Congressional Oversight Mandate
April 25, 2019
I live in Clearwater, FL and my elected Congressional representative is Charlie Crist. Here is a copy of my letter to Rep. Crist regarding the obfuscation by Steven Mnunchin:
April 25, 2019
No law requires presidential candidates to release their tax returns, but historical precedent does.
In November 1963, then-presidential candidate George Romney started this trend when he released 12 years of tax returns, a full year prior to the 1964 election.
When George’s son Mitt ran for president in 2012, he released his own tax returns.
According to PolitiFact, only 7 presidential or vice president candidates since 1976 have not released any tax returns. (Jerry Brown, Pat Buchanan, Mike Huckabee, Steve Forbes, Rudy Giuliani, Richard Lugar, Ralph Nader, none of whom were elected to the position they sought.)
When Donald J. Trump voluntarily announced (June 2015) his candidacy to run for the office of President of the United States, he voluntarily left a sequestered world of privacy to become a public figure.
Americans have come to rely on full transparency from Presidential candidates, including voluntary public release of federal tax returns.
Since June 2015, Trump has been asked many times to release his tax returns, and he has often replied in specious and vague generalities, frequently citing “under audit” as a primary barrier.
Fast forward to April 2019: Ways and Means Committee Chairman Richard Neal (D-MA) sent a written request to Internal Revenue Service (IRS) Commissioner Charles Rettig seeking six years of President Donald J. Trump’s personal and business tax returns.
Chairman Neal issued a concurrent statement explaining his request: “Congress, as a co-equal branch of government, has a duty to conduct oversight of departments and officials. The Ways and Means Committee in particular has a responsibility to conduct oversight of our voluntary Federal tax system and determine how Americans – including those elected to our highest office – are complying with those laws. It is also our duty to evaluate the operation of the Internal Revenue Service in its administration and enforcement of the tax laws.
“The IRS has a policy of auditing the tax returns of all sitting presidents and vice-presidents, yet little is known about the effectiveness of this program. On behalf of the American people, the Ways and Means Committee must determine if that policy is being followed, and, if so, whether these audits are conducted fully and appropriately. In order to fairly make that determination, we must obtain President Trump’s tax returns and review whether the IRS is carrying out its responsibilities. The Committee has a duty to examine whether Congressional action may be needed to require such audits, and to oversee that they are conducted properly.”
U.S. Treasury Secretary Steven Mnuchin failed to ensure that IRS Commissioner Rettig met a final congressional deadline of April 23 for turning over President Donald Trump’s tax returns to lawmakers, the second time the Trump administration missed a House deadline for the tax returns since Neal requested them on April 3.
After the deadline lapsed, Mnuchin released a letter to Neal in which he pledged to make “a final decision” on whether to provide Trump’s tax records by May 6 by which date Mnuchin expected to receive a legal opinion from the Department of Justice on the propriety of Chairman Neal’s request.
Mnuchin further stated he was concerned that the efforts by Democrats to release the president’s tax returns were ‘politically motivated’.
The powers delegated to the Chairman of Ways and Means under IRS code are clear.
Steven Mnuchin and Charles Rettig are violating the laws of our country and ought to be charged as such; arrested; and imprisoned until such time they comply with this legitimate Congressional request.
If Congress fails to act quickly and assertively to take control of this situation, then Congress is complicit in the continued efforts of the Trump administration to usurp the very essence of our Constitutional Republic.
Thank you for making time to consider my opinions on how our federal government could better serve the best interests of the people.
The Untouchables
April 23, 2019
The Untouchables television series debuted in 1959 loosely based on a memoir written by Eliot Ness, chronicling his career as a federal Treasury enforcement agent in the 1930’s.
The TV series starred Robert Stack (as Eliot Ness) as the leader of a team of Prohibition Agents employed by the U.S. Department of the Treasury following their efforts to bring down the bootleg empire of “Scarface” Al Capone.
The team of agents was nicknamed “The Untouchables” because of their courage, moral character, and incorruptibility; legend said they could not be bribed or intimidated by the Mob.
The Untouchables was a landmark television series that spawned numerous imitators over the decades, including S.W.A.T.; The F.B.I.; Crime Story; the original Hawaii Five-O; and countless more.
