The Balanced Budget Amendment

The Final Fraud

The nation is running an outrageous budget deficit. This budget deficit was not made in heaven. The deficit is not the unseen hand of the market or the inscrutable forces of history. The deficit and the economic woes that go with it were just as carefully planned and executed as anything else we do in government. The purpose of the deficit is to make us debt poor so we can not afford to have social programs.

After the Civil War, the magnates of the South, in order to get the former slaves under control, cut taxes. There simply was not enough money to go around. The politicians of the South who reclaimed public office and ended the brief spell of Republican democracy in the South were called the Redeemers. They redeemed the South. We recently have had three redeemer Presidents in the form of Nixon, Reagan, and Bush. They are redeeming the nation by returning us to yester-years before aid to education, public housing, medicare and medicaid, Headstart, the Voting Rights Act, the Civil Rights Act, aid to families with dependent children, and social security. Our redeemer presidents not only lowered taxes, but increased spending to boot, thereby exacerbating the process of making the nation debt poor.

If we are to believe the testimony given at the Robert Gates hearings (for Director of Central Intelligence) the information on the Soviet Union was deliberately exaggerated. The deliberately exaggerated information was used as the basis of the Reagan defense estimates and resulted in the trillion dollar defense initiative. At the same time that the defense budgets went out the roof, Federal taxes were lowered.

Supply side economics was a hoax. The prosperity of the 80's was a hoax. The country lived on borrowed money and the people of the country were told it was morning in America again. The Great Communicator sold us the Brooklyn Bridge, and when he found what a sucker we were, he gave us the Evil Empire and Star Wars—all a hoax to make us debt poor so social spending could be cut.

Who profited from the tax cuts after the Civil War? Why, the plantation magnates did. Who profited from the Reagan tax cuts? Why, our modern magnates, of course. They had it going all ways. The magnates profited from lower taxes, at a rate lower than that for the middle class. The magnates profited from defense procurement profits, since they tended to own everything. And lastly, they are profiting from the debt as I write. The interest on our unneeded national debt is rapidly becoming the largest item in the budget, and it goes to the folks who have the money to underwrite the debt. A million bucks will get you started. Is it any wonder that the richest 1/2% of the American population garnered 26% of the national wealth during the Reagan budget hoax? Bush is carrying on nicely even though the Evil Empire has become a pussy cat and our friend. All the talk is now on the notion of lowering the capital gains tax which again benefits the magnates.

While it was morning in America, the Great Communicator made it possible for the wealthiest 1/2 of one percent of the nation to get fabulously wealthier at the expense of the rest of the country. The Presidential candidate who described this all as voodoo economics inherited the mantle and it's been business as usual ever since. Throw in the S&L scandal and the Persian Gulf War and the country has been fairly well looted. The middle-class will be asked to pick up the mess because we have decided as a nation to revert to regressive taxation so as not to put too big a burden on the rich. After all, if they should think about it, they might invest in something besides government bonds—something that produces. jobs—and that would be good for the country.

The redeemer presidents are not solely to blame, as they did have help from the Democratic Congress. Dan Rostenkowsky was a key player. Without his help the tax reduction bills that were supposed to fuel supply side economics could not have been written. The 1986 Tax Reform Act was written in Rostenkowsky's Ways and Means Committee. This 1986 Act was supposed to level the playing field, reduce deductions, get the rich guys that pay no taxes. In reality it turned out to be another giveaway for the rich. Before it was morning in America the nominal tax rate was 70% for the highest bracket, but the actual rate paid by the rich was 40%. After Rostenkowsky's magic, the middle class rate was 33% and the upper class rate was 28%. The 1986 tax Act killed the U.S. real estate market and probably triggered the recession we are still in. It also made it unprofitable for the rich to give to charity as it was no longer of any tax advantage they got a better deal from the Tax Reform Act.

If the tax rate is 28%, it is a lead pipe cinch that the rich are paying less than the 28%, not more. If they only paid the 28% they got a 12% cut in their taxes while the taxes for the middle class went up.

The people who perpetrated these outrages on the body politic must have known what they were doing and what the results would be because no one seems willing to change the downward course. President Bush wants four more years of the same after racking up a 400 billion, dollar deficit for this year. The nation is not put out, in large part, because the teflon presidency is still cooking, and the news and communication media are still spreading the stuff.

