Category Archives: Budget

Avoiding The Fiscal Cliff

Congress has been thrown into a turmoil with the prospect of having to cut 1.2 trillion over 10 years. With budget deficits of about a trillion a year for the last four years, cutting spending by 109 billion dollars per year until 2021 is woefully inadequate. Moreover, these cuts are relative to the CBO 2010 baseline which includes automatic increases to the budget every year. So, the fiscal cliff, in terms of cuts, is not that the cuts are too deep but not deep enough! However, the Republicans are right to be concerned about the expiring tax cuts and the new Obamacare taxes in 2013. Raising taxes on anyone, even the symbolic raises on the rich, will reduce spending in the private sector and so cause a recession unless you think the rich keep their money in their mattress and not in stocks and other investments!

Maybe Congress should take another look at Ron Paul’s Plan to Restore America which gives a line-item budget plan from 2013 through 2016. His budget cuts $1 trillion dollars in spending from the 2013 budget and achieves a surplus, yes a surplus, in year 3 and 4. He does all this without cutting Medicare or Medicaid but block granting them to the states to administer more effectively. Nor does he cut Social Security, but allows younger workers to opt out. He honors our veterans by continuing their benefits at the current level. The Plan to Restore America accomplishes all this without raising taxes. In fact, his plan cuts taxes, lowering the business tax to 15%, eliminating taxes on personal savings, capital gains, dividends, the death tax, and the gift tax. All these tax cuts are designed to unleash the entrepreneurial spirit of the American people by allowing businesses to keep more of their profits and by incentivizing savings and investments.

Now, to realize these achievements Congress has to accept certain principles upon which our Republic was founded. First, Congress may not exercise any powers that are not specifically enumerated in Article I, Section 8 of the U.S. Constitution. This is the basis of limited government. Much of what Congress and the Executive branch does transcends these powers and so are unconstitutional. That is why the Plan To Restore America cuts 5 executive departments: Education, Energy, HUD, Commerce, and Interior. When the Federal government attempts to do more than it should, it necessarily costs more money. This is the source of the fiscal crisis that we face. What is more, excessive regulation of industry hog-ties the economy by forcing businesses to expend time and resources in being compliant rather than being profitable. That is why the Plan eliminates onerous regulations on business such as Dodd-Frank and Sarbanes-Oxley.

Secondly, the Constitution empowers the Federal government to provide for our national defense. However, it does not authorize it to engage in nation-building and policing of the world. These activities in fact make us less safe because they engender resentment and hatred by meddling in the internal matters of sovereign countries. Also, the power to declare war is entrusted to the Congress alone as the branch closest to the people and the last war that Congress declared was World War II! To this end, the Plan ends all foreign aid and all foreign, unconstitutional wars saving billions.

The Plan to Restore America provides a sure path to recovery by calling for a return to our founding principles which made this country great. Our most pressing task is convincing Congress and the American people to reclaim these founding principles of limited government, a sound currency, and a humble, non-interventionist foreign policy. Only then can we return to fiscal sanity.