Those were the days when the American public proudly looked up to…
- Our elected leaders in Washington;
- Their appointed cabinet heads; and
- The career public servants who signed on to protect our country against rascals, scoundrels and scofflaws.
Today (April 23, 2019), U.S. Treasury Secretary Steven Mnuchin failed to meet a final congressional deadline for turning over President Donald Trump’s tax returns to lawmakers, setting the stage for a possible court battle between Congress and the Trump Administration.
Last week, we witnessed William Barr — the current Attorney General of the United States – in a nationally televised press conference deliver a fully fabricated introduction to a 400+plus page summary of a Special Counsel independent investigation (“The Mueller Investigation”) into allegations of Russian government efforts to interfere in the 2016 presidential election.
We have a sitting President who has frequently and publicly besmirched, criticized and/or called into question the abilities, intentions and loyalty of the entire U.S. intelligence community, including the FBI, CIA, Treasury Department and National Intelligence Agency,
Trump’s decision to revoke the security clearance of former CIA director John Brennan in August 2018 – apparently in retaliation to Brennan’s comments that Trump was incapable of managing the office of POTUS – is cast in complete juxtaposition to the forced security clearances for Jared and Ivanka.
Make America Great Again?
Yeah.
Let’s go back to the time when Eliot Ness and his team of Untouchables were revered by virtually all Americans, and when we were willing and able to unite against Mobsters and Criminals who threatened the very essence of our Constitutional Republic.
More on: Tax Cuts & Jobs Act
April 16, 2019
Paul Ryan retired from Congress in January 2019 after 20 years of service culminating in his 3+ years of service as Speaker of the House.
Ryan was the chief cheerleader for the Tax Cuts and Jobs Act, and he left D.C. touting it as the greatest accomplishment of his political career.
Ryan repeatedly exclaimed how this new legislation (TCJA) would unleash unprecedented U.S. economic prosperity, by providing:
- Tax relief for middle-income families;
- Simplification of the tax code for individuals;
- Economic growth; and
- Repatriation of $3+ Trillion of profits U.S. companies have parked overseas would generate more investment and jobs in the U.S.
16 months after passage of the TCJA, it should be crystal clear that:
- Almost none of the tax cut benefits have reached the low- and middle income Americans who were promised tax relief;
- The TCJA legislation is some 1,097 pages itself, and it states very clearly that it is an Amendment to (the existing) Internal Revenue Code of 1986 (not a simplification);
- Economic Growth? The jury is still out on this one, but there seems to be no evidence of growth above or beyond the existing growth trend line which began in mid-2009;
- American companies have returned some (+/- $500 Billion) of their profits held overseas as a result of the tax holiday which was part of TCJA. Much of that money was used for stock buy-backs and debt reduction.
In fact, 16 months following the passage of the TCJA, U.S. companies are still waiting for final guidance from the Treasury Department on many of the final rules relative to repatriation.
And, despite continued U.S. economic growth and record corporate profits, a record 60 Fortune 500 companies avoided paying any federal income tax in 2018.
Federal tax revenues have declined during a period of economic expansion and our government spending has increased, thus the verifiable result from Paul Ryan’s signature accomplishment – the TCJA — is an increase in our federal deficit, an extra-special gift to our children and grandchildren.
The Treasury Department announced in March 2019 that the deficit for the first four months of the 2019 budget year (which began Oct. 1, 2018) totaled $310.3 Billion, up from a deficit of $175.7 Billion in the same period the year prior.
The Congressional Budget Office is projecting that the annual federal deficit between revenues and expenses will hit $897 Billion in fiscal year 2019, up 15.1 percent from the $779 Billion deficit recorded in FY 2018.
The end result: Our total federal debt will reach $22 Trillion this year – about 105% of GDP.
Why is that important? A comprehensive study by the World Bank examined economic data from 100 developing and developed economies spanning a time period from 1980 to 2008, concluding that a public debt/GDP above 77% begins to create a drag on economic growth.
The World Bank analysis concluded that for each additional percentage point of debt above the 77% threshold costs 0.017 percentage points of annual real growth.
If the World Bank study is correct, we are currently missing about 0.5% of our economic growth potential due to misguided public policy decisions, in addition to the future burden of repaying federal debt which was incurred unnecessarily.
