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Government Spending

Speaking of Taxpayers, September 7th (AUDIO): “No-Brainer” Bills Congress Should Pass
Posted By:  - 09/07/12

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A discussion of 10 "No-Brainer" bills Congress can pass to increase government accountability, reduce wasteful spending, and improve the economy as a whole. Also, the "Fiscal Five" takes a look at soda taxes, property taxes, and more.
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Transfer Payments Rise 34 % Under Obama, Taxpayers Lose Out Big Time
Posted By:  - 08/29/12

Fortune senior editor-at-large Shawn Tully recently took a look at just what goods and services taxpayers have reaped from the 17.8% rise in spending---almost one trillion dollars---since President Obama took office in the last quarter of 2008. Did the flurry of spending lead to increased services for taxpayers or investments in infrastructure to make the US economy stronger and more competitive?

It turns out, the majority of that nearly one trillion dollars didn’t purchase better roads or schools, or even pay the janitors, teachers, and law enforcement personnel whose salaries taxpayers foot the bill for in return for the services they provide:

From late 2008 until today, spending on government goods and services rose just .1% annually, adjusted for inflation. The real shocker is investment: It dropped 3.71% a year in real terms. So the almost 18% rise in spending failed to provide substantially more government services, and furnished a lot less money for the highly touted necessity of rebuilding America's infrastructure.

So where did all that money go, if it was not purchasing us better services or investing in our infrastructure? Unfortunately, the vast majority of that additional spending was funneled towards a ballooning new category of government spending called “transfer payments”:

Government transfer payments are defined as expenditures for which no good, service or upgrade in infrastructure is expected in return. The government collects the money in the form of taxes and new borrowing, then writes the checks to consumers and, to a lesser extent, companies in the form of subsidies.

In other words, the US, already up to the eyeballs in debt and borrowing nearly 40 cents of every dollar we spend, frittered away almost one trillion dollars over the past four years…to move money around from one group of individuals to another. The three largest transfer payment categories are Social Security, Medicare, and Medicaid, but fast on their heels are unemployment benefits, food stamps, and a myriad of subsidies for everything from solar panel manufacturers to ethanol producers.

Unfortunately for taxpayers and anyone concerned about the nation’s spending addiction, the trend for transfers is a definitively upward trajectory: transfer payments have increased by nearly $800 billion a year since 2008, a staggering 34% increase.

The lesson? Massive amounts of government spending do not automatically equate to more goods and services for taxpayers, or a stronger economy overall. If the US is going to set itself on a sustainable fiscal path, it will need to stop taking capitol from the private sector to pay for the inflated social welfare state, and return that capitol to the taxpayers and small business owners who are the real engines of America.

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Census Bureau Poverty-Calculation Gimmick Overstates the Problem & Prescribes Wasteful Spending
Posted By:  - 08/22/12

In a recent commentary piece the Heritage Foundation’s Robert Rector explains the US Census Bureau’s ability to distort the reality of poverty, making it appear more severe than it truly is in order to continue expanding the social welfare state at the expense of taxpayers.

According to Rector, a leading expert on poverty and welfare, the Census Bureau does not take into account any of the numerous social welfare programs an individual or family may already be benefiting from when calculating the family’s income for poverty-measurement purposes.

For example, the poverty level cutoff for a family of four in 2011 was approximately $23,000 dollars, meaning that any family earning less than this from wages would automatically be counted towards the overall national poverty rate. What is misleading about this system of calculation is that a family whose earned income is $23,000 could still be benefiting from a variety of welfare programs—food stamps, subsidized housing, Medicaid, and the earned income tax credit to name just a few—thus boosting the family’s effective revenues up above the so-called poverty line by hundreds or even thousands of dollars annually.

The result? The poverty level appears higher than it actually is, giving social welfare enthusiasts the ammunition to call for increasing government spending, while draining taxpayers and racking up massive deficits:

“In other words, government now spends on welfare five times the amount needed to raise all families out of poverty---and is about to spend even more.”

Last year welfare spending for a variety of anti-poverty programs totaled $927 billion dollars, excluding three of the largest social programs—Social Security, Medicare, and Unemployment Insurance. And if the past 48 years since the “War on Poverty” began in 1964 are any indication of future spending, that number will continue upwards.  

The Census Bureau’s misleading poverty calculations are just another example of the willingness of Washington bureaucrats to use any excuse to leech taxpayers dry in order to fund an ever-growing social welfare state. These findings are even more upsetting in light of the Obama administration’s gutting of Clinton-era welfare reform by executive fiat.

