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Government Spending

The Late Edition: February 18, 2013
Posted By:  - 02/18/13

Today’s Taxpayer News!

NTU opposes the Marketplace Fairness Act, a scheme to tax online purchases. Read the full story from the Daily Comet.

The Aspen Daily News takes a detailed look at a number of the tax tinkering proposals President Obama and the Democrats in Congress are likely to attempt in order to avoid the $120 billion in automatic spending cuts due to set in March 1st.

In honor of President’s Day, take a look at the chart below courtesy of the American Enterprise Institute graphically illustrating the percent of spending increases under the past five presidents. Note: This data was compiled in May of 2012.

Pres Spending

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The Late Edition: February 14, 2013
Posted By:  - 02/14/13

Today’s Taxpayer News!

NTU joined several other fiscally conservative organizations in support of a bill by Rep. Ron DeSantis (R-FL) which would extend the temporary Congressional pay freeze. Read the full story from The Hill.

NTU’s Pete Sepp weighs in on the 40 proposals from President Obama’s State of the Union speech, and NTUF’s line-by-line analysis of the cost for those where a cost could be calculated. The full article is from CNBC.

Did you know that Valentine’s Day has strong economic themes?

Check out this illuminating video from Learn Liberty outlining the economics of Valentine’s.

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Taxpayers Need Government out of the Gas Tank
Posted By: Pete Sepp - 02/13/13

Despite big talk on jobs and the deficit, for individual taxpayers working hard to get by in a struggling economy with persistently high unemployment, the President’s State of the Union (SOTU) address tonight provided contrasts and contradictions. Those who filled up their gas tank on the way home from work were surely shocked to see the price of gas has surged to a national average of $3.60 according to the latest numbers from AAA, up about 30 cents over the past month. If you were to ask most commuters if this is what recovery should look like the reply would most certainly be “No.”

When the price of energy directly affects our daily lives and the entire economy, paying top-dollar for fuel means fewer funds for other necessities. Furthermore, the resulting rise in transportation, heating, and food costs, are just a few consequences that increase the costs of doing business and drag down American families .

The President’s speech touted the progress made in expanding oil and natural gas production under his tenure, even though in other forums the Administration continues to attack so-called “tax loopholes” for traditional energy producers.  But the President is primarily taking aim at two provisions - the Section 199 deduction and dual capacity status -  that are widely available for many businesses. Eliminating these common practices, but only for oil and gas, - might please green energy advocates. In the long run, however, this takes our tax system away from the goals of simplicity and fairness. Proponents of higher energy taxes try to paint a picture of special treatment and back-room shenanigans in favor of “Big Oil,” conveniently neglecting to mention policies like the Renewable Fuels Standard (RFS) that exemplifies a systematic partiality toward the “green energy industry.”  Unfortunately, this misguided tactic of perpetual Washington meddling in the energy market comes at a very high price for not only taxpayers, but also livestock and dairy producers, food providers, and the environment.

Unleashing the power of the free market would give taxpayers instant relief and provide real stimulus to our economy. Reforming or repealing the RFS would open-up the commodities market and lower the cost of feed for the troubled livestock industry, bringing down record-high food prices for budget-conscious families. Taking such action would have fit with the President’s State of the Union theme of helping the middle class get ahead, but instead the EPA has refused to respond to pleas for relief from across the private sector. Additionally, lower corporate taxes across the board, rather than punitive tax code manipulation, would further control costs for consumers – providing needed jobs and economic relief. That way, when the day comes that all sources of energy can compete on a truly level playing field, taxpayers will have the funds and technology to make that choice for themselves by voting with their wallets. Based on what we heard tonight, that day may still be far off.

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The Late Edition: February 13, 2013
Posted By:  - 02/13/13

Today’s Taxpayer News!

What is the price tag for the President’s State of the Union (SOTU) proposals? The Washington Examiner breaks it down using NTUF data.

Today, 45 Republican Senators, including John Cornyn (R-TX), introduced a Balanced Budget Amendment to the Constitution aimed at combating out of control spending.

