Yesterday, Mitt Romney caused a stir when he made the following remarks about the poor during an interview with CNN:

“I’m not concerned about the very poor. We have a safety net there. If it needs a repair, I’ll fix it. I’m not concerned about the very rich…. I’m concerned about the very heart of America, the 90-95 percent of Americans who right now are struggling.”

Following this comment, CNN anchor Soledad O’Brien prodded Romney to clarify his remarks.

“We will hear from the Democrat party, the plight of the poor…. You can focus on the very poor, that’s not my focus…. The middle income Americans, they’re the folks that are really struggling right now and they need someone that can help get this economy going for them.”

The media, Democrats, and many Republicans are painting him as out-of-touch, while expressing their concern that he is apathetic to the plight of the poor.  However, they are missing the point.  The real outrage is not that he doesn’t want to do more for the poor; it’s that he thinks they are taken care of with the welfare state.  Worse, he believes that the welfare state is, more or less, functioning properly.  Fear not, ‘any minor glitches would be repaired by Mr. Fix It.

Read More →

Yesterday, Mitt Romney caused a stir when he made the following remarks about the poor during an interview with CNN:

“I’m not concerned about the very poor. We have a safety net there. If it needs a repair, I’ll fix it. I’m not concerned about the very rich…. I’m concerned about the very heart of America, the 90-95 percent of Americans who right now are struggling.”

Following this comment, CNN anchor Soledad O’Brien prodded Romney to clarify his remarks.

“We will hear from the Democrat party, the plight of the poor…. You can focus on the very poor, that’s not my focus…. The middle income Americans, they’re the folks that are really struggling right now and they need someone that can help get this economy going for them.”

The media, Democrats, and many Republicans are painting him as out-of-touch, while expressing their concern that he is apathetic to the plight of the poor.  However, they are missing the point.  The real outrage is not that he doesn’t want to do more for the poor; it’s that he thinks they are taken care of with the welfare state.  Worse, he believes that the welfare state is, more or less, functioning properly.  Fear not, ‘any minor glitches would be repaired by Mr. Fix It.

Read More →

The budget season has officially commenced today with CBO’s release of its annual budget and economic outlook.  Here are some of the major takeaways from the report:

FY 2012 Budget

The topline figure that the media will focus on is the projected $1.070 trillion budget deficit for FY 2012, down from $1.3 trillion last year.  However, as CBO notes several times throughout the report, the reduction in this year’s deficit is predicated on several assumptions.

1)      Revenues:  The entirety of this year’s deficit reduction comes from higher projected revenues, roughly $220 billion.  CBO is forced to score current law, which assumes that the payroll tax cut will expire at the end of February.  Another 10-month extension, which is almost a forgone conclusion, would cost over $100 billion.  Also, the CBO baseline does not include a likely AMT patch, and extension of many annual “tax extenders,” such as the credit for research and development.  It’s very likely that the extensions will wipe out the entire revenue gain from this year over 2011, thereby eliminating the reduction in the deficit.

2)      Outlays:  CBO is projecting $3.601 trillion in spending, up just $3 billion from last year.  Obviously, this projection does not account for a full-year extension of unemployment benefits and doc fix, which could add as much as $70 billion to this year’s spending total.

3)      Defense:  Outlays for defense will be reduced by another $20 billion.

When these factors are accounted for, it is clear that non-defense discretionary spending will not decrease significantly, while mandatory spending will continue to rise.  If you assume the alternative scenario, in which most of the temporary tax and spending measures are extended, the deficit should be about the same as last year; around $1.3 trillion.  In other words, there will be slightly more revenue this year, but increased spending as well.

Read More →

The budget season has officially commenced today with CBO’s release of its annual budget and economic outlook.  Here are some of the major takeaways from the report:

FY 2012 Budget

The topline figure that the media will focus on is the projected $1.070 trillion budget deficit for FY 2012, down from $1.3 trillion last year.  However, as CBO notes several times throughout the report, the reduction in this year’s deficit is predicated on several assumptions.

