A Conservative Bashes GOP Dysfunction on Spending Cuts

A Conservative Bashes GOP Dysfunction on Spending Cuts

iStockphoto/The Fiscal Times
By The Fiscal Times Staff

Brian Riedl, a senior fellow at the conservative Manhattan Institute, offers a blistering critique of congressional Republican’s problems cutting spending:

Since the Republicans took the House in 2011, nearly every annual budget blueprint has promised to balance the budget within a decade with anywhere from $5 trillion to $8 trillion in spending cuts. And yet, you may have noticed, the budget has not moved towards balance. This is because the budget merely sets a broad fiscal goal. To actually cut spending, Congress must follow up with specific legislation to reform Medicare, Medicaid, and all the other targeted programs. In reality, most lawmakers who pass these budgets have no intention whatsoever of cutting this spending. As soon as the budget is passed, the targets are forgotten. The spending-cut legislation is never even drafted, much less voted on.

The annual budget exercise is thus a cynical exercise in symbolism. Congress calculates how much spending must be cut over ten years to balance the budget. Then they pass legislation setting a goal of cutting that amount. Then they move on to other business. It’s like a baseball team announcing that they voted to win the next World Series, and then not showing up to play the season.

Read the full piece at National Review.

Quote of the Day: Time to Raise Taxes?

iStockphoto/The Fiscal Times
By The Fiscal Times Staff

“Tax revenue as a percentage of gross domestic product is expected to be 16.5 percent next year. The long-term average in a full-employment economy is 18.5 percent of GDP; if revenue were at that level for the coming decade, debt would be $3.2 trillion lower and the 10-year fiscal gap would be halved. Returning to past revenue levels, however, will be inadequate over time, because an aging population will increase Medicare and Social Security costs. This need not pose a problem: Revenue was roughly 19 percent of GDP in the late 1990s, and economic conditions were excellent.”

– Former U.S. Treasury Secretary Richard E. Rubin, writing in The Washington Post

Quote of the Day: When Tax Cuts Pay for Themselves

iStockphoto
By The Fiscal Times Staff

“You … often hear the claim that a lot of tax cuts will ‘pay for themselves,’ that they’ll cause so much additional economic activity that the revenue feedback from that activity will fully offset the direct revenue loss caused by the tax cut so that you end up making money for the federal government, or at least not losing any money. Now, of course that is theoretically possible and it would happen at extreme rates. I mean if a country had a 99 percent flat rate income tax and lowered it to 98 percent, I believe that they almost certainly would collect more revenue at the 98 percent rate than they did at the 99 percent rate. But the idea that this type of effect would occur at today’s tax levels just requires responses that are much bigger than statistical evidence would support and I think much bigger than common sense would indicate if you just ask people how they themselves would react to the tax cut.”

-- Alan Viard, tax policy expert at the American Enterprise Institute

Map of the Day: Gas Taxes

Saving $1.11 a gallon might not sound like much. But if you're filling up a 20 gallon tank, you could save $22. Do that once a week and you'd save $1,150 a year.
iStockphoto
By The Fiscal Times Staff

It’s summertime and the driving is anything but easy if you want to get to your favorite beach or mountain cabin for a well-deserved break. As lawmakers consider a plan to raise federal fuel taxes by 15 cents a gallon, here’s a look at the current state-level taxes on gasoline, courtesy of the Tax Foundation

Stat of the Day: 0.2%

U.S. President Donald Trump at the White House in Washington, U.S. January 23, 2018.  REUTERS/Jonathan Ernst
Jonathan Ernst
By The Fiscal Times Staff

The New York Times’ Jim Tankersley tweets: “In order to raise enough revenue to start paying down the debt, Trump would need tariffs to be ~4% of GDP. They're currently 0.2%.”

Read Tankersley’s full breakdown of why tariffs won’t come close to eliminating the deficit or paying down the national debt here.

Number of the Day: 44%

iStockphoto
By The Fiscal Times Staff

The “short-term” health plans the Trump administration is promoting as low-cost alternatives to Obamacare aren’t bound by the Affordable Care Act’s requirement to spend a substantial majority of their premium revenues on medical care. UnitedHealth is the largest seller of short-term plans, according to Axios, which provided this interesting detail on just how profitable this type of insurance can be: “United’s short-term plans paid out 44% of their premium revenues last year for medical care. ACA plans have to pay out at least 80%.”