Tag Archives: Deficit

News

Should government unions get inflated salaries and pensions during a recession?

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First, the raw facts from Fox News.

Excerpt:

The battle in Madison has become the epicenter of a national fight between newly empowered small-government conservatives and Democrats backed by government worker unions.

The grassroots political operation of President Obama, who on Wednesday denounced the austerity legislation as an “attack on unions,” has swung in behind the government workers. Organizing for America, the activist organizing wing of the Democratic National Committee is helping keep the pressure on Republican lawmakers who plan to pass the legislation today.

Members of the Service Employees International Union, the most influential union in national Democratic circles, have also joined the fray in support of the government workers. The SEIU is helping man an around-the-clock occupation of the central halls of the state capital.

Tea Party groups, meanwhile, have planned a counter demonstration for Saturday at the capitol in support of the measure, raising the prospect of a clash between the activist groups.

Thousands of union activists have tried to shut down the process at the statehouse, which swung to the GOP in the 2010 elections. The efforts to block access to the state Senate and disrupt debates have been described as “mostly peaceful,” though union groups have expanded their protests to the homes of individual lawmakers.

Nine protesters have been arrested so far for disorderly conduct.

The holdup in the vote is due to the fact that the Democratic members of the Senate are on the lam, denying Republicans a quorum and the chance to vote. The Democrats are holed up at a resort just across the Illinois border, putting them beyond the reach of Wisconsin law enforcement agencies that could otherwise compel at least one Democrat to appear in the Senate so a vote could take place.

So far, the hideout seems to be backfiring. Moderate Republicans who had been on the fence over the legislation are denouncing the shutdown as undemocratic.

The lower chamber of the legislature may take up the bill today if Senate Democrats remain in hiding.

The measure would increase the contributions of public employees to their own retirement and medical benefits. The plan, put forward by new Gov. Scott Walker, R-Wisc., would have public workers make equal contributions to their retirement funds (teachers currently contribute $1 for every $56.94 from the state) and increase workers’ share of health insurance premiums to 12.6 percent. Teachers in most districts currently pay less than 5 percent of their insurance costs. The national average for workers is 27 percent.

This is important because Ed Schultz and Rachel Maddow are lying about the facts. But what do you expect from MSNBC?

Here’s McCain’s latest from the American Spectator. (H/T Hyscience)

Excerpt:

Quin Hillyer’s observations about the Obama-led “thugocracy” illustrate the yawning chasm between the intimidation tactics of the Left and all the prattling about “civility” liberals dished out last month.

The still-greater chasm is the economic gap between the striking government employees and the taxpayers who pay their salaries. Stephen Hayes of the Weekly Standard points out that the average teacher in Wisconsin receives $77,857 in total compensation, when the value of their generous benefit package is added to their salaries. Given that the median household income in Wisconsin is just above $50,000 (and the typical household has more than one wage-earner), this means that the striking teachers are earning substantially more than the people whose taxes pay their salaries. Furthermore, the basic bone of contention between them and Gov. Walker is his plan to make them contribute a larger share toward their pension and health benefits.

Michelle Malkin has more eye-opening facts about the economic realities of the Wisconsin strike. It is obvious that if voters and taxpayers pay attention to the facts, Walker wins and the strikers lose, as I said this morning:

The unemployed, the under-employed and regular folks trying to pay their bills aren’t likely to have a lot of love for people who (a) have jobs, (b) work at taxapayer expense, (c) get paid more money than the average taxpayer, and (d) go on strike because they don’t want to pay a dime toward their own generous benefits.

The thuggish behavior of the left-wing unions, supported by Barack Obama, has even radical leftists from Time and the Washington Post crying foul.

Larry Kudlow of CNBC has more.

Excerpt:

Wisconsin parents should go on strike against the teachers’ union. A friend e-mailed me to say that the graduation rate in Milwaukee public schools is 46 percent. The graduation rate for African-Americans in Milwaukee public schools is 34 percent. Shouldn’t somebody be protesting that?

Governor Walker is facing a $3.6 billion budget deficit, and he wants state workers to pay one-half of their pension costs and 12.6 percent of their health benefits. Currently, most state employees pay nothing for their pensions and virtually nothing for their health insurance. That’s an outrage.

