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Paul Ryan recently presented his ideas for a Republican Budget for 2014 and was followed a day later by Patty Murray’s idea for a Democrat Budget for 2014. Not surprisingly the two Budgets were miles apart and neither one has a snowflakes chance in hell of being passed even though each promised wonderful things for our country’s future. Ryan’s Budget seems to be totally deaf to the rising concern over the relative increase in the share of our country’s assets held by the wealthiest Americans and actually proposed a lowering of the top tax rate. Maybe he isn’t aware that we recently had an election where such an idea was rather soundly defeated. Murray’s Budget seems to be blissfully unaware of the deteriorating financial status of the United States and of the tremendous economic problems in Europe, which is just a step ahead of us in our headlong plunge into financial
insolvency. Her clever plan provides for a balance between real tax increases right away and ‘sometime in the future’ spending cuts that will never happen. In short it is a tax a lot and spend even more plan. Patty seems to think that spending what you don’t have is not a problem despite the fact that every country in history that tried such an insane approach eventually fell apart. Since it would be close to impossible to come up with worse or less practical Budget plans than these two out of touch politicians I have decided to develop my own idea of what an “Independent United States Budget for 2014” should look like. It is based on the idea that we do need to end the absurd deficit. We need to cut spending in many areas and at the same time there add some spending in education and improving our infrastructure so we can compete in the future. We also need to bail out state and local governments from the unfortunate defined benefit pension plans that they have so generously granted government workers without any possible means of paying the long term costs. Unfortunately doing this will require more income so new taxes are needed. Fortunately we have evidence dating back to the year 2000 that the American people can survive the proposed rate increases and even prosper as long as government spending is kept under control. Rather than torture you with 100 plus or minus pages of nonsense I will limit my “Independent” plan to a simple outline identifying needed spending cuts, spending increases, and tax changes.
First off reduce Defense Spending by $100 Billion for 2014 and limit growth to 2% a year for the next twenty years. I
realize that former Defense Secretary Leon Panetta recently said that the Defense spending cuts under the Sequester, which were less than half the amount I am proposing, threatened to make the U.S. a second rate military power. However, I am also aware that the U.S. currently spends more than half of the amount spent on military budgets in the whole world. Even with a $100 Billion reduction we would still be right around the 50% mark. If our Defense Secretary and our Military leadership cannot provide us with a first rate military spending that much they should be replaced rather than increasing the budget.
The second target for a significant cut would be our budget for foreign aid. Until we get our own house in order we simply cannot afford to squander billions of dollars on countries and people, who do not appreciate the assistance and who, in many cases, actually hate the United States. I would cut this unnecessary spending by a minimum of $15 Billion in 2014 and limit future growth to a maximum of 2% per year for the next twenty years. While I recognize the importance of Social Security to our senior citizens and our society we must change the method used to calculate the annual cost of living adjustment as has been proposed by Republicans and has been put ‘on the table’ by President Osama. This change will save billions of dollars over the next ten years and will help keep Social Security solvent which is of crucial importance.
4. All other Federal expenditures, excepting the items in the next section, would be limited to a 3% increase over the 2013 Budget and would be limited to 2% per year increases for the next 20 years.
Spending Increases and one time expenditures
First we must provide up to $200 Billion over five years to K-12 schools throughout the United States to upgrade their infrastructure including new technology. These funds would be spent over a five year period and only allocated to schools that present a plan for significantly improving their results. Second we must provide up to $100 Billion over five years to public Community Colleges, Colleges, and Universities to upgrade their infrastructure including new technology. Half of the amount would be provided to Community Colleges to allow them to convert to vocational and technical training colleges. They would have to agree to and submit plans for such a change before receiving any funds and part of their plan must include cooperation with private sector businesses to set up apprenticeship programs and real world educational experiences that will allow their graduates to obtain productive employment. The other half would be provided to Colleges and Universities who agree to a program where a minimum of two years credit can be obtained by passing exams without requiring actual classroom attendance. Set up a “Conversion fund” of $150 Billion, to be funded over three years, to help the conversion of any Government (Federal, State, or Local) Pension plans to become part of Social Security. The amount needed to be contributed to the Social Security Trust Fund to make up for missed past contributions for the employees would be calculated and 20% of that amount would be paid out of the Conversion Fund provided the other 80% was contributed by the Government plan involved. Note that
supplemental pension plans for these employees would be allowed provided they were defined contribution plans and not defined benefit plans. The opportunity for such a conversion would be limited to the next five years.
Make a one time payment to the U.S. Post Office of $50 Billion in 2015 provided it shifts to a three day delivery schedule where each mail recipient receives mail on Monday, Wednesday and Friday OR on Tuesday, Thursday and Saturday. The U.S. Postal service would be allowed to make any future changes, including rate increases, needed to remain financially viable. The U.S. State Department should be given special payment of $50 Million (yes, Million not Billion) to set up a new Embassy in Cuba. This would of course require an end to the Cuban Embargo which makes no economic, social, or political sense for our country.
Tax Changes 1. The individual tax rate schedules will revert to those in effect in 2000 when the economy was strong and there was no deficit. One minor difference is that the top rate will be 40% rather than the 39.6% rate that was in effect in 2000. This would generate substantial additional revenue and help close the budget deficit in a very short period of time. 2. Capital Gains will be taxed at the same rate as ordinary income effective with the 2015 tax year. This will allow one year for previously unrecognized gains to be recognized and taxed at the current rates.
The top corporate tax rate shall be 30%. The first $350,000 of profits shall be taxed at 15% and any amount
above $350,000 shall be taxed at 30%. However, corporations will be taxed on all overseas holdings of ‘profits’ that are kept offshore to avoid taxation.
Corporate Retained Earnings in excess of the last two years revenue, not to exceed $20 Billion dollars, shall be deemed to have been distributed to shareholders who will be taxed on the deemed dividend distribution.
5. The entire IRC shall be reviewed and simplified eliminating or reducing as many deductions as possible. For example the Individual homeowner deduction for interest payments on the taxpayer’s primary residence shall be limited to $50,000 per year and the deduction for other than a primary residence shall be limited to $25,000 per year.
So that’s it. A plan with real spending cuts starting immediately and real tax increases also starting right away. A plan to actually balance the budget and at the same time make needed changes in the way we do things. My guess is that almost everyone will find something to complain about in this proposed Budget which means it is most likely good for the American public, and unlikely to get passed by our entrenched and out of touch politicians.
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