Paul Ryan achieved his personal goal of shepherding record tax reform through Congress resulting in the passage of TCJA.
Although his personal goal was achieved at the expense of American society, Paul Ryan clearly is a winner. So, please join me in sending a note of thanks and congratulations to Paul Ryan. He left us a legacy.
Sen. Rick Scott & Health Care
April 3, 2019
Dear Senator Scott:
I live in Clearwater, FL so I write to you today as an alert and engaged constituent.
You are an accomplished and admired American leader. After volunteering for military service during the Vietnam era, you honorably served your country in the U.S. Navy as a radar technician aboard the USS Glover. You overcame significant social and economic obstacles to earn a J.D. from the SMU Dedman School of Law.
You are a former Chairman and CEO of one of the largest private sector health care corporations in America (Columbia/HCA). You then admirably served two terms as Governor of Florida; and you now serve as one our two U.S. Senators from the Great State of Florida.
In fact, you have been recognized as a uniquely qualified American leader who ran the largest health care company in the world, and who cares deeply about the costs and quality of health care to consumers.
I tuned into watch and listen to Face the Nation (CBS) on March 31, 2019, eager to learn from your current perspectives on health care in America.
I was disappointed by your responses to Margaret Brennan’s questions about a renewed partisan focus to repeal the ACA (President Trump, March 26, 2019). I was particularly concerned about your focus on drug prices as a key driver of excessive costs in our health care sector. While your observations contain some truth, you failed to disclose the background behind persistent high prices of ethical pharmaceuticals in the U.S.
On April 1, 2019, you were interviewed by Steve Inskeep from Morning Edition (NPR).
Mr. Inskeep attempted to draw out your unique expertise on some of the most critical issues facing our nation relative to our health care delivery system, noting that ‘President Trump says he wants Republicans to be known as the party of health care’.
You zeroed in on high prescription drug costs, and you cited a bill you are introducing, the “Transparent Drug Pricing Act” which aims to stop drug companies from charging more for medication in the U.S. than in other countries.
In both cases, you responded to some solid direct questions with sadly incomplete ‘softball’ answers.
I did not hear you mention the “non-interference” clause of the Medicare Modernization Act of 2003 which is frequently cited as the core reason for excessive drug costs in the U.S.
Medicare accounts for more than 25% of annual national retail prescription spending, and taxpayers currently pay nearly 70% more for drugs in the Medicare program than through the Veteran’s Administration, which has direct negotiating power with drug companies.
The Medicare Modernization Act of 2003 precludes the Secretary of Health and Human Services (HHS) from negotiating directly with drug manufacturers on behalf of Medicare Part D enrollees. A simple act of Congress, supported by the executive branch, can repair this problem quickly. In fact, a recent survey conducted by the Kaiser Family Foundation shows that over 90% of the public believes that allowing the federal government to negotiate drug prices for Medicare beneficiaries is needed.
As a highly accomplished expert in the field of health care, you are certainly familiar with a comprehensive study conducted by researchers at Harvard Medical School which examined peer-reviewed medical and health policy literature from January 2005 to July 2016. The study was published in the Journal of the American Medical Association (August 23/30, 2016, “The High Cost of Prescription Drugs in the United States”).
Their research studied scholarly articles addressing the sources of drug prices in the United States; examined the justifications and consequences of high prices; and investigated possible solutions for the pharmaceutical price conundrum we continue to face in America.
This independent professional research concluded that high U.S. drug prices are the result of U.S. government protected monopolies granted to drug manufacturers, combined with coverage requirements imposed on government-funded drug benefits. They noted that the most realistic short-term strategies to address high prices include:
- enforcing more stringent requirements for the award and extension of exclusivity rights;
- enhancing competition by ensuring timely generic drug availability;
- providing greater opportunities for meaningful price negotiation by governmental payers;
- generating more evidence about comparative cost-effectiveness of therapeutic alternatives; and
- more effectively educating patients, prescribers, payers, and policy makers about these choices.
Individuals in the U.S. are directly impacted by the cost of prescription drugs at the retail level, whether fully covered by their insurance provider; through a co-pay; or fully funded out of pocket.
