Miscellaneous, Orrin Hatch

Debt Deals and Deficits – A New Tax Plan

I wrote this almost a year ago when the Super Committee was convened to find a way to deal with the potential first fiscal cliff that United States was facing. Amazing that a year later we are in the same boat.

Power to the People

The entire American experiment was designed as a way for the American people to be represented for the common good. Our congressional leaders have proven that they represent themselves. The power needs to be returned to the people as the leadership shows that they are unable to spend within their means and utilize our money in a sensible fashion. Yes, this problem exists on both sides of the aisle.

Our representatives have been in Washington DC working on a deal that will hopefully keep our government from getting another downgrade from the various credit agencies. They were not able to come to an agreement and frankly it is unacceptable to me that both sides could not create a solution. At risk here was tax rates, sacred programs, and bragging rights.

Most people hope and believe that the two sides would have come together and found a way to make a deal. The Democrats want tax increases and the Republicans want spending cuts. Regardless of the outcome, both sides wanted to appear to win and use it as a way to walk in to next year’s elections as the side that saved the credit rating of the United States of America.

The goal of the deficit panel was to reduce government spending by $1.2 trillion over the next ten years. Essentially reducing the budget of the federal government by 3.3% of spending, given that spending stays constant. The government currently spends roughly $3.5 trillion dollars each year and with revenues of roughly $2.1 trillion. These numbers give us a budget deficit of $1.39 trillion and if the super committee accomplished their goal, the deficit would be reduced to $1.22 trillion, given no increase in revenues or expenses.

We now know that the committee failed and could not find a way to work together to reduce 3.3% of the Federal Budget and both sides have blamed each other for the failure. Frankly, in over $3.5 trillion in spending each year, it is amazing that they cannot find a way to close the gap even more than this. The problem is too much special interest money is involved and too much power was given to these people on the super committee and the overall process as well. Why do the American people not have more of a say in this process?

What percent of your income went to taxes last year? If you are like most Americans, you cannot answer this without going back and looking at your taxes, yet we hear the politicians talking about these percentages as a way to curry your votes. Other words may include “the rich”, “job creators”, “constitutional”, “social programs” and “fairness”. The reality is these are sound bites and give reasons for us to argue and disagree while they raise money for their re-election campaigns and disagree about what inside trading is.

Every year millions of Americans pull their W-2’s, charitable deductions, receipts and various records together to file their taxes. Around 67% of Americans file their taxes electronically. The forms are complicated and the number of potential deductions is amazing. It can be time consuming and frankly scary as many of us are nervous that we are not doing it correctly. After we are finished, we see the verdict of either more payment or a refund.

Over $3.5 billion dollars were spent last year on lobbying efforts to our politicians on a Federal level ( Divide this by the number of members of congress and you can see how our politicians find ways to fund the millions of dollars it takes to run state wide and national campaigns.

My Senior Senator from Utah, Orrin Hatch raised over $1.6 million for his re-election campaign in the third quarter and only 9% of it came from inside of Utah. With over $3.5 billion to spend, only speculation can deduct where the other 91% came from. Not to mention the fact that he has been able to amass a net worth north of $2.9 million while serving in the Senate for almost 40 years. Not bad for man that was a janitor while putting himself through law school (disclosure, I am a registered, but very concerned Republican).

As far as I can tell the issue of fixing our government is a matter of fixing the flow of money. With so much money at stake in politics, it seems that finding a solution has to be found in spite of those that benefit greatly from the system.

The budget of the Federal Government is divided by two budgetary categories, Mandatory and Discretionary.

  • Mandatory Budget Items comprises of 61.2% of the budget and five line items, Social Security (19.9%), Unemployment/Welfare (16.1%), Medicare (12.8%), Medicaid (8.2%) and the interest on the National Debt (4.6%).
  • Discretionary Budget items, 27 line items, are the rest of the budget; these include the cabinet departments, the largest of which is the Department of Defense (18.7%). The next largest lined item is the Department of Health and Human Service (2.2%). There are however other items listed as “Other” that makes up 3% of the budget.

To put this all in perspective, each percentage point represents $35.6 billion. So the Department of Defense represents $663.7 Billion and Social Security represents $695 billion. Other represents $105 Billion. With all this money being thrown around at so many different programs and the amount of money being thrown at our politicians, is it really a surprise that 12 people on the Super Committee could not cut it by 3%?

Simple solution, give the responsibility back to the people (they trust us to vote for them, but probably not decide where the money goes). We all fill out our income taxes and fill in little boxes. I have government programs that I like and others that I do not believe deserve my money. Let me determine which government agency is deserving of my money. Give me 31 boxes and a place to determine what percent of my taxed money each agency will get. This would mean that although everyone votes, only those that pay taxes get a say where the money goes.

The consequence of this would be our politicians would look to us to fund their programs and the lobbyists would pander to the people. We would still need our representatives to design programs, audit the money and create a vision for our country. We would also complain a lot less about the taxes and the programs because we would know that our tax money is supporting something I believe in.

There are many that would say this would not work, but most of them would be politicians and lobbyists that would not trust you and me with that much power.


About bradboyle

Brad Boyle is an entrepreneur and CEO of an international company. A graduate of UC Berkeley and has an MBA from Columbia University of New York City.


One thought on “Debt Deals and Deficits – A New Tax Plan

  1. Politics in this country have gotten out of hand. The good of the country is so far down the list of priorities that it is ridiculous. Thanks for the article Brad.

    Posted by Cucciolo | November 15, 2012, 10:33 am

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"There are two ways to conquer and enslave a nation. One is by sword. The other is by debt." -John Adams 1826


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