Nationwide, state and local government unions have a 45 percent total-compensation advantage over their private-sector counterpart. With high-pay compensation and virtually no benefits co-pay, the politically arrogant unions are bankrupting America — which by some estimates is suffering from $3 trillion in unfunded liabilities.

Exempting police, fire, and state troopers, Governor Walker would end collective bargaining over pensions and benefits for the rest. Collective bargaining for wages would still be permitted, but there would be no wage hikes above the CPI. Unions could still represent workers, but they could not force employees to pay dues. In exchange for this, Walker promises no furloughs for layoffs.

Indiana Gov. Mitch Daniels is also pushing a bill to limit the collective-bargaining rights of teachers for wages and wage-related benefits. Similar proposals are being discussed in Idaho and Tennessee. In Ohio, Gov. John Kasich wants to restrict union rights across-the-board for all state and local government workers. More generally, both Democratic and Republican governors across the country are taking on the extravagant pay of government unions.

Why? Because taxpayers won’t stand for it anymore.

Neil Simpson comments:

Let me get this straight: Union-loving Dems shirk their duties and leave the state?  And what, exactly, is bad about that? (That’s horrible behavior on their part of course, but if they leave and don’t come back that would be swell.)

Unemployment is stuck at 10% — which means non-union unemployment is much higher — and they think this will improve their reputations?

Poorly performing teachers close at least 15 school districts to go fight for their entitlements?  Yeah, that’ll garner a lot of sympathy.

I have been super busy at work and working weekends, so I haven’t been covering this story as much as I should be. But like Neil, I am extremely excited about this. I picked two winning issues for the GOP in 2012: School choice reform and de-funding abortion. Those are two issues that fiscal conservatives and social conservatives agree on. I’d like to now add two more issues to the list: a federal right-to-work law (can work without having to join a union) for ALL employees – public and private, and reforming public sector pensions to be in line with private sector pensions.

We have to go after Democrat special interest groups hard and stop them for collecting all of this private sector taxpayer money. Social conservatives should support this because unions are notoriously pro-abortion and anti-marriage. We need to stop giving them taxpayer money to fund their left-wing political activism.

News

Obama budget is a ten-year, $1.5 trillion tax hike over present law

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Here’s the analysis of Obama’s budget. (H/T The Blog Prof)

Excerpt:

President Obama released his budget this morning.  Rather than focusing on Washington’s over-spending problem, the budget calls for higher taxes on families and small businesses to pay for even more government spending.  Under the Obama budget, tax revenues will grow from 14.4% of GDP in 2011 to 20% of GDP in 2021.  By comparison, the historical average is only 18% of GDP.

Tax hike lowlights include:

  • Raising the top marginal income tax rate (at which a majority of small business profits face taxation) from 35% to 39.6%.  This is a $709 billion/10 year tax hike
  • Raising the capital gains and dividends rate from 15% to 20%
  • Raising the death tax rate from 35% to 45% and lowering the death tax exemption amount from $5 million ($10 million for couples) to $3.5 million.  This is a $98 billion/ten year tax hike
  • Capping the value of itemized deductions at the 28% bracket rate.  This will effectively cut tax deductions for mortgage interest, charitable contributions, property taxes, state and local income or sales taxes, out-of-pocket medical expenses, and unreimbursed employee business expenses.  A new means-tested phaseout of itemized deductions limits them even more.  This is a $321 billion/ten year tax hike
  • New bank taxes totaling $33 billion over ten years
  • New international corporate tax hikes totaling $129 billion over ten years
  • New life insurance company taxes totaling $14 billion over ten years
  • Massive new taxes on energy, including LIFO repeal, Superfund, domestic energy manufacturing, and many others totaling $120 billion over ten years
  • Increasing unemployment payroll taxes by $15 billion over ten years
  • Taxing management capital gains in an investment partnership (“carried interest”) as ordinary income.  This is a tax hike of $15 billion over ten years
  • A giveaway to the trial lawyers—not letting companies deduct the cost of punitive damages from a lawsuit settlement.  This is a tax hike of $300 million over ten years
  • Increasing tax penalties, information reporting, and IRS information sharing.  This is a ten-year tax hike of $20 billion.