Indirectly, each taxpayer in the U.S. helps to subsidize the cost of prescription coverage for current and retired local, state and federal government employees; veterans; and those of our neighbors who are eligible for Medicare/Medicaid benefits. When drug prices are inflated due to a lack of appropriate government regulation, U.S taxpayers are subsidizing excessive profits which accrue to executives and shareholders of pharmaceutical companies.
It is – and has been – clear to me that our elected officials in Congress have failed the people of the U.S. over a rather long period of time. Our elected representatives have failed to address the root causes of high drug prices which have been identified and delineated in (the previously cited) independent and non-partisan report published almost 3 years ago.
Senator Scott, I believe the great majority of my fellow Floridians join me to expect much more of you in this arena.
We count on you — A recognized expert in the field of health care — to give us the full, honest and unvarnished picture on these issues, and to support new and appropriate legislation which strategically addresses the rapidly changing operational landscape on which our economy and society operates.
President Trump & Puerto Rico
March 27, 2019
Dear President Trump:
It has been reported that you don’t want to see any additional federal aid directed to Puerto Rico.
The government debt crisis in Puerto Rico started in 1973 when the government began to operate on a deficit budget (i.e. spend more than what it collected). To cover the annual budget shortfall, the government issued bonds.
The impact of that decision had long range impacts, beginning with reduced capital spending resulting in deferred maintenance of public sector infrastructure (roads, bridges, public utilities, hospitals, electric power grid, ports, airports, etc.).
The practice of deficit spending in Puerto Rico continued for 4 decades!
In 2014 three major credit agencies downgraded several bonds issued by Puerto Rican government entities to “junk status” after the government was unable to demonstrate that it would be able to pay its debt from sustainable current cash flows. That action precluded Puerto Rico from access to the public debt markets, and forced them into the shadowy world of hedge funds and high-yield debt issuers.
I think you are punishing Gov. Ricardo Rosselló — and the people of Puerto Rico — for a situation which they inherited.
Meanwhile, there is a long-term lesson to be learned from the current Puerto Rico situation.
The Amazon Conundrum
March 5, 2019
While New Yorkers continue to debate the loss of Amazon from a site in Queens, the discussion seems to have lost sight of what Amazon contributes to the long-term well-being of our society.
Amazon is not a friend to America, has contributed very little if anything to our overall economy. The stock is currently grossly overvalued with a P/E ratio in excess of 80x.
Jeff Bezos, the founder of Amazon, has an estimated net worth of $165 Billion, primarily as a result of a business model which has dramatically changed the U.S. retail sector.
Most egregious? Amazon paper earnings for 2018 are $11.2 Billion, and early reports indicate that they will pay $0 in federal income taxes on these earnings.
(Amazon reported $5.6 Billion in U.S. profits in 2017 and paid $0 last year.)
Amazon creates jobs? True. Good jobs? False.
Economic scholars generally agree that a ‘living wage’ in the NY Metro area for an adult with one child is $31/hour, with 2 children $41/hour.
Amazon announced in early October 2018 that it would raise the minimum wage to $15 an hour for its U.S. employees.
Meanwhile, much like Walmart, Amazon has created a business model which effectively eliminates competition and destroys small business.
The hot topic today is the talk of ‘Democratic Socialism’ being portrayed by some pundits as a death threat to American democracy.
The real threat to American democracy is the proliferation and exponential growth of a few family-controlled and vertically-integrated oligarchies which are capable of re-creating the Feudal System which characterized medieval Europe during the Middle Ages.
“Those who fail to learn from the lessons of history are bound to repeat the outrage of history.”
Tax Returns & The Base
March 4, 2019
It truly is fascinating to watch the Hard Core Trump Base rise up on their haunches and respond to Trump tweets, pronouncements and positions.
I thought the Trump Base was loud but modest: maybe 20% of American adults? Wrong.
There seems to be a solid base of around 40% of American adults who idolize the words and actions of Donald Trump. Though the number might occasionally rise or fall by a few points, Trump’s 40 percent approval rating seems to be mostly bulletproof.
Trump’s base is loud and determined. One of his followers summed it up succinctly: “People who voted for Trump will NEVER stop believing in his strength, intelligence and goodness. Trump 2020!”