How taxpayer-friendly is your state? The Tax Foundation has compiled the top ten best and worst states for businesses and individuals.

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SOTU Analysis: Obama Lacks Commitment to Spending Restraint
Posted By: Brandon Arnold - 02/13/13

When it come to spending, President Obama’s State of the Union speech gave taxpayers very little to cheer about. But at least there were a few rays of light coming from Senators Marco Rubio (R-FL) and Rand Paul (R-KY) in their subsequent responses.

Right off the bat, the President attacked the impending sequester cuts by saying they would "devastate priorities" and "cost us hundreds of thousands of jobs." He claimed that without Congressional action, "about a trillion dollars’ worth of budget cuts would automatically go into effect this year." This claim is simply false. The total amount of cuts that would take effect this year is about $85 billion -- the $1 trillion dollar estimate is a cumulative total over the 10 year budget window.

Setting aside the President’s exaggeration, let’s put this 10-year, $1 trillion cut into perspective. CBO’s long term spending projections suggest – despite the "devastating" impact of the sequester – outlays will increase slightly from 22.8 percent of GDP in 2012 to 22.9 percent of GDP in 2023. Keep in mind that during Clinton’s presidency, spending averaged 19.8 percent of GDP. During George W. Bush’s two terms, spending averaged 19.6 percent of GDP.

The sequester will not take us back to the Stone Age. It will not even take us back to the spending levels of Bush or Clinton. The government is still scheduled to spend a staggering $3.5 trillion in 2013. And as Senator Paul pointed out in his Tea Party response, "Even with the sequester, government will grow over $7 trillion over the next decade." Better yet, Senator Paul challenged Democrats on their reluctance to cut domestic spending and Republicans on their reluctance to cut military spending – there can be no sacred cows at a time of staggering deficits. Groups on both sides of the aisle as well as Sen. Paul's colleague Senator Tom Coburn (R-OK) have pinpointed billions of dollars in wasteful programs and duplicative spending at the Pentagon that would help meet the sequester goals without weakening our strong defense.

Speaking of Senator Paul, both he and Senator Rubio deserve credit for their support of a Balanced Budget Amendment to the Constitution. Ratification of a BBA would dramatically change the free-spending culture of Washington and force politicians to make tough spending decisions. By contrast, President Obama called for a "balanced approach" to deficit reduction. This was a thinly veiled plea for higher taxes paired with modest reductions to future spending. Higher taxes should be off the table after last month’s massive tax hike on small businesses and high-wage earners.

Spending cuts should be the sole focus. If Obama could just bring spending down to the levels of the Clinton era, our nation’s finances would be on much firmer ground and future generations might have a chance to avoid the mountains of debt we are currently scheduled to saddle them with. Unfortunately for taxpayers, it seems like the era of big government is far from over.

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The State of the Debt
Posted By: Michael Tasselmyer - 02/12/13

During this evening's State of the Union address, we expect to hear the President discuss his plan for creating jobs and strengthening the economy, among a number of other issues affecting Americans in the year ahead. NTUF took a look back at recent trends in overall government spending in order to provide some context as lawmakers discuss the 2013 budget.

According to this NBC News article from 2007:

"Like a ticking time bomb, the national debt is an explosion waiting to happen. It's expanding by about $1.4 billion per day -- or nearly $1 million a minute. ... [The national debt] stands at a mind-numbing $9.13 trillion."

Although those figures are staggering, for those tracking recent developments in government spending, they look somewhat quaint. The Congressional Budget Office recently announced that it expects the deficit for fiscal year 2013 to be around $845 billion. That means the debt will grow this year by about $2.3 billion per day, or nearly $1.6 million per minute. The national debt, as of the time of this post, stands at $16.5 trillion. These figures reflect a deficit that's smaller than it's been in any of the past 5 years.