1)      Revenues:  The entirety of this year’s deficit reduction comes from higher projected revenues, roughly $220 billion.  CBO is forced to score current law, which assumes that the payroll tax cut will expire at the end of February.  Another 10-month extension, which is almost a forgone conclusion, would cost over $100 billion.  Also, the CBO baseline does not include a likely AMT patch, and extension of many annual “tax extenders,” such as the credit for research and development.  It’s very likely that the extensions will wipe out the entire revenue gain from this year over 2011, thereby eliminating the reduction in the deficit.

2)      Outlays:  CBO is projecting $3.601 trillion in spending, up just $3 billion from last year.  Obviously, this projection does not account for a full-year extension of unemployment benefits and doc fix, which could add as much as $70 billion to this year’s spending total.

3)      Defense:  Outlays for defense will be reduced by another $20 billion.

When these factors are accounted for, it is clear that non-defense discretionary spending will not decrease significantly, while mandatory spending will continue to rise.  If you assume the alternative scenario, in which most of the temporary tax and spending measures are extended, the deficit should be about the same as last year; around $1.3 trillion.  In other words, there will be slightly more revenue this year, but increased spending as well.

Read More →

Much ink has been poured over the fact that 51% of tax filers paid no federal income taxes in 2009.  There is less attention directed towards the more outrageous statistic; 30% of tax filers had a negative tax liability that year.  In other words, they made money off the tax system.

Those who won the jackpot on tax day benefited primarily from refundable tax credits; the Earned Income Tax Credit (EITC), Additional Child Tax Credit (ACTC, the refundable portion of child tax credit), and the now-expired Making Work Pay Credit.  In 2011, refundable credits cost the treasury about $94.4 billion.   Keep in mind that this is just one small portion of the burgeoning welfare empire, approaching $1 trillion in total federal, state, and local expenditures.   While it would be nice to get rid of these redistributive “tax expenditures” for everyone, we could start with illegal aliens.

Last July, the Treasury Inspector General for Tax Collection released a shocking report detailing how illegal aliens are able to utilize a filing loophole to obtain billions in ACTC funds.  While EITC appropriations are protected from illegals (those who don’t engage in identity theft) because they are only awarded to those who provide a valid Social Security number, the same cannot be said for the ACTC.  Illegals can receive the ACTC by merely providing an Individual Taxpayer Identification Number (ITIN) on their 1040 form, which is blithely issued by the IRS.  In 2010, according to the report, illegals received $4.2 billion in ACTC payouts.  That accounts for roughly 15% of all outlays for that refundable credit.

During the December imbroglio over the payroll tax cut, the House inserted a provision to require a valid Social Security number in order to collect the ACTC.  Republicans planned to use the savings as part of the offset package.  Now that the bill, HR 3630, is pending before the conference committee, we must ensure that the ACTC provision is part of a legitimate proposal to offset the cost of the extenders package.

Read More →

Much ink has been poured over the fact that 51% of tax filers paid no federal income taxes in 2009.  There is less attention directed towards the more outrageous statistic; 30% of tax filers had a negative tax liability that year.  In other words, they made money off the tax system.

Those who won the jackpot on tax day benefited primarily from refundable tax credits; the Earned Income Tax Credit (EITC), Additional Child Tax Credit (ACTC, the refundable portion of child tax credit), and the now-expired Making Work Pay Credit.  In 2011, refundable credits cost the treasury about $94.4 billion.   Keep in mind that this is just one small portion of the burgeoning welfare empire, approaching $1 trillion in total federal, state, and local expenditures.   While it would be nice to get rid of these redistributive “tax expenditures” for everyone, we could start with illegal aliens.

