Now that income tax filing day has come & gone many people wonder where their tax dollars went. The above table provides the breakdown detailing the allocation of federal revenue received in fiscal year 2013 & in so doing gives people a chance to see how they would reduce the annual budget deficit themselves – I'm sure Paul Ryan would appreciate the help.
The fiscal year 2013 budget deficit was $680 billion dollars – it is portrayed on the above breakdown as $24.50 for every $100 paid in federal taxes (income, payroll, corporate, & excise). See note @ bottom of breakdown.
What line items would you cut or would you raise taxes to reduce the $24.50 in borrowing costs for every $100 paid? For those who choose the raising of taxes method please be aware that Professor Friedman liked to say that "to spend is to tax" meaning that in the case of borrowing it has to be repaid plus interest from tax revenue sooner or later. By preferring to raise taxes to lower borrowing costs you are just deciding to tax sooner rather than later.
Also with regard to the interest line item - it is projected to double to 12% in the next ten years after interest rates return to more normal levels from the Fed's artificially manipulated interest rates of the past many years. This projection provides a clear picture of the Fed giving up its independence to work as an agency of the Treasury.
My own method of deficit reduction has been listed on RTE several times over the years. In summary, there are four points that will bring America's financial house in order & accordingly will restore the prosperity that has been cruelly ripped from us by BO - 1) repeal ObamaCare & implement a premium support plan for Medicare based on Ryan's initial proposal that turns the cost curve down for generations to come while preserving current programs for people 55 & over, 2) follow Susan Lee's solution for controlling Social Security's growth by reducing the initial benefit for people under 55 so that the initial benefit is calculated based on the CPI rate instead of the wage rate as it is now, 3) begin Ken Blackwell's "cut, cap, & balance" plan that cuts projected borrowing in half next year (not 10 years from now) & caps spending @ 18% of GDP (it has averaged over 22% since 2009), & 4) enact the FairTax.
Now it is obvious that none of the above points will be done until after the 2016 presidential election, if then. But the midterm election gives us a chance to elect congressmen & senators who we can work with to build a financial foundation for America & start a change in mindset that embraces such measures. If this takes hold we may even have a chance to defeat the statists in 2016. The solutions are there – all we need are the will & sense to follow through.
In the meantime click on Tax Freedom Day to see how to determine the date the nation as a whole has earned enough money to pay its tax bill (federal, state, & local) for the year. Tax Freedom Day in 2014 is April 21 meaning that the average American draws the first dollar he could use for himself on April 22; when you add the effects of federal borrowing the date becomes May 6. The link also shows how the FairTax will reduce these days to something more manageable – my target is 12:01 AM on January 1 of each year.