Other recent debt growth rates:

  • Fiscal Year 2012: Deficit was $1.1 trillion, equating to a debt expansion of $3 billion per day ($2.1 million per minute)
  • Fiscal Year 2011: Deficit was $1.3 trillion, equating to a debt expansion of $3.56 billion per day ($2.5 million per minute)
  • Fiscal Year 2010: Deficit was $1.29 trillion, equating to a debt expansion of $3.53 billion per day ($2.45 million per minute)

NTUF will be following the President's State of the Union Address this evening to let taxpayers know how the policies he proposes might affect the federal budget going forward. Be sure to join us tonight and be part of the conversation.

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President Obama's Past SOTU Addresses & Spending
Posted By: Dan Barrett - 02/12/13

Of course, there is both widespread and wild speculation on what President Obama will say during tonight's State of the Union (SOTU) Address. I'm stumbling across so many predictions that you would think the speech is as important as the federal budget (which hasn't been released yet) or a solution to the pending debt ceiling debate (which has taken a backseat to the automatic across-the-board sequester cuts that have already been delayed in implementation). It is not bad to speculate but at some point, taxpayers will expect an agenda that allows Americans to get back to the business of business, instead of worrying about another government shutdown or one of the many financial near-catastrophes experienced in recent memory. How this happens is anyone's guess but by looking at the past, we can infer what the President might talk about tonight.

First things first, NTU Foundation has analyzed SOTU Addresses going back to the Clinton Administration (check out some of them here). Director of Research Demian Brady uses the same methodology as NTUF's BillTally project to determine how much the President proposes to change the federal budget (both in new spending and savings). BillTally is strictly a study on spending (or outlays) and does not account for revenue or regulatory costs. Normally, BillTally is the only comprehensive analysis of every introduced piece of legislation in both chambers of Congress (somewhere in the neighborhood of 10,000 bills sponsored and cosponsored over two years). You can search for your Representative and Senators' individual BillTally reports here. Now, back to SOTU...

President Obama has given four SOTU Addresses in the past and, as seen below, he has called for both spending increases and decreases (so much so that in 2012, NTUF found that if the speech's provisions were enacted, taxpayers might have seen spending decreases). What is outlined below is something of an historical baseline for taxpayers and policy experts alike to compare with tonight's Address.

President Obama's Spending Changes Related to his State of the Union Addresses
(in billions of dollars)
Year
Non-Defense Discretionary
Defense/Homeland Security
Mandatory
Net
$55.58
$6.60
Unknown
$62.18
$10.20
$11.30
$49.00
$70.50
$39.01
($15.60)
($2.10)
$21.31
$20.79
($48.70)
-0.08
($27.99)
Average
$31.39
($11.60)
$15.61
$31.50
*Historically Presidents do not give State of the Union Addresses in their first year in office
Source: NTUF State of the Union Studies, NTUF BillTally System

Over the past four years, some recurring themes and policies have come up during President Obama's OSTU speeches:

  • Broad Education Reform: Each year, the President has called for varying degrees of reforms in education. Increasing spending related to employing and training more teachers has appeared in all four years. He also proposed eliminating some unproductive education-related programs in 2009 but has since not.
  • Defense: The years are largely split. In 2009 and 2010, the President outlined increases in the defense budget for more personnel whereas, in 2011 and 2012, he was seeking multi-billion cuts.
  • Energy: Not a secret, President Obama seeks to develop a clean energy sector and has voiced his support for that transition every year, ranging from cap-and-trade proposals in 2009 to increasing energy efficiency in industry and buildings in 2012. He also called on his Administration to open up more offshore areas for oil and natural gas exploration.
  • Financial Changes: One of the recurring policies in the President’s SOTU Addresses is allowing homeowners to refinance their mortgages. Though many different bills have been proposed in both chambers and both sides of aisle, major changes to either how mortgages are negotiated or regulated have not occurred, except for some changes in the Dodd-Frank Act.
  • Immigration Reform: Since 2010, the President has called for immigration reform and, at times, for an omnibus comprehensive package. He has not given many details on specifically what he would like to see passed through Congress but, in 2011, he supported the DREAM Act. For perhaps some other information on this subject, check out NTUF Policy Analyst Michael Tasselmyer's post on the last comprehensive immigration reform package to be scored.
  • Infrastructure: As staple in his agenda, the President has continually asked Congress for more infrastructure funding for project ranging from increased bridge and levy safety inspections to constructing high-speed rail and improved highways. He has been pushing for the creation of a National Infrastructure Bank for years, which would centralize some public and private spending for these improvements.

