraternity “bros” to the recent “pajama boy.” Fortunately, Americans are starting to ask if these ads are being paid for with taxpayer funds.

Such questions are certainly warranted given the federal government’s history of wasting public resources.  For example, Senator Tom Coburn (R-OK) just pointed out in his “Wastebook 2013” that the federal government took $65 million of the emergency funds provided for Hurricane Sandy disaster relief and spent it on tourism ads for New York and New Jersey.

It’s clear that the government needs to provide more transparency and sunshine about its expenditures. Last month, former National Taxpayers Union Foundation intern Curtis Kalin identified some of the features of the “Taxpayer Transparency Act,” which was introduced by Rep. Billy Long (R-MO). The bill would require government agencies to disclose the use of taxpayer funding in any print, online, radio or television advertisements.  This seemingly small step could go a long way to helping people understand how their tax dollars are being used (and misused).  Speaking for National Taxpayers Union, I’m pleased to hear that Senator Roy Blunt (R-MO) will soon introduce companion legislation in the Senate.  

In an ideal world, politicians and government agencies wouldn’t squander public funds on advertisements. But until we can achieve more fiscal discipline in Washington, we need legislation like the bills introduced by Rep. Long and Sen. Blunt so we’ll at least know when our money is being spent on such activities.

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Safeguards Against Predatory “Digi-Taxes” Advance
Posted By: Nan Swift - 12/20/13

Desperate to cover their bills from chronic overspending, too many states and municipalities are taking President Reagan’s famous “If it moves, tax it” to be a prescriptive rather than cautionary quip. As the market for digital goods such as music downloads and online subscriptions grows, so also are fears that governments could see the burgeoning marketplace as a would-be cash-cow.

These fears aren’t unfounded. For instance, cell phone users have been hit hard with unfairly high tax rates, as states and localities have scrambled to add predatory levies on wireless phone service – all to pay for projects that have little to do with improving the communications network. The average nationwide tax burden on wireless service is far above the typical rate imposed on other goods and services (click here to learn more about the Wireless Tax Fairness Act). In addition, taxing digital goods can be an especially complicated endeavor, and it’s important to ensure consumers aren’t forced to foot the bill for multiple, burdensome taxes on the same purchase.

Because the instinct of most governments is to tax first and ask questions later when encountering a potential revenue stream, it is essential that Congress get out ahead of this problem with practical guidelines. With purchases crossing state and international boundaries, there’s a clear-cut role for Congress to define the jurisdiction with the right to tax a digital transaction and ensure that costly taxes and regulations don’t impede digital commerce.

As NTU Executive Vice President Pete Sepp explains in the video below, we can’t let bad tax policies stifle the economic promise of the Internet.

To that end, Senators Ron Wyden (D-OR) and John Thune (R-SD) have introduced the Digital Goods and Services Tax Fairness Act of 2013 as S. 1364 in the Senate.  In the House, Representatives Lamar Smith (R-TX) and Steve Cohen (D-TN) have introduced a companion, H.R. 3724. Let’s hope that when Congress comes back legislators can work toward the swift passage of this common-sense bill.

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Where Could Congress Cut Spending?
Posted By: Demian Brady - 12/18/13

The Senate is expected to pass the Murray-Ryan budget compromise bill as soon as today. As we noted, the bill increases federal spending by $65 billion (75 percent of which will occur in the first two years) by raising budget caps that were agreed to just a few years ago. It also includes offsets of $78 billion over the next 10 years -- three quarters of which occur six to ten years from now. Moreover, nearly half of the savings in the bill are achieved by increasing user fees in a way comparable to a tax increase.

The major flaw of this proposal is that it increases spending now and promises to pay for it years later. By approving this bill, Congress is weakening recently-passed, self-imposed budget limits … so why should taxpayers expect that Congress they will abide to the reductions in this compromise over the long term? Some Members, including Congressman and House Budget Chair Paul Ryan (R-WI), have already signaled that legislators will likely revisit the Cost-of-Living Adjustments, or COLA, slowdown for certain military retirees that was included in the compromise (savings of $1 billion over five years and $6 billion over ten). It is conceivable that similar carve outs will occur as elected officials give in to pressure for more spending.

