You Can Help Pay Down The Debt

"The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation and foreign commerce. The powers reserved to the several States will extend to all the objects which in the ordinary course of affairs, concern the lives and liberties, and properties of the people, and the internal order, improvement and prosperity of the State." — James Madison

On July 6, at least a dozen busybody Congressmen sponsored the introduction of H.R. 2411, the Reduce America’s Debt Now Act of 2011. They always come up with fantastic names for these pieces of legislation and rest assured, the better/more patriotic the name, the more ominous the bill. This one follows the pattern.

H.R. 2411 states that every worker in America should be able to voluntarily have a portion of his or her wages automatically withheld and sent directly to the Treasury Department for the purposes of paying down the Federal debt.

“Every employer making payment of wages shall deduct and withhold upon such wages any amounts so elected, and shall pay such amounts over to the Secretary of the Treasury.”

That’s right. Uncle Sam is so broke that he wants to give all the good little Americans out there the opportunity to contribute an even greater portion of their paychecks to finance government largess.

Desperate? Hmmm… Don’t worry, it gets better.

Obviously, if an employee feels so compelled and should elect to have a portion of his or her paycheck withheld, the onus of responsibility is now on the employer to make it happen. The employer has to do all the paperwork, withhold the money, send the payment to the Treasury, maintain the account records and probably submit to all kinds of new filing requirements.

You can imagine that, if passed, the bill will result in a host of new Internal Revenue Service regulations, complete with a battery of penalties for employers who don’t fill out the paperwork properly or submit filings on time or who make some administrative mistake.

Think about it: If a small business owner has one single employee who is dumb enough to think it’s his patriotic duty to pay down the debt and decides to contribute $1 per month, that owner will have the responsibility for all kinds of new forms and filings, plus submit to new “debt reduction audits.”

But don’t worry, it gets even better.

So let’s say there are millions of sheep out there who elect to donate a portion of their toil and sweat so that the Chinese and big financial institutions don’t have to worry about an American default. How does Congress plan on rewarding its most patriotic citizens? By sticking it to them on their taxes, of course.

H.R. 2411 stipulates that any contribution made to the Treasury in order to pay down the Federal debt is not tax deductible.

“The (Treasury) Secretary shall include a reasonably conspicuous statement that any amounts deducted and withheld from wages are not deductible as charitable contributions for Federal income tax purposes.”

Imagine this scenario: You make $100,000 per year. In a fit of complete insanity, you decide that you want to withhold your entire annual salary to pay down the debt. Hey, you can always move in with Mom for the next year, right?

Well, guess what? Uncle Sam will gladly take your money and then still expect you to pay taxes on the $100,000 you earned, so you would have to come out of pocket with an additional $40,000 or so.

Don’t worry, though. The Social Security and Medicare wages are reduced by the amount that you withhold, making you liable for only State and Federal taxes. Seems like a good deal, eh, comrades?

Don’t worry, though. The Social Security and Medicare wages are reduced by the amount that you withhold, making you liable for only State and Federal taxes. Seems like a good deal, eh, comrades?

There are so many things utterly wrong with his piece of legislation, it’s hard to know where to begin other than by saying that such intellectual and philosophical perversion is only capable of springing from unprincipled sociopaths whose sole capability is the destruction of value.

There’s a great quote from Atlas Shrugged that comes to mind which sums this all up:

“When you see that in order to produce, you need to obtain permission from men who produce nothing; when you see that money is flowing to those who deal not in goods, but in favors; when you see that men get rich more easily by graft than by work, and your laws no longer protect you against them, but protect them against you, you may know that your society is doomed.”

I think by now everyone who is halfway honest and has an IQ above 32 realizes that the claim that the U.S. will default its debt if the debt ceiling isn’t raised by Aug. 2 is just another shameless Democratic canard.

Thanks to cable TV, talk radio and the Internet, the facts are well known:

First, while the exact amounts vary from month to month, the government brings in, on average, about $200 billion a month from (mostly unwilling) taxpayers and pays out, on average, about $20 billion in monthly interest charges. That’s a tenfold coverage.

Second, Social Security and Medicare, at least right now, are easily covered by government revenues each month. There’s no nice way to say it: Barack Obama has been blatantly lying about Social Security and Medicare payments being in jeopardy, as has the rest of the Democratic leadership.

Third, there would also be enough money available to meet our current military obligations (though we need a good debate about how much military we really need in order to defend our country).

