Coffee Talk on Tax Reform


Some “coffee talk” on tax reform:


Our national debt is now approaching $21 trillion ($231 trillion if you include unfunded liabilities like government pensions), and nobody seems to care.  Most of our congressmen still want to spend more and tax less.  I guess they think we can just print more money whenever we want and there is no down side.  They had better hope interest rates can be artificially held to near zero for generations to come.


Everybody knows the tax code is ridiculously complex.  But few understand what a drag on the economy this complexity causes.  Here’s something to think about:  the cost of filling out government tax forms is estimated by the IRS at $400 billion per year.  At the bottom of every business tax form is a small box that asks how many hours were spent preparing this form.  The preparer will write “2 hours” or “.5 hours” on the form, and the IRS rolls up this number, multiplies it by some arbitrary labor cost per hour, and comes up with $400 billion.  But that’s just for filling out the form!  It doesn’t include the billions of hours spent on accounting to generate the numbers to report on the form!  I know some of this accounting also serves internal purposes, but much of it does not, especially in small businesses.  And we aren’t even counting the cost of the IRS, the IT systems required for data gathering, or the Advils swallowed every April.

I’ll bet the cost of reporting taxes easily exceeds a trillion dollars.  Think about it:  our annual GDP is $20 trillion.  Ask any business owner what percentage of the labor hours in his business are spent punching computers, gathering data and doing accounting.  A conservative average might be 25%.  That would be $5 trillion of bookkeeping per year.  Imagine what our economy could do if we didn’t spend a quarter of our time bean-counting instead of making something useful.


OMB Director Mick Mulvaney knows that there is terrible waste in government, and we could cut a huge chunk out of the federal budget without causing any pain for Americans.  And while he is making the effort to cut spending as best he can, it won’t work.  “Too slow,” says Mulvaney, an honors scholar and holder of advanced degrees in international economics, commerce, and finance.  “The only way to turn the ship around is to grow the economy.”

Mulvaney believes 3% GDP growth, which has been fairly common in our history, would grind down our debt and reduce the drag on the economy, but only only if we could muster some restraint in the growth of spending.  It’s encouraging and discouraging at the same time.  It’s definitely do-able.  But our elected class has learned that they can get elected and re-elected by promising to give everybody somebody else’s money.


The purpose of taxes is to fund the government.  Collecting taxes should be simple:  Here is the budget for next year (say $1 trillion).  Add up the total wages of all adult citizens ($33 trillion).  Divide – the answer is 3%.  Ask each citizen to send a check for 3% of their wages to the swamp.

That might be a little bit too simple – for example, all business and investment profit would need to be distributed as personal income, not retained.  But our tax code has grown to over 75,000 pages, and that’s because it is used for much more than just funding the government.  It’s all about controlling our behavior.  Most tax laws were put in place to reward some of us with tax breaks, or to punish some of us with higher taxes, or to encourage (or require) all of us to act in a certain way.

If you think the government should have less control over your daily life, you should want the tax code to be severely simplified, and the corrupt IRS whittled down to reflect its core mission.


Tom Balek – Rockin’ On the Right Side

It’s Hell! Tryin’ to make it
When you’re doin’ it by yourself
It’s Hell! Payin’ taxes
When there’s no money left

Cut the Budget, Or A Whole Department? You Decide!

When is the last time the Federal Government asked you what you want it to do?  Been a while, hasn’t it?

Here is yet another example of how elections really do matter.  The Trump administration, via Mick Mulvaney and his Office of Management and Budget, wants your input.

They set up a web page on the White House website and are asking for suggestions from citizens on how to make our federal government “more efficient, effective, and accountable to the American public.”

They want you to name names.  They are asking for details.  If you have seen a federal agency that is not operating at, shall we say, “peak efficiency”, here’s your chance to do something about it.  Trump and Mulvaney want to know which agencies, boards, and commissions are screwing up, wasting money, or are no longer even necessary, and visitors to the website are encouraged to share their ideas and solutions in detail.

In addition, citizens are asked to weigh in on federal government management reform and reorganization of the government.  How damn refreshing is that?

It’s hard to resist the temptation to “select all” for elimination or reform and hit enter.  So I zeroed in on all the departments and agencies related to the Indian Reservation debacle.

Rumor has it that Mulvaney and his team are also planning to “tech up” the government to modern business standards, something I have advocated for years.

Information technology (IT) advancements have been at the center of a transformation in how the private sector operates—and revolutionized the efficiency, convenience, and effectiveness with which it serves its customers. The Federal Government largely has missed out on that transformation due to poor management of technology investments, with IT projects too often costing hundreds of millions of dollars more than they should, taking years longer than necessary to deploy, and delivering technologies that are obsolete by the time they are completed. We are working to close the resulting gap between the best performing private sector organizations and the federal government.

— Office of E-Government and Information Technology

Of course asking for input and actually using it are two very different things.  But I find it flattering to even be asked, after two terms of total arrogance in the executive office.

So I hope you will take a few minutes and look over the long list of agencies.  Consider whether the National Endowment for the Arts is still deserving of taxpayer support, and check yes or no.

Tom Balek – Rockin’ On the Right Side

Do you love me,
Do you want to be my friend?
And if you do
Well then don’t be afraid to take me by the hand
If you want to
I think this is how love goes
Check yes or no

Check Yes or No – George Strait

We Can Rebuild the Military AND the Budget

carrier-landing

President Trump’s campaign promise to “Make America Great Again” included his plan to restore our military preparedness to at least pre-Obama levels.  His message resonated with voters, and still meets little resistance from political leaders or from citizens.