While it is disappointing that Congress is not choosing to replace the automatic across-the-board sequester caps with an equal amount of upfront targeted spending cuts, unfortunately, it is not surprising. Historical data from BillTally, NTU Foundation's legislative tracking program, shows that Congress produces far more proposals to increase spending than ways to trim the budget. The same trend is observed in this Congress. As of December 17, we have identified 84 savings bills and 424 spending bills in the House and 40 savings bills and 254 spending bills in the Senate. 

A complete list of all the spending reductions is available as an Excel spreadsheet for download, or can be browsed online. The list also includes some savings ideas that were included as partial offsets in bills that would, on net, increase spending. 

NTUF observed that during the 112th Congress, half of all the cut bills were authored during the first six months and 75 percent by the end of the first year, becoming more scarce during the second year. We are still in the process of reviewing and scoring legislation for the current Congress, but so far, the bulk of the savings we identified were introduced during the first six months of the year.

There is certainly no shortage of places Congress could look for more spending reductions in the $3.5 trillion budget. Lots of reference sources are available: from Senator Coburn's (R-OK) Wastebook, to NTU & US PIRG's list of cuts, and the Congressional Budget Office's most recent Budget Options reports on discretionarydefense and mandatory reductions, to name just a few.

As federal spending, debt, and overreach are set to figure more prominently in policy debates and campaigns during this upcoming election year, will taxpayers see their Representatives and Senators drafting more cut proposals in 2014? Stay tuned to find out because NTUF will continue to keep a close watch on Congress throughout the New Year!

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Senator Coburn Releases 2013 Wastebook
Posted By: Nan Swift - 12/17/13

This morning the Senate voted on cloture to move forward the sequester-busting budget deal the House passed last week. The deal is proof-positive that Congress can’t keep spending in line with modest budget caps, even when those caps are The. Law.

Before Senators vote on final passage tomorrow, they should consider Senator Coburn’s (R-OK) “Wastebook 2013,” released just a few hours ago. This year’s Wastebook highlights nearly $30 billion in “questionable and lower-priority spending.” Sen. Coburn goes on to note that this is just “a small fraction of the more than $200 billion we throw away every year through fraud, waste, duplication and mismanagement.”

Some of the outrageous highlights of this year’s Wastebook include:

  • More than 100,000 federal employees being paid a salary of at least $100,000 were furloughed as non-essential. Each of these were paid $4,000 for the time off of work during the shutdown. [emphasis added]
  • $297 million on a blimp for the Army that flew once, for 90 minutes, over Lakehurst, NJ.
  • $65 million in Hurricane Sandy “Emergency” Funds spent on TV ads
  • $325,525 on a National Institute of Health study that found wives should calm down faster during arguments with their husbands

Go here to read the whole list.

Only a few months ago, House Minority Leader Nancy Pelosi (D-CA) proclaimed, “The cupboard is bare. There’s no more cuts to make.” However, as Senator Coburn’s annual Wastebook so ably demonstrates, the cupboard is far from bare.

Congress shouldn’t be resorting to accounting gimmicks and promised cuts in the future to pay for more spending now. We often say that Congress needs to make tough decisions on spending, and they do, but as the Wastebook and NTU’s own report with our friends at U.S. PIRG prove – there are still a lot of easy decisions Congress is leaving on the table.

Senator Coburn goes on to point out, “There is more than enough stupidity and incompetence in government to allow us to live well below the budget caps. What’s lacking is the common sense and courage in Washington to make those choices – and passage of fiscally-responsible spending bills – possible.”

Click here to call your Senator now and urge them to keep the caps and oppose the budget deal.

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(AUDIO) Taxpayers Get Raw Deal - Speaking of Taxpayers
Posted By: Dan Barrett - 12/16/13

NTU Foundation's Demian Brady and NTU's Brandon Arnold both offer insight on why the numbers don't add up and what to do as the bill heads to the Senate. Plus the Outrage of the Week! 

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