This is another worthy example of spending more than necessary and fixing less than is needed.



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From the "I'm So Glad We Reauthorized That" File: More Ex-Im Bank Fail
Posted By: Nan Swift - 08/16/12

It’s well known these days that green energy endeavors are extremely sound investments, especially for the U.S. government, whose track-record in this area is not at all besmirched by one costly failure after another after another after another.

That’s why it is such a total shock that immediately after securing an Export-Import Bank (Ex-Im Bank) backed loan, the Denmark-based LM Wind Power turned around and laid off more than 200 U.S. workers. Apart from the fact that one government backed green energy venture after another has lost money or gone under, there was no way Ex-Im Bank could have seen this coming; probably the details below from The Washington Free Beacon were closely guarded secrets:

When LM Wind Power came to Little Rock, Arkansas, in 2007, it said it would employ 1,000 people by 2012. But the global economic crunch led to diminishing demand. Three months before its loan guarantee was finalized, LM Wind Power announced its profits had fallen 41 percent last year.

LM Wind Power also has had numerous citations for workplace safety violations. The Department Of Labor’s Occupational Safety and Health Administration cited the firm 11 times in an investigation beginning October 2010 for exposing workers to unsafe conditions and noted the company had demonstrated a “continued pattern of failing to comply” with OSHA standards.

In 2010, LM Wind Power Blades was cited with OSHA violations because of conditions that killed a worker.

The Department of Energy has been getting a lot of attention for its failed Title 17 taxpayer-backed loan guarantee program, but it’s far from the only agency that deserves close scrutiny (if not elimination) for persistent forays into doomed green energy projects. Like a slot-machine addict, the weekly news of government funded failures seem to serve as no reason why the next big investment won’t be the one that finally pays out.

Again, despite repeated and costly failures in the green energy industry, the Heritage Foundation reports that Ex-Im Bank recently made a $2 BILLION loan for green projects such as wind and solar energy in South Africa – not several years ago when everyone was still flush, not last summer before the news of Solyndra broke, but last week - after numerous and costly failures:

“To now, Ex-Im Bank has not cost the taxpayer money. But there are strong reasons to think this loan is a mistake. When SolarReserve or some of its South African partners go under in the next couple years, Ex-Im will face renewed congressional demands that it be curbed or closed,” said Heritage’s Derek Scissors, senior research fellow in Asian Studies.

On top of the fact that Ex-Im Bank’s market-distorting actions are well-outside the role of government and seriously poor fiscal policy, the repeated bad investments and inherent cronyism within the institution should have been more than enough reason to oppose reauthorizing the bank. The Examiner’s Tim Carney sums up the cronyist connection here:

For years, I have been saying that green energy is the place to look if you’re looking for tales of cronyism, corruption, and corporate welfare. It has all the elements: profits dependent on subsidies, customers that are often government-protected monopolies, deep involvement of finance types ranging from Goldman Sachs to politically connected VC, PE, and hedge funds.

These elements are all too alive and well within Ex-Im Bank. You can read more about the crony capitalists at the helm here.

With no sign of being afflicted by simple logic in the near future and with so many bad projects out there still to fund it’s a good thing that a “compromise” was struck to reauthorize Ex-Im Bank just a few short months ago.  Outside of Washington, compromises tend to mean that each side of a fight loses a bit to meet somewhere in the middle. In this instance, the middle was a massive funding increase from $100 billion to $140 billion, so there are still plenty of funds to throw down the green energy money pit.

You can find NTU’s statement of opposition to Ex-Im Bank here.  And you can find a list of who to thank for this ongoing boondoggle here.

PS: In other green energy news, Fisker Automotive, known best for it’s very flammable high end Fisker Karma hybrid cars  and recipient of millions of dollars in DOE loans, just named its new CEO, who is the former head of Chevy Volt at GM. Chevy Volt, it should be noted, made no money and costs taxpayers thousands of dollars per car. This should end well.



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Despite Expensive Missteps, Ryan Solid on Fiscal Issues and Spending Reform
Posted By:  - 08/14/12

With Republican Presidential candidate Mitt Romney’s weekend announcement that he has selected Congressman Paul Ryan (R-WI) as his vice presidential pick, many voters are seeking to learn more about the seven term fiscal hawk, and author of the Ryan Budget.