Fourth, everything that’s left (about 30 percent of scheduled expenditures) can be prioritized, with the only question being who should make the decisions as to what goes at the top of the list and what goes at the bottom. Not doable, says Turbo Tax whiz Timothy Geithner. Turbo Tim insists that prioritizing government payments won’t work because it would “spur deep cuts in other disbursements and still cause investors to shun U.S. Treasury securities.”

No question about it, it definitely would cause deep cuts in other disbursements, but that’s a good thing. It’s a forced solution to government’s spending addiction. And the notion that cutting spending would cause investors to stop buying U.S. Treasuries is questionable, at best. On the contrary, the rest of the civilized world has made it clear that it is gravely concerned about rapidly increasing U.S. spending and debt.

Continued out-of-control spending is far more likely to cause investors to pull their money out of U.S. Treasuries than a fantasy default. Geithner, who was wrong on the Troubled Asset Relief Program (even though TARP was his predecessor’s creation), wrong on the “stimulus,” and wrong on his own taxes, said: “Ultimately, the notion of ‘prioritizing’ payments is futile because the debt limit must be increased regardless of which spending path is adopted. There is no credible budget plan under which a debt-limit increase can be avoided.”

Wrong again, Timmy. There most certainly is a creditable budget plan to avoid raising the debt ceiling. It’s called: Cut spending. That’s right, just cut spending enough, and you don’t have to raise the debt ceiling one dime.

And once that’s accomplished, a new House, Senate and President in 2013 could start making serious cuts in the budget, with the litmus test being whether a given program or expenditure is constitutional. Such a litmus test would make it possible to dramatically reduce taxes, borrowing and fiat-money creation.

Geithner warns that because the United States now borrows about 40 cents of every dollar it spends; prioritizing payments without raising the debt ceiling would force the U.S. to cut 40 percent of all government expenditures.

The other day I went through some of the existing government departments and saw where we could cut 1.654 trillion dollars and eliminate 390,100 federal jobs and the unfunded liabilities for pensions and health care that go with them by eliminating the departments listed below as they are outdated or really do not do much good and in some cases like the Department of Education made things worse. Here is a list of the starters:

Department of Agriculture: The Department of Agriculture provides an array of subsidy programs for farmers and imposes extensive regulations on agricultural markets. It operates food assistance programs, such as the food stamp and school lunch programs, and it administers many subsidy programs for rural parts of the nation. The Forest Service also forms part of the Department of Agriculture.

The department will spend $152 billion in 2011, or more than $1,200 for every U.S. household. It operates about 235 subsidy programs and employs 98,000 workers in about 7,000 offices across the country.

Department of Education: The Department of Education operates a range of subsidy programs for elementary and secondary schools. That aid is matched by rising federal regulatory control over the schools, but federal intervention has not lifted academic achievement. The department also provides subsidies to higher education through student loans and grants. Unfortunately, that aid has fueled inflation in college tuition and is subject to widespread abuse.

The department will spend $79 billion in 2011, or about $670 for every U.S. household. It employs 4,400 workers and operates 171 different subsidy programs.

Department of Energy: The Department of Energy oversees nuclear weapons sites and subsidizes conventional and alternative fuels. The department has a history of fiscal and environmental mismanagement. Further, misguided energy regulations have caused large loses to consumers and the economy over the decades.

The department will spend about $45 billion in 2011, or about $380 for every U.S. household. It employs about 17,000 workers directly and oversees 100,000 contract workers at 21 national laboratories and other facilities across the nation. The department operates 37 different subsidy programs.

The Department of Health and Human Services: The Department of Health and Human Services administers the huge and fast-growing Medicare and Medicaid programs. These programs fuel rising health costs, distort health markets, and are plagued by waste and fraud. The department also runs an array of other expensive subsidy programs, including Head Start, TANF, and LIHEAP. Growth in HHS spending is creating a federal financial crisis, and the 2010 health care law sadly makes the situation worse.

The department will spend $910 billion in 2011, or $7,710 for every U.S. household. It employs 68,000 workers and runs more than 420 subsidy programs.

The Department of Housing and Urban Development: The Department of Housing and Urban Development engages in a range of housing and community activities that used to be the responsibility of local governments and the private sector. Its public housing subsidies, rental assistance, and housing finance activities have proven to be costly and damaging to the economy. The department's poor management and misguided policies have led to fraud, corruption, and much wasteful spending.