Now we come to the balanced budget amendment. The Reagan people wanted the balanced budget amendment to the Constitution so they could beat the social programs to a pulp against the hokey estimates of the Russian threat. The Democrats who are now sponsoring the amendment think that with the Russian threat gone they can use the balanced budget amendment, to beat the defense budget down to some reasonable level.

These Democrats are going to be in for some big surprises if the balanced budget amendment passes. There are enough hot spots in the world that, with very little effort, the President could be sending troops to Serbia, Haiti, Iraq, Lebanon, Israel, et. al., and the drumbeat for Star Wars could increase as the number of nuclear players worldwide increases. It is illusion bordering on delusion to believe that a budget war can be won against the defense budget in favor of the social budget using the balanced budget amendment as the tool.

The only way to balance the budget is to reverse what it took to get it unbalanced. Reagan had the full cooperation. of the press and the electronic media to pull his scam—lower taxes and increase spending. If the fix is still on, the press will be all for the balanced budget amendment. If the press and the electronic media are restored to some level of sanity, then the reverse process can work—but the American people will have to be educated as to how it will work. It's terribly simple but just consider the effort that has been expended to get us where we are today. The budget deficit was produced by lowering taxes and increasing spending with a huge dollop of teflon to tell us black was white—reducing taxes would increase tax revenues.

To reverse the process the Federal Government will have to raise taxes and reduce spending. The great bulk of the spending heretofore went for defense, so most of the reductions will have to come from that sector. The greatest reduction in the tax went to the wealthy people of the nation, and they should pick up their fair share of the burden plus a surtax to pay for the S&L debacle since they are the greatest beneficiaries.

We need progressive income taxation and reduced Federal spending, primarily for defense but also other programs that have spilled over from the payroll tax to the general revenues. We need a national health program to cover all Americans and, more importantly, to contain the costs of health care. Above a certain income, social security benefits should be taxed as ordinary income. A great infusion of education has to permeate the social welfare programs.

To help reduce our foreign deficit and to increase the sense of conservation in the United States we need at least a 50¢ tax on gasoline. Give gas stamps to the poor, and let the rest join the world in energy conservation. The 50¢ tax on gasoline will produce 50 billion dollars of tax revenue, all of which should be used to reduce the deficit. (This 50¢ should be in addition to the tax already in place for gasoline since that money is dedicated to infrastructure maintenance, which is also sorely needed across the nation.) For each one cent gas tax, one billion dollars will be chipped off the deficit and be free to float back into the economy. For each one cent gas tax, one billion dollars will be free for some morning in America patriot to pay the country back a little by investing in the manufacturing base of the nation.

To break out of the recession and jump-start the nation's economy into the 21st century, we need a massive effort to rehab, renew, and create the nation's infrastructure. The needs of roads and bridges are obvious, but they make up only the small part. The Federal Government should assume the responsibility for the total infrastructure of the nation, and that means responsibility for power grids, railroads, rivers, canals, sewage treatment, water purification and transport, elimination of ground water contamination, removing hazard waste sites, communications satellites, fiber optic systems for computers, telephone, and cable television, in addition to roads and bridges.

The total infrastructure is necessary to carry on the total commerce of the nation. The Federal Government can provide the environment for intense competition, which will accrue to the benefit of all the citizens-sovereign, by breaking private monopolies and allowing free competition all across the full spectrum of the business environment. Creation and maintenance of the national infrastructure should be a continuous public works activity undergirding the competitiveness of the nation. The task would provide great employment opportunities and contribute to the income-making potential of the nation. There is probably no investment we could make now, with the exception of education, that would bring a greater return on the tax dollar than attending to the nation's infrastructure.

After infrastructure considerations we need to look at energy alternatives, particularly solar energy, and make it useful for the home and industry now. This is another way to reduce our dependence on foreign oil, and to help reduce our trade deficit. The Administration's policies favoring the oil, coal, and nuclear industries unfairly uses the tax structure of the nation to favor one segment of the nation's overall industrial sector. The warnings from the world's climate are telling us to shape up and get our act together. We can live in a cleaner, healthier, more prosperous world if we have free enterprise rather than the cartel-like economics of the oil or nuclear power industries. The energy companies are big boys; they should be able to compete. If not, they should not be supported to the detriment of the economic and physical health of the nation and the world.