NTUF will be following the Presidents SOTU Address this evening to let taxpayers know how the policies he proposes might affect the federal budget going forward. Join us on Twitter and follow the coverage offered by the National Taxpayers Union.

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WATCH & PLAY: NTU State of the Union ‘Hangout’ Livestream & “Price the Proposals” Game
Posted By: Douglas Kellogg - 02/12/13

If you have not submitted your best guess on the total cost of everything the President proposes in his speech tonight, go to the “Price the Proposals” game page HERE to submit your entry before the speech ends!

Our Google+ Hangout is LIVE during the State of the Union and GOP response! Watch the livestream below – or click HERE to watch it on YouTube (if there is any problem with the streaming video on this page, please watch via YouTube).


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The Late Edition: February 7, 2013
Posted By:  - 02/07/13

Today’s Taxpayer News!

NTU recently joined several other fiscally conservative organizations in calling on Congress to enact defense savings. Read the full story from The American Conservative.

The Regional Greenhouse Gas Initiative Inc., which manages the carbon emissions program for nine Northeastern states, is planning to reduce permits to drive up prices according to Bloomberg.

Beer enthusiasts can rejoice: The New Hampshire House of Representatives rejected a proposed beer tax 308-35 yesterday, says the Portsmouth Patch.

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Predicting the Fiscal Future
Posted By: Michael Tasselmyer - 02/06/13

On Tuesday, the Congressional Budget Office (CBO) issued "The Budget and Economic Outlook: Fiscal Years 2013 to 2023," giving taxpayers an in-depth look at the economic situation our nation will most likely be facing over the next ten years. The report covers far more ground than I can go over in the space this blog affords me, but there are some noteworthy findings I thought were worth sharing.

  • Federal debt will remain very high. CBO's forecast predicts that federal debt held by the public, as a percentage of GDP, will stay around 73 percent over the next five years- a historically high figure. For some context, the average debt/GDP percentage over the last four decades was nearly half that, at 39 percent. The federal deficit in 2013 is projected to slip below $1 trillion for the first time in five years -- down to $845 billion, assuming sequester cuts take effect in March. But CBO expects total debt to keep climbing, as deficits amount to $7 trillion over 2014-2023. 
  • The recovery hasn't arrived yet. CBO doesn't expect actual GDP to match potential GDP until 2017. In 2013, unemployment is expected to remain around 8 percent, and interest and inflation rates will likely remain extremely low. By 2014, CBO expects more substantial growth in GDP and a slight dip in unemployment rates, down to 7.6 percent. The projected annual average by 2019 is expected to be about 5.2 percent.
  • Federal revenues and spending are both projected to increase. Recent changes in tax policy, as well as an expected growth in income from improving economic conditions, will mean more tax revenue for the federal government in coming years. However, federal outlays are expected to grow as well -- and remain higher than revenues for the foreseeable future. By 2023, federal outlays are expected to reach 23 percent of GDP (and on an upward trajectory), while revenues would remain around 19 percent of GDP.

When discussing CBO's projections, it's important to keep in mind that their baseline forecasts are made under the assumption that current law will remain in place over the next ten years. No forecast is perfect, but this gives budgetary analysts a benchmark against which we can compare how future cuts or spending increases would affect the budget relative to the path it's on now. The forecast could be significantly impacted depending on how Congress decides to act regarding:

  • Sequester cuts set to take effect March 1st;
  • The Continuing Resolution set to expire March 27th; and
  • The statutory limit on federal debt, postponed from taking effect until May.

The Washington Post has a nice visual summary of some of the data from CBO's report, including a helpful graph comparing how health care spending and debt interest payments are expected to grow relative to programs like defense spending and Social Security.

Also, NTUF's own Demian Brady was featured on Townhall.com last month in a piece highlighting where Congress might begin trimming down the deficits CBO has projected. It features preliminary BillTally data from the 112th Congress.

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