Those of us who didn’t vote for Trump may never understand the deeply held values of the people who see America and the rest of the world so drastically different from us.
Do the hard-core Trump folks really believe that Trump is an economic and social policy expert who alone can make America great?
Or are they just lost souls clinging to the past in a desperate hope that the inevitability of change and uncertainty can be conquered through anger, bad manners and avoidance?
Trump defied an established custom developed over the last 40 years by refusing to release his tax returns during the 2016 presidential campaign, although he did say – on multiple occasions during the campaign – that his tax returns had been under a routine Internal Revenue Service audit since 2009 and that he could not release them until the audit was finished. (N.B. The IRS has repeatedly stated that there is no prohibition or restriction on releasing tax returns while they are under audit.)
After a while, Trump promised that he would release his tax returns once the audit was completed.
I’m no expert on IRS audits, having only been audited once myself. My audit was completed within 90 days.
Generally, the statute of limitations for the IRS to close out tax audits on a taxpayer expires three (3) years from the due date of the return or the date on which it was filed, whichever is later.
Public evidence shows that in most cases, an IRS tax audit lasts less than one year. In a few rare cases where substantial tax fraud or misreporting (generally, unreported income) is involved, the statute of limitations can be extended to six years.
That said – and assuming worst case situations — the audit on Trump’s 2009 tax return would have been completed not later than October 15, 2016; 2010 by October 15, 2017; 2011 by October 15, 2018
Various public polls reflect the sentiment of a majority of Americans (70+ %) that Trump should release his tax returns. Yes, even some of the Trump acolytes agree that releasing the tax returns is the right thing to do!
It’s the job of congressional committees to conduct oversight of the executive branch, and the Ways and Means committee is empowered to obtain anyone’s tax returns – even a sitting President – under a provision of the tax code which has existed since the 1920s.
Let’s get those Trump tax returns released ASAP, and eliminate at least one of the broken campaign promises. As has been said, ‘sunlight is the best of disinfectants’.
House Oversight Committee: 2/27/19
February 27, 2019
I was looking forward to hearing the testimony of Michael Cohen before the House Oversight Committee, particularly interested to learn more about some of the ‘behind the scenes’ actions and activities which took place during Cohen’s ten year stint as a lawyer for Donald Trump, and as an executive of The Trump Organization.
It is clear that Michael Cohen is guilty of multiple frauds and felonies.
Cohen pleaded guilty to eight charges in August 2018, including several counts of tax fraud and campaign finance violations. He also pleaded guilty in November 2018 to a charge of lying to Congress from Special Counsel Mueller’s office.
Said Cohen, “I take full responsibility for each act that I pled guilty to: The personal ones to me and those involving the President of the United States of America.”
In December 2018, Cohen was sentenced to a term in federal prison for the eight criminal counts he pleaded guilty to in August. The judge gave him an additional two months for the special counsel charge.
Despite pending imprisonment for his acknowledged bad behavior, Cohen agreed to provide public testimony to the House Oversight Committee on February 27, 2019.
It was my expectation that – during this public hearing – committee members would politely hear testimony from Mr. Cohen, followed by a question and answer session which might provide us with a broader understanding of the issues.
Upon completion of the public hearing, I anticipated that members of the committee would meet sometime in the near future to study, discuss and debate the findings of the hearing.
At a future date, I expected that I would learn from traditional media sources about next steps: Further investigation? Criminal referral(s)? Case closed?
I appreciate and covet freedom of speech, and I am cognizant of special protections afforded to Members of Congress to ensure they are not censured for statements made in their official capacity.
That said, today I witnessed two members of the House Oversight Committee go off course early in the proceedings, and they continued to cloud and obfuscate the intended purpose of the hearing almost to the very end.
The behavior and demeanor of Rep. Jim Jordan (R, OH) and Rep. Mark Meadows (R, NC) on 2/27/19 (as displayed on national television) was unprofessional; inappropriate; and absolutely unacceptable coming from elected Members of Congress.
I am a citizen and registered voter in the United States.
As such, I am entitled to all of the protections afforded by the Constitution of the United States, including the expectation that elected Members of the House will (1) behave at all times in a manner that shall reflect creditably on the House; (2) adhere to the spirit and the letter of the Rules of the House and to the rules of duly constituted committees thereof; and (3) not receive or accept compensation, favors or other benefits from any source which would occur by virtue of influence improperly exerted from their elected position in Congress.