The sooner we reduce the world's dependence on oil, the sooner we can abandon the charade of our middle east policy where we support absolute monarchy as long as the money is moved to the United States or the UK. If oil becomes less important in the world, there won't be so much oil money around to cause mischief.

What are we talking about?

• Increase taxes through the reinstitution of the progressive income tax and reduce spending, particularly for defense and for entitlements not supported by the payroll tax. A surtax on very high incomes should be levied to address the S&L scandal.

• Create a national health plan as the means of containing health costs. Treat Social Security payments as ordinary income for those incomes above a certain minimum.

• Increase the tax on gasoline by 50¢ (over the present rate) and dedicate the proceeds to reducing the deficit. (Remember that for every penny collected on the gas tax, one billion dollars will be free to enter the economy and reduce the interest on the debt.)

• Mount a comprehensive, creative infrastructure program to provide employment and to enhance the ability of American business to do business in the United States and the world.

• Go gangbusters after energy conservation to reduce the need of the world for oil as fuel, and to reduce our requirement to support absolute monarchies. The middle east would be a great place to sell solar energy equipment.

We should forget the balanced budget amendment. The balanced budget amendment will simply prolong the agony of what has to be done and will confuse the issue. It is an immoral use of the Constitution to cover up the sins of the Congress. Face it: The balanced budget amendment is a fig leaf on an otherwise immoral Congress. Virtue lies in the direction of using the authorities already in the hands of the Congress and the President, and if not by this Congress and this President, then their more responsible successors.

...Ted Sudia...

12 Years and What Do You Get?

One Word Led to Another

The other day I was trying to think of a word to describe the Federal Government of the last 12 years under the leadership of Ronald Reagan and George Bush. I was thinking in particular about the Supreme Court about to roll back a hundred years of civil rights legislation and the Democratic Congress that aquiesced in the machinations of the Reagan and Bush Administrations, and stood by while the worst administrations since the days of Andrew Jackson trashed the Federal Government. Now they are trying to sweep the trash of 12 years under the rug with a balanced budget amendment. Well, one word led to another.

The slothful, degenerate, debased, decadent, dissolute, retrograde, perverted, profligate, libertine, corrupt, debauched, depraved, immoral, unscrupulous, warped, extravagant, wasteful, spendthrift, wanton, reprobate, dishonest, base, dissipated, wicked, profane, unethical, sinful, unprincipled, iniquitous, improvident, immoderate, prodigal, roguish, deceitful, lying, nendacious, fraudulent, devious, sordid, malevolent, malicious, coarse, vulgar, promiscuous, unruly, perverted, imprudent, reckless, inordinate, ignoble, mean, intemperate, squandering, villainous, invidious, malignant, pernicious, crass, crude, uncouth, disorderly, rowdy, unmanageable, foolhardy, rash, unwise, careless, heedless, thoughtless, excessive, nefarious, infamous, dastardly, knavish, deleterious, detrimental, boorish, discourteous, tactless, inconsiderate, gauche, chaotic, confused, disorganized, ponderous, unwieldy, heedless, careless, impulsive, unmindful, inattentative, lax, remiss, exorbitant, extravagant, unreasonable, fiendish, sinister, inglorious, disgraceful, cowardly, uncharitable, turbulent, disorderly, awkward, unmanageable, impulsive, indifferent, messy, slipshod, derelict, nebulous, slack, illogical, irrational, ignominious, shameful, spineless, fainthearted, conniving, bumbling, insensitive, obstreperous, clumsy, maladroit, uncoordinated. uncontrollable, capricious, unpredictable, impetuous, apathetic, impervious, unconcerned, sloppy, haphazard, delinquent, obscure, hazy, inconsistent, inane, disgraceful, callous, uncaring, unfeeling, inept, incorrigible, obdurate, intractable, erratic, fickle, flighty, unresponsive, arbitrary, indiscriminate, negligent, contradictory, ludicrous, appalling, outrageous, shameful, shocking, recalcitrant, implacable, unsympathetic, stubborn, unpredictable, frivolous, unreliable, untrustworthy, capricious, scatterbrained, slovenly, contrary, absurd, preposterous, reprehensible, scandalous, bullheaded, mulish, obstinate, eccentric, erratic, ridiculous, fatuous, despicable, denigrating, contemptible, detestable, odious, abominable Congress with equally (go back to the head of the list) Administrations.

...Ted Sudia...

© Copyright 1992
Institute for domestic Tranquility