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Plan For America To Control Federal Deficit Spending

Economics / Government Spending Jul 23, 2010 - 02:16 AM GMT

By: James_Quinn

Economics

Diamond Rated - Best Financial Markets Analysis ArticleI’m sorry to be the bearer of bad news. There are no easy solutions. There are only painful, more painful, and really, really painful solutions. Both mainstream corrupted political parties have had the chance to put the country back on a prudent fiscal path. They have both failed miserably. One party will spend the country into oblivion and the other country will try to democratize the world with their military machine. There are no fresh ideas from either party. There are the same old stale ideas and rhetoric.



I’ve been waiting for someone to distinguish themselves as a straightforward leader who will level with the American people and tell them the TRUTH. There is only one totally truthful politician in Washington DC. His name is Ron Paul. He is trapped in a Republican Party run by neo-con warmongers. Chris Christie, the governor of NJ, has the guts and demeanor to satisfy the requirements of a new leader, but the hacks who run the party will not allow him to become the face of the party. Paul Ryan, Congressman from Wisconsin, has the brains and ideas to help save the country. The party hacks will pretend to adopt his ideas to get elected in 2012 and then go back to the same old policies.

Both parties are captured by corporate lobbyists, the military industrial complex and Wall Street. Lobbyists spend $40 billion per year “convincing” politicians that their ideas should be implemented. Politicians DO NOT represent the people. They represent those who give them the most money. Radical earth shattering change is needed to save this country. Incremental steps won’t work. We need a leader wielding a sledgehammer.

The ONLY way to save the country from financial collapse is to take on the largest expenditures. They are:

  • $895 billion for Military spending
  • $730 billion for Social Security
  • $491 billion for Medicare
  • $297 billion for Medicaid

These 4 areas total $2.4 trillion per year out of $3.8 trillion. This is 63% of all Federal spending. A real leader would tackle these areas. A 3rd party candidate with a strong backbone would propose the following ideas:

  • When George Bush took office in 2000 the annual Defense (funny name) Budget was $380 billion. Since that date CPI has increased 25%. On an inflation adjusted basis, the Defense Budget should be $475 billion today. Essentially we are paying an additional $420 billion PER YEAR to fight the phantom WAR ON TERROR. This is nothing but a fraud perpetrated by the neo-cons and now the neo-liberals. My plan is to declare victory in the War on Terror. No one knows what victory means anyway. Withdraw ALL the troops from the Middle East, Germany, Japan and Korea. Let them blow themselves up if they want. Not our problem. Germany, Korea and Japan can pay for their own defense. Tell the Pentagon they have $475 billion to allocate and not a dime more for the next 10 years. SAVINGS = $420 billion
  • John Hussman has a fantastic idea regarding Social Security. This idea would benefit the working class and stick it to the rich. ”Drop the rate substantially, but include all income – wage and non-wage. Three-quarters of Americans pay more in payroll taxes than in income taxes. By reducing the wedge between the hourly amount earned by employees and the hourly cost paid by employers, this strategy would create immediate incentives for employment. Moreover, it would raise more revenue because at present, even Warren Buffett only pays Social Security taxes on the first $106,800 of income.” This idea would be an immediate boost to the economy as the average worker would take home more pay. Revenue from Social Security would increase by $200 billion.
  • On the cost side of Social Security, life expectancy, amount of wealth, and market incentives would need to be introduced. Anyone over 55 years old would get just what they were promised. Workers from 30 years old to 55 years old would see the age they were entitled to collect SS rise from 67 to 76 depending on their current age. Anyone whose net worth is in the top 5% of all Americans would not receive SS when they retire. Workers just entering the workforce would be given the option of a significantly scaled down benefit or a private account to be managed by them. These steps would make the system viable forever. It would not cut costs in the near term.
  • Paul Ryan’s common sense approach to Medicare would be: For those under 55—as they become Medicare-eligible—it creates a Medicare payment, initially averaging $11,000, to be used to purchase a Medicare certified plan. The payment is adjusted to reflect medical inflation, and pegged to income, with low-income individuals receiving greater support. The plan also provides risk adjustment, so those with greater medical needs receive a higher payment. The proposal also fully funds Medical Savings Accounts (MSAs) for low-income beneficiaries, while continuing to allow all beneficiaries, regardless of income, to set up tax-free MSAs. Enacted together, these reforms will help keep Medicare solvent for generations to come. This proposal, along with eliminating the fraud within this system would save at least $200 billion per year.
  • Paul Ryan’s healthcare plan would reduce costs, keep the high quality, and keep it out of the government’s clutches: It provides a refundable tax credit—$2,300 for individuals and $5,700 for families—to purchase coverage (from another state if they so choose) and keep it with them if they move or change jobs. It establishes transparency in health-care price and quality data, so this critical information is readily available before someone needs health services. State-based high risk pools will make affordable care available to those with pre-existing conditions. In addition to the tax credit, Medicaid will provide supplemental payments to low-income recipients so they too can obtain the health coverage of their choice and no longer be consigned to the stigmatized, sclerotic care that Medicaid has come to represent. This plan would save $200 billion per year.
  • There are two options to simplify the tax system. Americans spend $11 trillion per year. They pay $1.1 trillion in income taxes per year. The tax code is 17,000 pages long. By scrapping the entire income tax and replacing it with a 10% VAT, the country would get the same revenue with individuals being freed from the tax code. The other option is essentially a modified flat tax as proposed by Paul Ryan: This highly simplified code fits on a postcard. It has just two rates: 10% on income up to $100,000 for joint filers and $50,000 for single filers, and 25% on taxable income above these amounts. It also includes a generous standard deduction and personal exemption (totaling $39,000 for a family of four), and no tax loopholes, deductions, credits or exclusions (except the health-care tax credit). The proposal eliminates the alternative minimum tax. It promotes saving by eliminating taxes on interest, capital gains, and dividends. It eliminates the death tax. It replaces the corporate income tax—currently the second highest in the industrialized world—with a business consumption tax of 8.5%. This new rate is roughly half the average in the industrialized world and will put American companies and workers in a stronger position to compete in a global economy.
  • The Department of Education and the Department of Energy were both created by Jimmy Carter in 1979. Since this time student test scores have plummeted, the cost per student has skyrocketed, and we graduate more morons into society than ever. Since this time, our dependence on foreign oil has doubled, no nuclear power plants have been built, no refineries have been built and peak oil has been completely ignored. For this outstanding performance, we spend $78 billion per year for the Dept of Education and $36 billion per year for the Dept of Energy. If we survived from 1789 until 1979 without these departments, we can make do without them again. They are miserable failures and must be scrapped. Annual Savings = $114 billion.
  • Every department and every program and every government worker would be required to take a 10% reduction across the board. Annual savings = $100 billion.
  • Legalize marijuana for adults and then tax the shit out of it like tobacco and alcohol. Unknown revenue increase. Reduction in prison costs for minor drug offenses.