The department will spent about $61 billion in 2011, or about $520 for every U.S. household. It employs 9,700 workers and operates 118 different subsidy programs.

The Department of Labor: The Department of Labor's budget is dominated by the unemployment insurance system, which has soared in cost in recent years. The department runs numerous employment and job training programs, but these activities are generally ineffective and duplicate services available in private markets. The department also oversees an array of labor union laws and workplace regulations that restrict freedom and are costly to workers and businesses.

The department will spend $148 billion in fiscal 2011, or about $1,250 for every U.S. household. It employs more than 17,000 workers.

The Department of Transportation: The Department of Transportation subsidizes and regulates highways, airports, air traffic control, urban transit, passenger rail, and other activities. However, taxpayers and consumers would be better off if these activities were privatized, as has occurred in numerous other nations. Opening up the financing and operation of transportation infrastructure to the private sector would save money, spur innovation, and reduce congestion.

The department will spend about $79 billion in 2011, or about $670 for every U.S. household. It employs 58,000 workers and operates 84 subsidy programs.

These seven departments are just starters. We also have Commerce, Defense, Interior, Homeland Security, Justice, State and Treasury to look at. I am confident we cut 40% from the budgets of these agencies while maintaining any Constitutional mandates they have.

EPA: The Environmental Protection Agency is an agency of the federal government of the United States charged with protecting human health and the environment, by writing and enforcing regulations based on laws passed by Congress. The EPA was proposed by President Richard Nixon and began operation on December 3, 1970, after Nixon submitted a reorganization plan to Congress and it was ratified by committee hearings in the House and Senate. The agency is led by its Administrator, who is appointed by the president and approved by Congress. The current administrator is Lisa P. Jackson. The EPA is not a Cabinet department, but the administrator is normally given cabinet rank. The agency has approximately 18,000 full-time employees and a budget of 11 billion dollars. This agency is the most onerous of all federal agencies and is the cause of our decline as a manufacturing power and a job killer. Every American is affected by the regulations this runaway agency creates.

I am sure we can merge any Constitutional mandate the eight departments I have listed with the have with the eight remaining (with the exception of Homeland Security that should be eliminated) and downsize the federal government to the size our Founders envisioned in Article I, Section 8 of the Constitution. Everything else should revert to the states and the people.

As example Customs should go back to the Treasury Department where it began and Immigration and Naturalization back to Justice where it belongs. Air traffic control can go to Commerce and be privatized as are all major nations in the world. Airport security can go to Justice and be privatized and the responsibility of the airport as it is in every industrial nation of the world.

Finally, Geithner got to the heart of America’s impending financial doom when he said that such spending cuts “would have painful implications for people in every walk of American life.” He included military families, veterans and government employees — all commonly referred to by politicians as voters.

The military families and veterans obligations can be whittled down over a period of time by closing most of our 700 overseas military bases and staying out of nation-building wars. For a fraction of current costs, we can bring our troops home and have them focus on defending our own porous borders rather than bombing, then rebuilding, countries on the other side of the globe that have no interest in establishing a democratic form of government.

As to government employees, do you know anyone who would be unhappy with getting rid of as many “public servants” as possible?

Those who insist that not paying for programs and employees already on the books is just as much of a default as not paying interest on the national debt are, in effect, saying: “Even though we have to go deeper into debt to pay for these government programs, which assures that default is only a matter of time, we have no choice because we’ve already made those commitments to people.” What great logic.

Sorry, but if Congress passes un-Constitutional legislation to implement un-Constitutional programs, it is not your obligation to pay for them. On the contrary, it is Congress’s duty to repeal all such legislation, because, first and foremost, members of Congress made a commitment that trumps all other commitments — the commitment to uphold the Constitution! I’m feeling a bit lonely wondering about how many other people even care about this little inconvenient truth.

But let’s get real here and face reality. The U.S. will ultimately default on its debt obligations regardless of what deal Congress strikes. Every halfway honest person with an IQ below 32 knows that. All Democrats and most Republicans are doing is playing politics in an effort to prolong the inevitable so our children and grandchildren will be left holding the bag of hyper-inflated currency when the U.S. does finally default on its debt. Lots of luck, kids.

Our problem is not how to deal with the debt ceiling. It’s much bigger than that. Our real, underlying problem is that we have lost our moral compass.

According to legend, a frog, when put into a pot of water and slowly brought to a boil, doesn’t realize it’s in danger until it’s too late. I think the boiling frog just got a little hotter. Have you hit your breaking point yet?