One of the key tools NTU offers to help taxpayers and voters evaluate how members of Congress stack up when it comes to taxes and spending is the comprehensive NTU Rates Congress. As discussed in more detail HERE, Ryan has an above average lifetime rating of 75%, including six “Taxpayers’ Friend” awards.

However, a few of the reasons those Ratings are not higher have also earned Ryan criticism from fiscal conservatives - they include Ryan’s votes for the TARP bailout, the auto bailout, Medicare Part D, No Child Left Behind, the debt ceiling, and Davis-Bacon wage controls.

Still, Ryan has taken a leadership position in addressing the nation’s impending entitlement insolvency and ballooning public debt, championing his budget blueprint to responsibly transition the United States to a more sustainable fiscal path. According to the Congressional Budget Office, Ryan’s proposal would reduce deficits by $3.26 trillion from 2013 through 2022 when compared to President Obama’s plan. In addition, the Ryan Plan would simplify income taxes with two tax rates of 10% and 25%, compared to the current six brackets.

Ryan’s most significant reform would be with regards to Medicare. If Congress continues to spend as they have, debt will reach 194% of GDP by 2040, but if Ryan’s budget were adopted debt would be a mere 38 % of GDP, saving taxpayers trillions of dollars.

Paul Ryan deserves much credit from taxpayers for shifting the debate in Congress to solutions for the big fiscal crises that face America on entitlements, debt, and run-away spending.  

Whichever duo is elected this November, a set of extremely pressing budgetary concerns will await them. Bringing Paul Ryan onto the ticket as Vice Presidential nominee is a good sign for taxpayers and voters who are starving for a plan to address our long-term debt and budget concerns without recovery-crushing tax hikes.

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Taxpayers Forced to Fund Section 8 Housing Recipients Lobbying Efforts…Which in Turn Lobby Congress for More Funds
Posted By:  - 08/03/12

Last month the United States Department of Housing and Urban Development (HUD) awarded nearly 5 million dollars in taxpayer-funded grants to 15 organizations through its “Tenant Resource Network”; which, according to the HUD website:

“make[s] grants to qualified nonprofit organizations to assist, inform, educate and engage tenants living in certain Section 8-assisted properties at risk of losing affordability protections or project-based rental assistance.”

In other words, taxpayers are not only being forced to fund Section 8 housing for “low-income” tenants, but they are also being forced to subsidize efforts which ensure a steady stream of taxpayer dollars will continue to be poured into the program, even as the federal government regularly runs an annual deficit of over $1 trillion dollars. 

These grants came under fire for waste and abuse nearly ten years ago and were subsequently squelched until June of this year when HUD unveiled them again as a so-called “new” initiative. Apparently the department has forgotten the 2003 HUD Office of the Inspector General findings in the Semi Annual Report to Congress, which noted that ineligible recipients received funds and funds were misdirected to lobbying efforts:

 “In our grantee audit report we identified $600,000 of ineligible costs and over $1.6 million of unsupported costs. In addition, nine grantees used a portion of their Section 514 funds for lobbying activities directed at Congress…”

This is simply another example of an irresponsible federal government attempting to fix a problem by creating several more, and putting taxpayers on the hook to pay for its newfangled social welfare programs while recklessly adding to the nation’s already disastrous deficit.

On a brighter note, Congresswoman Diane Black (R-TN), has been working to eliminate this wasteful abuse of our hard-earned dollars, and has sponsored a bill called the Stop Tenant Organizing Promotion Act (STOP Act), which fiscal conservatives can support via the YouCut Initiative which could save taxpayers $100 million dollars over ten years.

It’s not going to fix the deficit, but it’s certainly not chump change to those of us who have to earn a living.






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Bullet Train to Nowhere
Posted By: Lee Schalk - 07/13/12

There’s no getting around it—California is underwater. State officials are constantly telling taxpayers that they aren’t coughing up enough money to fund “essential” services, necessitating huge tax hikes or savage program cuts (or both) to make ends meet. But my mother always said, “Actions speak louder than words,” and California’s actions say that legislators’ spending addiction is alive and well.   

Despite facing unprecedented budget challenges, last Friday the State Senate approved funding for America’s first “bullet” train. It’s supposed to shoot from San Francisco to Los Angeles, but right now it’s aimed squarely at the taxpayers’ collective wallet. Total cost of this monstrosity is estimated to be $203 billion. Terms like “irresponsible” and “out-of-control” don’t even begin to describe the madness of the Senate’s vote. High speed rail will be catastrophic for the state budget.