Most Americans sense that our armed forces are no longer up to the task of defending our homeland while dealing with international conflicts, and this week’s briefings to Congress by our top military brass didn’t leave us feeling any less hinky.

General Daniel Allen reported that only three of the Army’s fifty combat brigade teams could deploy if needed.  Admiral William Moran said less than half of the Navy’s fighters are in service and our fleet is the smallest it has been in 100 years.  Our Air Force planes average 27 years in age, well past their life expectancy, and we are short 750 pilots and over 1600 maintenance technicians.

Of course every government program wants more money, more money, more money.  Always.  But it appears the military has been cut to the bone, and our leaders made it clear to President Trump that they need funds, now – if we want to continue to have any foreign policy leverage.

Sen. John McCain (R-AZ) is pushing for a huge military budget increase, but he may have to fight that through a conservative Congress and a tough new OMB director, Mick Mulvaney.  Mulvaney agrees with President Trump that national defense is our highest priority.  But he is also a budget hawk, tasked with keeping Congress’ promise to the voters to stop the insanity of our $20 trillion debt.

McCain attacked Mulvaney over his alleged “failure to support the military” by blindly supporting every request for “more money” as a congressman, but Mulvaney’s counterpunch embarrassed the crusty McCain, who could not differentiate between the “top line military budget” and the “overseas contingency operation”, a much-abused and unaccountable military slush fund.

McCain wants $100 billion.  The generals are asking for a $40 billion increase.  Trump is thinking more like $30 billion – with the requirement that it not be wasted.

Is President Trump right about the need to refresh our military?  Yes.

Is it time to send John McCain to the glue factory?  Yes.  Thanks for your service, John.  Have fun at Sun City.

Am I glad to have a tight-fisted skinflint like Mulvaney at OMB keeping an eye on our money?  Hell yeah!

Tom Balek – Rockin’ On the Right Side

Rockin' On the Right SideHell yeah!
Turn it up!
Right on!
Hell yeah!

Hell Yeah! – Montgomery Gentry

 

 

Mulvaney Set to Drain the Swamp

mulvaney-alligatorFor a long time I have suspected that because liberals see everything through the prism of skin color, they assume conservatives do too, and are therefore racists.

Only recently have I realized that the same is true of political corruption.  Liberals think that conservatives who run for office or accept administrative posts must be doing it to enrich themselves unethically because that’s what they, the liberals, do – or would do, given the chance.

For instance, Senator Elizabeth Warren (D-MA) excoriated HHS nominee Rep. Tom Price (R-GA) during his hearing for a $300 profit he made on a stock purchase in a company that benefited from a ruling his committee made.  Her condescending rebuke was designed to paint Price as a monster who made shady self-serving deals using his government influence.  How rich.  Warren, a “one-percenter” with assets estimated at $10 million, falsely claimed Native American heritage to land a professorship, and received $350,000 for teaching one  college course.

Democrats point out, with faux concern and anger, that President-elect Trump’s cabinet picks are mostly wealthy individuals.  Like Trump himself, his nominees have accomplished a level of business (not government) success that not only builds wealth, it also indicates competence.

The Democrats can grandstand and delay, race-bait and class-envy ad nauseam, trying to hold up the confirmation process.  But it won’t work.  The swamp will be drained.

Only the shallowest of observers can’t see that these all-stars are not in it for personal profit.  Quite the contrary; they are sacrificing their earning power and precious time as an act of patriotism, service and charity.  And isn’t it just possible that the wealthy Democrats, most of whom have never earned a dollar in the private sector, are panicking at the prospect that their own gravy train may soon fall off the tracks?

The Trump team tapped budget hawk Rep. Mick Mulvaney (R-SC) to head up the Office of Management and Budget.  Mulvaney was a co-founder of the uber-conservative Freedom Caucus and has a stellar resume in budget, finance, and business – both inside and outside the Beltway.  Mulvaney isn’t rich – during legislative sessions he slept in the closet of his office.  But he is focused and determined.  And he is building his own all-star team, starting with Heritage Action brainiacs Russ Vought and Jessica Anderson.  The Beltway is abuzz today with talk of a plan to reduce the national debt by $10.5 trillion in ten years, based on the Heritage Foundation’s Blueprint for Reform published last year.

This is what common-sense Americans have been praying for since Rick Santelli’s rant on CNBC gave birth to the Tea Party in 2009 – a glimmer of hope that our children will not have to deal with the economic destruction caused by our monolithic $20 trillion federal debt.  In his rant, by the way, Santelli gave kudos to Wilbur Ross, another Trump appointee.

President-elect Trump calls it “draining the swamp”, which encompasses both rooting out corruption and slashing out-of-control spending.  It makes me picture OMB Chief Mulvaney in the role of Amos Moses, that badass Cajun in the Louisiana bayou, knockin’ alligators in the head with a stump!

Tom Balek – Rockin’ On the Right Side

Rockin' On the Right SideNow Amos Moses was a Cajun
He lived by himself in the swamp
He hunted alligator for a living
He’d just knock them in the head with a stump!

Jerry Reed – Amos Moses

 

I love this 1982 video of Jerry Reed and Glen Campbell rockin’ it up with this funky, swampy, bluesy version of Reed’s “Amos Moses.”  You won’t find more guitar pickin’ power in one camera shot.  Reed is most widely known as Burt Reynold’s sidekick in the “Smokey and the Bandit” movies, but he was an outstanding musician and songwriter, and was revered by guitar players world-wide.  Among his innovations was the “claw” style of picking, which he allegedly taught to Chet Atkins.  Campbell had a stellar career until it was derailed by alcoholism and, later, Alzheimer’s disease.  He started as a studio guitarist, was an early member of the Beach Boys, and eventually had his own television show plus many gold records.