Last July, the Treasury Inspector General for Tax Collection released a shocking report detailing how illegal aliens are able to utilize a filing loophole to obtain billions in ACTC funds.  While EITC appropriations are protected from illegals (those who don’t engage in identity theft) because they are only awarded to those who provide a valid Social Security number, the same cannot be said for the ACTC.  Illegals can receive the ACTC by merely providing an Individual Taxpayer Identification Number (ITIN) on their 1040 form, which is blithely issued by the IRS.  In 2010, according to the report, illegals received $4.2 billion in ACTC payouts.  That accounts for roughly 15% of all outlays for that refundable credit.

During the December imbroglio over the payroll tax cut, the House inserted a provision to require a valid Social Security number in order to collect the ACTC.  Republicans planned to use the savings as part of the offset package.  Now that the bill, HR 3630, is pending before the conference committee, we must ensure that the ACTC provision is part of a legitimate proposal to offset the cost of the extenders package.

Read More →

Nothing typifies the inane cycle of government dependency and poverty more than the issue of healthcare.  Given that healthcare constitutes 18% of our economy and that millions of Americans are languishing under its crushing costs, it is important that we articulate healthcare reform from a position of strength.  We must demonstrate how it is socialist interventions in the marketplace that are responsible for high costs.  We must demonstrate how our policies will bring costs under control.

When discussing entitlements, conservatives must remember that the goal of healthcare reform is not to merely cut its costs to the federal budget; it is to alleviate the burden of government-run healthcare on the entire healthcare sector.  Any proposal to tweak the outlays for programs such as Medicare, without fundamentally reforming their anti-free-market structure, will only achieve minor savings, cause pain for those suffering from healthcare inflation, and incur the wrath of the largest voting bloc.

Medicare is socialized medicine for those over 65 in all but name only.  Its very presence in the market as the 800-pound gorilla has a counterintuitive effect of driving up the cost of healthcare, thereby forcing people to remain dependent on its broad shoulders.  Unless Medicare (along with Medicaid) is reformed as a defined contribution voucher system, instead of an open-ended market distorting behemoth, any attempt to raise the eligibility age or cut benefits would severely squeeze older healthcare consumers.

Now we learn that such a proposal would fail to stem the unsustainable trajectory of Medicare costs.

Last week, CBO published a report which suggests that a plan to gradually raise the retirement age from 65 to 67 would save $148 billion over 10 years.  That may sound like a large sum, but when compared to projected outlays, it is infinitesimal.  According to the most recent CBO budget outlook, Medicare outlays will top $7.4 trillion over the next 10 years, with a 75-year unfunded obligation of $35 trillion.  And that is probably a conservative estimate.  Thus, pulling the trigger on raising the retirement age and incurring the wrath of seniors will only reduce outlays from $7.4 trillion to $7.25 trillion.  We’ll be broke before we reach that point anyway.

Read More →

Nothing typifies the inane cycle of government dependency and poverty more than the issue of healthcare.  Given that healthcare constitutes 18% of our economy and that millions of Americans are languishing under its crushing costs, it is important that we articulate healthcare reform from a position of strength.  We must demonstrate how it is socialist interventions in the marketplace that are responsible for high costs.  We must demonstrate how our policies will bring costs under control.

When discussing entitlements, conservatives must remember that the goal of healthcare reform is not to merely cut its costs to the federal budget; it is to alleviate the burden of government-run healthcare on the entire healthcare sector.  Any proposal to tweak the outlays for programs such as Medicare, without fundamentally reforming their anti-free-market structure, will only achieve minor savings, cause pain for those suffering from healthcare inflation, and incur the wrath of the largest voting bloc.

Medicare is socialized medicine for those over 65 in all but name only.  Its very presence in the market as the 800-pound gorilla has a counterintuitive effect of driving up the cost of healthcare, thereby forcing people to remain dependent on its broad shoulders.  Unless Medicare (along with Medicaid) is reformed as a defined contribution voucher system, instead of an open-ended market distorting behemoth, any attempt to raise the eligibility age or cut benefits would severely squeeze older healthcare consumers.

Now we learn that such a proposal would fail to stem the unsustainable trajectory of Medicare costs.