Of course, this project comes with promises of instantly lowering the state’s 10.8 percent unemployment rate, eliminating traffic congestion, and saving Mother Earth. Hate to break it to you, but the chances of really, really fast train solving your state’s problems are slim to none (closer to none).This project is a boondoggle of the highest order.

But there’s an even bigger problem: they quite literally don’t have the money. The geniuses in the legislature passed a budget with $4.75 billion in funds that don’t exist for the high-speed rail project with the hope that taxpayers will approve massive tax increases on the November ballot to cover it. California has higher tax burdens than all but five states and a business tax climate that’s worse than all but two states. Appropriating dollars based on the hope that citizens approve even higher taxes is just reckless and foolish.

It’s time to organize and fight back. The citizens of Californian must send Governor Brown and his cronies a message in November by rejecting his tax increases. Not only has Brown authorized billions of dollars for the bullet train disaster, but he's attempting to raise the sales tax to 7.5 percent and impose an income tax increase on those making more than $250,000 per year (rates for Californians making more than $1 million will jump from 10.3 percent to 13.3 percent). 

The insanity has already gone too far. Fifteen thousand California millionaires abandoned ship from 2000-2003, and the state’s “leaders” have done absolutely nothing to stop the bleeding since then. If this financial bullet hits its mark, how will California survive?

The good news is that there are some signs that the people of California are sick of sinking. In a July 5 poll, 1 in 3 voters said they would be less likely to support Governor Brown’s tax increases if funding for the train was approved because they understand that a state that’s appropriating dollars it doesn’t have is not being responsible with the ones it does.

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CBO Reports: FY2012 for the Win with Record Spending and Debt
Posted By: Nan Swift - 07/12/12

Congrats, America!  We’re on track to both spend more than $3 trillion and to rack up an over $1 trillion deficit for the FOURTH year in a ROW! Yes, we are that good. Sure, it took us 220-some odd years to break that record back in 2009, but since then it’s been nothing but spend, spend, spend.

Nine months into FY2012, the CBO reports that the federal government has run up a $905 billion deficit in just the first nine months, twice as high as any annual deficits prior to FY 2009. So far, we’ve spent a total of $2.705 trillion in the fiscal year, more than any year prior to FY 2007 – and that’s with three months left in the fiscal year. What really sets this accomplishment apart is that we’ve been able to keep up the pace of deficit spending (33.1% of all spending so far this year has been borrowed) even with more taxpayer funds flowing into the government coffers. The $1.824 trillion in taxes that have been collected so far are up 5.2% over the same time last year.

In June alone, spending was up $24 billion over the same period last year.  Interestingly, one of the biggest drivers was your friend, and mine, TARP.  Who could have ever foreseen that a program could cost more than anticipated?

TARP: Outlays rose by $62 billion, mainly because adjustments to the estimated costs of earlier transactions reduced outlays by $42 billion in 2011 and increased them by $21 billion in 2012.

As we continue to maintain record high spending and deficit levels year after year, one can only wonder – how much worse could it get next year?  Luckily, Congress is looking at even more spending with an almost $1 trillion Farm Bill on the table, an army of new IRS agents to hire to enforce ObamaCare, and looming Social Security shortfalls, just to name a few budget busters on the horizon. 

 Unless real changes are made, and made quickly, I’m sure we’ll be able to beat these numbers next time around.


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Opposition to Food/Farm Welfare Bill Grows
Posted By: Andrew Moylan - 07/11/12

NTU has been hard at work opposing the massively wasteful, nearly-$1 trillion food and farm welfare legislation that Washington knows as "the Farm Bill." In some of the best news we've had on the issue in weeks, The Hill reported today that House Speaker John Boehner (R-OH) is leery of the pork-filled legislation and could hold the key to protecting taxpayers from it. We've been watching the markup debate over 100 amendments unfold with shock and horror, as positive measures to reduce government intervention in the dairy and sugar markets failed at the hands of special-interest minded Members of the Agriculture Committee. But if Boehner comes out forcefully in opposition to the bill, taxpayers could be spared from its awful provisions in favor of a one-year extension which would allow a presumably more fiscally responsible 2013 Congress to take it up.

