Tax Day

It is the 15th of April and if you live and work in America then you have probably been scrambling around for the last couple of months finding all the necessary bits to complete your tax return by today's deadline. Taxes are always the subject of great debate and while no one really likes to pay them they do help our society to function, an important task indeed. The real issue centers around how productively they are used and while the Tea Party movement has been traveling from town to town railing and rallying against government spending during an extended recession- a key solution to cushioning the blow for the economy in consumer spending and providing incentives for growth and job creation. I thought the most appropriate exercise for the day is to put some perspective behind the federal budget and where all those dollars go. These are where the real priorities and character of a President can be found as are the leadership necessary to pay for them. It is hard here not to rail against President Bush who typical of his character never wanted to make any hard choices between substitutes but utilized linguistics, Democratic Party ineptness and a conservative free pass--and yet it is some how still debatable how we got to this level of crisis. Anyway, it ends up the real distribution is actually quite appropriate especially if your old and in need of Medicare and Social Security. The majority and ever increasing share regardless of need or the scarcity of resources goes to defense. So we can send our sons and daughters to a foreign country to find people that we should be paying no mind to, holed up in the mountains of a far away place that is otherwise meaningless. If we are concerned that they will come to our country and attempt to blow us up then don't let them come to our country....Sorry I get really worked up when I think about what a waste of time and treasure we spend waging war when the people we are attempting to help continue to work against us or take minimal responsibility. Going a bit longer and down a different road then expected so instead of parsing the budget let's simply look at the deficit.

According to the CBO:

Since September 2001, lawmakers have appropriated about $1.1 trillion (including $130 billion so far in 2010) for operations in Iraq and Afghanistan and for other war-related activities. That figure could rise if additional appropriations are required later this year to support the planned increase in troop deployments to Afghanistan. Outlays this year are expected to total at least $165 billion.

Yes, all of the cost of these wars has gone directly to the deficit because they were never included as part of the defense budget but as supplementals that by definition had not been budgeted for.

And for the deficit hawk quick to blame the President, who made 5.5 million in 2009--mostly from book sales, a break down of the deficit:

The U.S. budget situation has deteriorated significantly since 2001, when the CBO forecast average annual surpluses of approximately $850 billion from 2009–2012. The average deficit forecast in each of those years is now approximately $1,215 billion. The NY Times analyzed this roughly $2 trillion "swing," separating the causes into four major categories along with their share:

• Recessions or the business cycle (37%);
• Policies enacted by President Bush (33%);
• Policies enacted by President Bush and supported or extended by President Obama (20%); and
• New policies from President Obama (10%).

Now that we have laid out the contributing factors What specific policies resulted in this $2 trillion swing? The Obama Administration portion is composed of the stimulus package meant to spur economic recovery. One would hope a thoughtful legislator, concerned for fiscal responsibility perhaps, might propose the establishment of a rainy day fund, a percentage of the budget like savings, whose funds may only be deployed when the economy is operating with negative growth. Obama/ Bush policies are primarily war and TARP money. Bush Administration policies are Medicare prescription drug program that legislated that Medicare is not allowed to use its considerable purchasing power to negotiate better drug prices--why it is cheaper to get drugs from Canada. The tax cuts and war. Too simple really but 9 years on it is easy to get the jist. A failure to invest in productive expenditures providing for growth and an unwillingness to finance them otherwise has lead to fiscal ruin. We were doomed to fail because of our policy priorities that neither solved problems, found efficiencies or lead to growth. The deficit numbers don't even take into account the lost wealth and negative equity that households around the country are feeling as a result of the housing crisis. The investments of the nation laid to waste.

So happy April 15th. If this day is a reminder to do anything else may it be to elect representatives that will pursue governance that will return some of those taxes in a productive capacity so that we can do it all again next year and then some.