It is my belief that both Rep. Jordan and Rep. Meadows repeatedly violated their basic duties of comportment and professionalism during their activities today as members of the House Oversight Committee.
I do hope the House Ethics Committee will hold each of these individuals fully accountable for their unprofessional, inappropriate, and unacceptable public behavior, and I encourage others to demand accountability from Congress.
Border Security
February 15, 2019
I’ve been looking into the border situation. My goal is to reach an understanding of what’s really going on, because the political rhetoric has my head spinning. Here is what I found:
Depending on which source(s) you are comfortable with, you may agree that the 1,900+-mile border between the United States and Mexico is the most heavily crossed – both legally and illegally – international boundary in the world.
Today – mid-February 2019 — barriers which block people and vehicles along 650 miles of the U.S.-Mexico border are in place and operational. These barriers include stretches of steel and barbed wire, fortified with infrared cameras, imposing watchtowers, and blinding floodlights, and it is patrolled by thousands of guards. These 650 miles represent a four-fold increase over 2005, when there were 120 miles.
About 1,300 miles of the U.S.-Mexico border lacks fencing because the Rio Grande forms a natural border along most of those miles. Remaining sections are in rugged, inhospitable terrain, where building a barrier would not only be impractical, but fail the most rudimentary cost-benefit analysis.
The legislation President Donald Trump needs to build his promised wall along the U.S. southern border with Mexico was passed in 2006 and remains on the books.
The Secure Fence Act was introduced in Sept. 2006 by Rep Peter King (R-NY) and was quickly passed by Congress on a bi-partisan basis. The House passed the Fence Act 283 to 138 on September 14, 2006; the Senate passed the Fence Act 80 to 19 on September 29, 2006; and the Act was signed into law by Pres. George W. Bush on October 26, 2006.
The goals of The Secure Fence Act of 2006 envisioned helping to secure America’s border with Mexico to decrease illegal entry, drug trafficking, and security threats by building about 700 miles of physical barriers along the Mexico-United States border. Additionally, the law authorized more vehicle barriers, checkpoints, and lighting as well as authorizing the Department of Homeland Security to increase the use of advanced technology such as cameras, satellites, and unmanned aerial vehicles to reinforce infrastructure at the border.
The initial concept imagined in the King-sponsored law anticipated a continuous barrier of double-layered fencing with a sufficient gap that a vehicle could be driven between the layers.
Once it became clear that the geographic and topographic diversity along the border could not accommodate a simple double-layered fence, Senator Kay Bailey Hutchison (R, TX) worked with the Department of Homeland Security to propose an amendment to give DHS discretion to decide what type of fence was appropriate in different areas.
The law was subsequently amended to read,
“Nothing in this paragraph shall require the Secretary of Homeland Security to install fencing, physical barriers, roads, lighting, cameras, and sensors in a particular location along an international border of the United States, if the Secretary determines that the use or placement of such resources is not the most appropriate means to achieve and maintain operational control over the international border at such location.”
By mid-2011, the Department of Homeland Security reported that fencing for 649 miles of border had been completed. As described in the 2007 Hutchinson amendment, much of the total fence reported by DHS consists of vehicle barriers and single-layer pedestrian fence, deemed most appropriate at those locations by DHS.
Purists looked back to the original King-sponsored bill and decried the type of fencing DHS was counting as “completed”. They said that vehicle barriers and single-layer pedestrian fences can’t meet the amended letter of the law.
Yet, according to Customs and Border Patrol reports at that time, the border barriers they included in their report include: ‘Post on Rail’ steel set in concrete; Steel Picket-style fence set in concrete; Vehicle Bollards similar to those found around federal buildings; ‘Normandy-style’ steel beam vehicle barriers; and concrete ‘Jersey Walls’ reinforced with steel mesh.
I don’t know much about barriers, but these sound pretty substantial and imposing to me.
Many people will take exception to something President Obama said in 2011 when addressing the issue of border security. I include this here because it is emblematic of the political discourse we seem to have devolved toward in the past decade or two:
“We have gone above and beyond what was requested by the Republicans who said they supported broader reform as long as we got serious about enforcement. All the stuff they asked for, we’ve done. But even though we’ve answered these concerns, I’ve got to say I suspect there are still going to be some who are trying to move the goal posts on us one more time.”