Last week, CBO published a report which suggests that a plan to gradually raise the retirement age from 65 to 67 would save $148 billion over 10 years.  That may sound like a large sum, but when compared to projected outlays, it is infinitesimal.  According to the most recent CBO budget outlook, Medicare outlays will top $7.4 trillion over the next 10 years, with a 75-year unfunded obligation of $35 trillion.  And that is probably a conservative estimate.  Thus, pulling the trigger on raising the retirement age and incurring the wrath of seniors will only reduce outlays from $7.4 trillion to $7.25 trillion.  We’ll be broke before we reach that point anyway.

Read More →

Despite strident opposition from supporters who maintain that Rick Santorum is a “true conservative” in the mold of – you guessed it – Ronald Reagan, the already huge mountain of evidence that he is, at heart, a ‘big-government conservative’ continues to grow. As Erick noted previously, in 2008 Santorum said:

This whole idea of personal autonomy, well I don’t think most conservatives hold that point of view. Some do. They have this idea that people should be left alone, be able to do whatever they want to do, government should keep our taxes down and keep our regulations low, that we shouldn’t get involved in the bedroom, we shouldn’t get involved in cultural issues. You know, people should do whatever they want. Well, that is not how traditional conservatives view the world and I think most conservatives understand that individuals can’t go it alone.

Now, consider these two quotes from Santorum’s 2005 book It Takes a Family: Conservatism and the Common Good, both of which are very telling:

What was my vision? I came to the uncomfortable realization that conservatives were not only reluctant to spend government dollars on the poor, they hadn’t even thought much about what might work better. I often describe my conservative colleagues during this time as simply ‘cheap liberals.’ My own economically modest personal background and my faith had taught me to care for those who are less fortunate, but I too had not yet given much thought to the proper role of government in this mission.

-Preface, p. IX; audio here

And:

I suspect some will dismiss my ideas as just an extended version of ‘compassionate conservatism.’ Some will reject what I have said as a kind of ‘Big Government Conservatism.’ Some will say that what I’ve tried to argue isn’t conservatism at all. But I believe what I’ve been presenting is the genuine conservatism our Founders envisioned. One that fosters the opportunity for all Americans to live as we are called to live, in selfless families that contribute to the general welfare, the common good.

-Conclusion, p. 421; audio here

Read More →

Despite strident opposition from supporters who maintain that Rick Santorum is a “true conservative” in the mold of – you guessed it – Ronald Reagan, the already huge mountain of evidence that he is, at heart, a ‘big-government conservative’ continues to grow. As Erick noted previously, in 2008 Santorum said:

This whole idea of personal autonomy, well I don’t think most conservatives hold that point of view. Some do. They have this idea that people should be left alone, be able to do whatever they want to do, government should keep our taxes down and keep our regulations low, that we shouldn’t get involved in the bedroom, we shouldn’t get involved in cultural issues. You know, people should do whatever they want. Well, that is not how traditional conservatives view the world and I think most conservatives understand that individuals can’t go it alone.

Now, consider these two quotes from Santorum’s 2005 book It Takes a Family: Conservatism and the Common Good, both of which are very telling:

What was my vision? I came to the uncomfortable realization that conservatives were not only reluctant to spend government dollars on the poor, they hadn’t even thought much about what might work better. I often describe my conservative colleagues during this time as simply ‘cheap liberals.’ My own economically modest personal background and my faith had taught me to care for those who are less fortunate, but I too had not yet given much thought to the proper role of government in this mission.

-Preface, p. IX; audio here

And:

I suspect some will dismiss my ideas as just an extended version of ‘compassionate conservatism.’ Some will reject what I have said as a kind of ‘Big Government Conservatism.’ Some will say that what I’ve tried to argue isn’t conservatism at all. But I believe what I’ve been presenting is the genuine conservatism our Founders envisioned. One that fosters the opportunity for all Americans to live as we are called to live, in selfless families that contribute to the general welfare, the common good.

-Conclusion, p. 421; audio here

Read More →