By my estimation we’d be pretty damn close to a balanced budget. It would entail pain and sacrifice to achieve a balanced budget. The pain and sacrifice today would ensure that our children and grandchildren have a tomorrow. Some practical issues to tackle in order to fix the culture of Washington DC would be:

  • Term limits of 12 years for all Representatives and Senators. Politics is not a career. They are serving the people and then returning home to their chosen profession.
  • Lobbying and lobbyists would be outlawed. No corporation, individual, or union could buy access to politicians.
  • Political Campaigns would be publicly funded and last for only 6 weeks before an election.

Regarding immigration, all illegal immigration would be stopped. The fence/wall that exists in California would be extended through Texas. Troops withdrawn from Iraq, Afghanistan, Germany, Korea, and Japan would be available to enforce our closed border. The children of illegal immigrants would no longer be given citizenship status for being born here. We should strongly encourage legal immigration, especially of professional well educated immigrants. John Mauldin has a great idea to encourage legal immigration and help the housing market:

  • Any immigrant who buys a house in the US would be given a fast track to citizenship of two years, as long as they commit no crimes. This would attract wealthy immigrants. It might also keep the best and brightest graduate students here in this country.

John Hussman had a creative solution to help the housing market. He came up with this idea in October 2008. Of course, the Bush and Obama idiots would never consider such a logical solution:

  • Congress can efficiently mute the impact of the mortgage crisis on “Main Street” by allowing a small change in foreclosure law. Specifically, in foreclosure proceedings, judges should have the ability to reduce the amount of principal on a mortgage loan, provided that the original mortgage lender receives a “Property Appreciation Right” or “PAR” from the homeowner. The PAR would be an obligation to repay the mortgage lender out of future appreciation on the home (including property subsequently purchased, until the obligation was relieved). Payment would occur either when the home was sold, or through an equity-extraction refinancing at some later date. In that way, homeowners would surrender some amount of future appreciation in return for an equivalent reduction in the mortgage principal. This would result in an immediate lowering of mortgage payments, yet the original mortgage lender would still stand to be made whole. To account for time-value, the amount of the PAR obligation could be allowed to increase at a small rate of interest. The homeowner would be able to keep the house. Importantly, there would be no need to continue major write-downs on mortgage securities, since only the character of the payments, not the value of the mortgage obligation itself, would change.