Add it all together, and this budget is a ten-year, $1.5 trillion tax hike over present law. That’s $1.5 trillion taken out of the economy and spent on government instead of being used to create jobs.

The “tax relief” in the budget is mostly just an extension of present law, and also some refundable credit outlay spending in the tax code.  There is virtually no new tax relief relative to present law in the President’s budget.

So then how can the Obama administration claim that they are being fiscally responsible? Let’s see how. (H/T Hyscience)

Excerpt:

The Obama administration’s statement that the government will not be adding to the debt by the middle of the decade clashes hard against the facts, Republicans say, leaving officials straining to justify the budget claim they’ve pushed repeatedly over the past few days.

As it turns out, the administration is not counting interest payments. That means the budget team plans to have enough money to pay for ordinary spending programs by the middle of the decade. But it won’t have the money to pay off those pesky — rather, gargantuan — interest payments. So it will have to borrow some more, in turn increasing the debt and increasing the size of future interest payments year after year.

So how then, visibly agitated Republicans asked, can the administration claim that its 2012 spending plan sets the country on a course to “pay for what we spend” in just a few years?

Hyscience also linked to this McClatchy news article.

Excerpt:

He overlooks the fact that the government still would have to borrow to pay interest on the debt, much of it run up on his watch. Despite achieving “primary balance” in fiscal 2017, the government would have to borrow $627 billion to pay $627 billion in interest. Interest payments would rise annually through 2021.

Debt would rise as well, according to Obama’s proposed budget. Despite the budget reaching “primary balance,” the total gross government debt would rise from $21.9 trillion in fiscal 2017 to $22.9 trillion in 2018, $24 trillion in 2019, $25.2 trillion in 2020 and $26.3 trillion in 2021.

In all, the debt would jump by nearly $4.5 trillion in the four years after the government supposedly would stop adding to the debt because it had achieved “primary balance” – and that’s according to his own budget.

And a non-partisan fact-checking organization has found that Obama is lying about the budget. You can bet that the mainstream media will be backing him up, though.

News

Social Security running deficits now, will be bankrupt by 2037

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Last Republican budget was in 2006
Last Republican budget was in 2006

This is from CBS News. (H/T Robert Stacy McCain)

Excerpt:

Social Security’s finances are getting worse as the economy struggles to recover and millions of baby boomers stand at the brink of retirement.

New congressional projections show Social Security running deficits every year until its trust funds are eventually drained in about 2037.

This year alone, Social Security is projected to collect $45 billion less in payroll taxes than it pays out in retirement, disability and survivor benefits, the nonpartisan Congressional Budget Office said Wednesday. That figure swells to $130 billion when a new one-year cut in payroll taxes is included, though Congress has promised to repay any lost revenue from the tax cut.

The massive retirement program has been feeling the effects of a struggling economy for several years. The program first went into deficit last year, but the CBO said at the time that Social Security would post surpluses for a few more years before permanently slipping into deficits in 2016.

The outlook, however, has grown bleaker as the nation struggles to recover from the worst economic crisis since Social Security was enacted during the Great Depression. In the short term, Social Security is suffering from a weak economy that has payroll taxes lagging and applications for benefits rising. In the long term, Social Security will be strained by the growing number of baby boomers retiring and applying for benefits.

The deficits add a sense of urgency to efforts to improve Social Security’s finances. For much of the past 30 years, Social Security has run big surpluses, which the government has borrowed to spend on other programs. Now that Social Security is running deficits, the federal government will have to find money elsewhere to help pay for retirement, disability and survivor benefits.

You may remember that George W. Bush tried to reform Social Security during his Presidency, but left-wing media and the Democrats cowed him into submission. Shut up, they explained. Just like they shut him up on his plan to regulate Fannie Mae and Freddie Mac back in 2003.

Here’s why nothing is going to be done to fix the problem. (H/T Hyscience)

It’s not going to be fixed until we vote out every last Democrat and replace them with grown-ups from the grown-up party.