Boehner is no stranger to Farm Bill opposition. He opposed the travesties that were the last two versions and has always expressed his distaste for the incredible amounts of wasteful spending that get packed into them. Despite the different makeup of this Congress, the bill they came up with is sadly no different. It eliminates direct payments made for certain commodity crops, but then plows virtually all of the savings into new subsidy programs to effectively guarantee revenue for farmers. The end result, when combined with an exploding food stamp program that has doubled in size since 2008, is a bill that costs upwards of $900 billion and does almost nothing to truly begin to wean farmers off of their sweet, sweet taxpayer money.

The bill is complicated, but the issue is simple. Farm income exceeded $100 billion last year. Average farm household income has consistently grown faster than the average American household, particularly post-1995 (when the "We swear, this is the Farm Bill to end all Farm Bills!" charade began in earnest). Fewer than one in 200 farms fail per year. Crop prices are at or near record highs. Meanwhile, our fiscal challenges have never been larger with a rapidly-increasing $15.8 trillion national debt. As a result, we have a more fiscally conservative House of Representatives than we've had in years.

One could scarcely dream up a better time to truly reform farm programs. Thankfully, it appears that Speaker Boehner realizes that this bill doesn't even come close to doing that. We should encourage him to do the right thing and shelve this monstrosity for good.

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The Internet Tax Threat That Won't Go Away
Posted By: Andrew Moylan - 07/11/12

The so-called “Marketplace Fairness Act," a bill to impose onerous tax collection requirements on remote retailers, is back again for another bite at taxpayers' wallets. We've alerted you to this threat timeand time again, and now proponents and their big-money backers are trying to sneak it through once more. Introduced as an amendment to S. 2237 (a small business tax bill) by Senators Mike Enzi (R-WY), Dick Durbin (D-IL), and Lamar Alexander (R-TN), the measure would add to the burden governments heap upon items purchased online while undermining vital taxpayer safeguards. The Marketplace Fairness Act would…

  • Dismantle Key Taxpayer Protection - Currently, online and remote retailers cannot be required to remit a state’s sales tax unless they have a physical presence there. This amendment would dismantle that taxpayer protection by allowing states to force tax collection dictates on businesses regardless of their location. Dissolving the physical nexus standard for collecting sales taxes could encourage overzealous state tax administrators and lawmakers to reach far across their borders in order to fill their coffers.
  • Impose Enormous Compliance Burdens - The Marketplace Fairness Act could force online businesses to comply with the rates, rules, and definitions of every last one of the country’s 9,600 (and growing) sales tax jurisdictions. Meanwhile, traditional brick-and-mortar retailers generally must contend with the sales tax in a single jurisdiction: the one in which their business is physically located. This would be a distinctly “unlevel” playing field that imposes much more onerous administrative obligations for businesses that dare to operate online. Such obligations won’t be made magically care-free by tax software packages, any more than the billions in payroll income tax compliance costs for businesses have somehow disappeared with the advent of computers.
  • Drain More Dollars from Taxpayers with No Reform in Sight -  Piling complex tax rules on the backs of remote retailers could lead to millions (or billions) of dollars in additional tax money for state governments at the expense of online shoppers. But nothing in the proposal ensures that those new costs aren’t just added on top of the many others borne by taxpayers struggling in today’s economy. The amendment doesn’t include any language to require or even encourage states to reform their sales taxes so that net burdens on taxpayers don’t rise.

It is particularly odious and contradictory to attempt hanging this proposal on a bill purporting to assist small businesses. S. 2237 is problematic for taxpayers in its own right, but is made all the worse with an Amendment that fails on so many counts. As a practical matter, the paltry “small seller exemption” contained in the language means that numerous firms will become ensnared in a web of higher tax-compliance overhead costs. Businesses that could be contributing to a more robust economic recovery will instead squander resources extricating themselves from this trap, or worse, resign themselves to oblivion.

As a philosophical matter, the amendment treats the Internet and e-commerce as a sinister, alien force for small business, when the opposite is true. Where would brick-and-mortar retailers be, for example, without the convenience of online inventory control, or other “B2B” transactions that make management so much more efficient today? What losses would retailers suffer without the new markets for goods and services for which the Internet has provided the portal? How many millions of everyday citizens, who have created thriving online “mom and pop” proprietorships, would be denied the opportunities to provide for their families? To be clear: No Senator who claims to support taxpayers and small businesses should vote for this amendment. There are fairer, less burdensome ways to address any real “level playing field” issues in this area of commerce.


It's unclear as of now how the Senate will proceed on this amendment or the underlying small business tax bill, but rest assured that we'll be hammering away to make sure that well-financed lobbyists don't fleece taxpayers and businesses with this awful bill. 


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