The Federal Reserve must be audited. It must be a complete audit with nothing off-limits done by the GAO. When the audit reveals that the Federal Reserve has committed crimes against the citizens of the United States, it should be disbanded. The country grew tremendously from 1789 until 1913 without a Federal Reserve. The Treasury can issue the money of the U.S. The money should be backed by hard assets. It would require a basket of hard assets including gold, silver, uranium, oil, natural gas, and agricultural products.

We have reached Peak cheap oil. Ignoring it for a moment longer will ensure disaster for our suburban sprawl society. The government needs to get out of the way and let companies build nuclear reactors, oil refineries, and LNG facilities. The Pickens Plan which would utilize wind farms to free up natural gas to power our truck fleets should be given serious consideration. If geothermal, hydro, solar, and wind make sense from an ROI basis, it should be encouraged. Government needs to get out of the way of entrepreneurship. An expansion of electrified rail transportation is one area that government could actually provide leadership.

The ideologues in the Republican Party and Democratic Party are not worried about a 3rd Party. They say that there is no way a 3rd Party could create an infrastructure to win in 2012. What they fail to realize is that people are sick and tired of their two party games. The names change, but the game remains the same. Both parties have failed the American people. The American people have failed. It is time to make a stand, before it is too late. 2012 is our last chance.

I believe that Ron Paul and his Campaign For Liberty should break away from the Republican Party and either form a new 3rd Party or just take over the existing Constitution Party structure. The name is right. The ideas are consistent. I would vote for Ron Paul, but he is 72 years old and he may be too diplomatic. We need a bomb thrower. I think we need Chris Christie to take on Washington DC the way he has taken on the Unions and the Democrats in NJ. A Constitution Party ticket of Chris Christie for President and Paul Ryan as VP would be a winnable option. This would be revolutionary. It would require these two men to abandon the corrupt Republican Party and do what is best for the country. Party politics is dying rapidly due to incompetence and corruption. It is time to start over. 

If we keep these wise words of our founding fathers in our minds at all times, we could turn this country around before it is too late.
“I love the man that can smile in trouble, that can gather strength from distress, and grow brave by reflection. ‘Tis the business of little minds to shrink, but he whose heart is firm, and whose conscience approves his conduct, will pursue his principles unto death.” – Thomas Paine
“Peace, commerce and honest friendship with all nations–entangling alliances with none, I deem [one of] the essential principles of our government, and consequently [one of] those which ought to shape its administration.” –Thomas Jefferson: 1st Inaugural Address, 1801.

Join me at www.TheBurningPlatform.com to discuss truth and the future of our country.

By James Quinn

quinnadvisors@comcast.net

James Quinn is a senior director of strategic planning for a major university. James has held financial positions with a retailer, homebuilder and university in his 22-year career. Those positions included treasurer, controller, and head of strategic planning. He is married with three boys and is writing these articles because he cares about their future. He earned a BS in accounting from Drexel University and an MBA from Villanova University. He is a certified public accountant and a certified cash manager.

These articles reflect the personal views of James Quinn. They do not necessarily represent the views of his employer, and are not sponsored or endorsed by his employer.

© 2010 Copyright James Quinn - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments


23 Jul 10, 08:50
Plan for America

AMEN!!


Robert Fry
23 Jul 10, 17:45
RE: Action Plan?

Nobody is talking about any comprehensive plan for the US. That seems exceedingly stupid to me. I may argue with details, but this plan as described makes logical sense and seems to me intuitive as one who grew up as a child of the 70's in the shadow of Kent State University. However, the fact that it does make sense is exactly what the problem is with it. Now James Quinn I have followed many of your articulate articles with interest. You are very keen in pointing out basic problems and issues with our society, economy, and politics. What can you suggest in terms of an action plan though? Our society and politics are not logical and we driven principally by self-interest and greed - both individual and corporate. That is reality. How is it that we can appeal to the greater common notion of the survival and prosperity of our nation and society despite our seemingly innate natures?

I will take my answer off the air.


Steve
24 Jul 10, 17:47
Plan for America

Mr. Quinn. I agree with you on most points. However I'm not going to forward this link to anyone due to your profanity. I doesn't add, but only takes away from, the validity of your arguments.


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