“They’ll want a higher fence,” Obama said. “Maybe they’ll need a moat. Maybe they want alligators in the moat. They’ll never be satisfied. And I understand that. That’s politics.”
Political rhetoric is to be expected, and most of us prefer it to be witty, sharp and to the point.
There really is no place in a civilized society for the sort of caustic and unforgiving political hate speech and outright lies we all too frequently seem to encounter in 2019.
National Emergency
February 13, 2019
Yes, we are facing a national emergency, and it’s not along our southern border.
Our real national emergency is our National Debt.
Let’s first agree that when the U.S. federal government runs a deficit, or spends more than it receives in tax revenue, the U.S. Treasury Department borrows money to make up the difference.
Next, let’s agree that our national debt is the amount of money the federal government has borrowed through various means, including: (1) by issuing bills, notes and bonds which are bought by investors (domestic and foreign), including the public, the Federal Reserve and foreign governments; (2) through intra-governmental debt, essentially money borrowed from trust funds used to pay for programs like Social Security and Medicare.
The great majority of economists and economic and fiscal analysts tend to agree that the significance of national debt is best measured by comparing the debt with the federal government’s ability to pay it off using the debt-to-GDP ratio, simply by dividing a nation’s debt by its gross domestic product.
Various sources have estimated that a healthy debt-to-GDP ratio is in the 40% to 60% range. A longitudinal study conducted by World Bank economists published in 2010 estimated that in highly developed countries, 77% was a ‘tipping point’ where productivity and potential economic growth was constrained by adding additional debt without addition of incremental revenue. (In emerging economies, they estimate that 64% is the tipping point.) In either case, potential for default begins to increase once the tipping point has been breached, thus putting upward pressure on borrowing costs.
The first instance when U.S. debt-to-GDP ratio exceeded 77% was toward the end of World War II. In the post-war years, our national debt shrank in comparison to the booming post-war economy, and the debt-to-GDP ratio fell as low as 24 percent in 1974.
Recession and rising interest rates during the Carter administration put upward pressure on the debt-to-GDP ratio, and once the tax cuts enacted during Reagan’s first term combined with increased spending on both defense and social programs, the debt-to-GDP ratio reached 50 % in July 1989.
Economic growth in the ‘90s, combined with tax increases under both Presidents George H.W. Bush and Bill Clinton helped keep the debt load in line, and by the end of December 2000, our national debt was about 55% of GDP.
Following the terrorist attacks on 9/11/2001, U.S. military spending spiked, yet tax cuts enacted in 2001 and 2003 during the George W. Bush administration combined with a mild recession in 2001 and the Great Recession beginning in 2007 caused significant decreases in tax revenues. By the time Barack Obama took office in January 2009, the debt-to- GDP-ratio reached 75%.
Deficit spending is one of the key tools available to stimulate economic recovery, and by the time of Obama’s 2nd inauguration in January 2013, the U.S. debt had grown to $16 Trillion – a debt-to-GDP ratio of 101%. By that time, it was clear that the economic stimulus of deficit spending had worked, evidenced by an expanding U.S. economy; signs of ending the wars in Afghanistan and Iraq; resurgence of the U.S. stock market; continued job growth; and other positive economic indicators.
All of these positive signs at the beginning of 2013 pointed to the need to rein in government spending and to strategically increase revenues (i.e. raise taxes).
Yet, the Congress has stubbornly refused to deal with the reality that our U.S. debt-to-GDP ratio has remained above 100 percent since 2013.
In early 2018, an analysis by the nonpartisan Committee for a Responsible Federal Budget concluded that the Tax Cuts and Jobs Act signed into law in late 2017 will push the U.S. national debt to $33 Trillion — 113 % of GDP — by 2028, a ratio not seen since immediately after World War II.
The Tax Cuts and Jobs Act is a sham (and a scam) which created a situation exactly opposite of what responsible elected officials should have supported. The sooner it is amended, repaired or repealed, the sooner the American people will be transitioned into a less dangerous and more stable and sustainable economic environment.
walrus51 