Scorekeeping on Government Shutdown

Open Email to House Speaker Boehner:

Dear House Speaker Boehner,
    The Washington Times says that with the 17% government shutdown, key agencies are no longer producing financial reports and this makes it impossible for Congress to determine what action should be taken on government spending.
    That position is WRONG!    Anybody who watches football games can tell who is winning without ever looking at the scoreboard. True, the scoreboard gives additional information, but the fundamental of who wins the game is not changed by concentration on those numbers.
    In the case of the 17% government shutdown, all signs show that piecemeal government funding is an effective strategy. It obviously reduces expenses, which is the major requirement. It is also known to be effective by listening to the howling of Democrats and the President.
    The next issue is extending the public debt limit to allow increased borrowing. This needs to be handled in the same way as all government spending. It is obvious that the only purpose of increasing debt is to obtain more money so that it can be spent, which is exactly contrary to the long-term needs of the government and its people. The Obama Administration has tried to confuse the issue by claiming that unless the debt limit is increased, we will need to default on payment of government bond interest, which would be a worldwide disaster. Baloney! There's plenty of money to pay government bond interest. It is only a matter of how the available money is allocated. Obviously, we advocate paying our debts and avoiding accumulation of new debt. Government finance is not exactly the same as personal finance, but there are many similarities. On a personal basis, one must pay the interest on the credit card, but it is also undesirable to engage in any new spending, which would then require payment of even more interest.

Tough Times Ahead for Research?

Open Email to Representatives and Senators:

Dear Representatives and Senators,
    The American Association for the Advancement of Science (AAAS) is a large nongovernmental organization. However, many of its members obtain financial research support from various government agencies. Last May, it held its annual form on science and technology policy, at which time government funding for private research was discussed.
    The forum bemoaned the fact that projected government research funding in 2013 would be back to the same level as it was in 2002. It also showed that the six major US government funders would be supplying 6.5% less money than it did the previous year. The actual funding reduction would be $9 billion. Total funding would be $133 billion, which I believe most people would agree is a substantial amount of money. I believe this is about $1000 per US resident.
    It is unclear what may have happened since last May, especially in view of the 17% partial government shutdown. However, assuming we're still on the same track, I congratulate Congress for the reduction. I would like to make it as a strong congratulation, but I am limited by my conclusion that $133 billion is much, much, too much for the federal government to be doling out to universities for mostly questionable research projects. I was also sorry to see that, in the recent efforts to use piecemeal funding of various sections of government, the funding of the National Institute of Health was approved. I suppose that because it has the name "health" in its title, it received some sort a special priority. However, I believe the only justification for any significant NIH funding is for the Disease Control Center section in Atlanta. It should be noted that of the various government agencies, the dole for research was largest for the NIH. It amounted to $30 billion last year.
    May I strongly suggest that if Congress is really serious about reducing government spending, with the intention of establishing a long-term fiscally viable government, it could start with these silly research grants which are a significant drain on our resources.

Reducing Government Employment

Open Email to House Speaker Boehner:

Dear Speaker Boehner,
    Congratulations on your move to guarantee back pay for all federal employees now on furlough. The Washington Times says, the bill ensures
that hundreds of thousands of furloughed government workers will receive full back pay after lawmakers strike a deal to reopen the federal government. I see the House vote was unanimous, and it is almost certain that the Senate and Pres. will approve the measure early next week.
I suppose you had to do this as part of your piecemeal government funding strategy and to maintain public support. However, I'm sure you recognize this also defeats in part our objective to reduce the size of government. The more government employees we have on the payroll, the larger is our government, and the more we spend
You will now have to start thinking of some other mechanisms by which to reduce government employment, if we are ever going to make any headway on reducing expenses and establishing a program for long-term government continuity. Unfortunately, I have no suggestions at this time.

Government Shutdown

Open Email to House Speaker Boehner:

Dear Speaker Boehner,
    There been three developments since yesterday. A woman on Fox News said the public wants a termination of the government shutdown. Fox News also said some Republicans are ready to support a Continuing Resolution. Chuck Hagel called back to work 400,000 civilian employees, presumably with pay.
    Let's take them one at a time.    It is not surprising that the public would generally like to have some form of government operating. The general public is probably not conversant enough with the details to know that the present shutdown is relatively minor, which I will demonstrate later. In addition, there are likely many persons who feel that their entitlements are jeopardized, and they don't want that, even if they were to recognize that entitlements are driving the government to a Communist/Socialist form with Dictator Obama eventually reducing civilian benefits in an attempt to maintain as long as possible an operating government destined to fail. Examples are East Germany, the Soviet Union, Cuba, and North Korea.
    It is highly likely that any Republicans who would support a Continuing Resolution are likely not really Republicans interested in the continuity of the United States, but may be Democrats in disguise. Another possibility is that they have believed much of the information in the normal press and may be convinced that their jobs, through reelection by the public,.are in jeopardy. It is doubtful that they could be as generally ignorant of details and the overall objectives of what government should be as apparently is most of the public. I think the numbers are small, and we have no choice other than to overlook these lost souls.
    The return of 400,000 civilian employees to work, apparently with pay, is said to be a legal decision. No details are given on specific law, and it is likely that is really an arbitrary decision based upon an Obama directive to Nagel, his Secretary of Defense. Although Pres. Obama is withholding himself from the frontline position, his attitude has probably been to give this order to Nagel with the reasoning that, "let's just do it, because I don't think Congress can or will do anything about it". He is probably correct on this, because I believe all of us do not want to see the military even partially impaired, which would give encouragement and opportunity to foreign aggressive powers.
    Getting on to the facts of government shutdown, the Washington Examiner has this to say:
"Everyone knows the phrase "government shutdown" doesn't mean the entire U.S. government is shut down. So in a partial government shutdown, like the one underway at the moment, how much of the government is actually shut down, and how much is not"? Estimates drawn from the Congressional Budget Office and and the White House Office of Management and Budget show that 83 percent of government operations continue. This figure was also obtained before the Nagel order to put 400,000 civilian employees back to work.
    Even taking the old figure, a 17% shutdown is pretty darn small compared to the major issue involved, which is an attempt to reduce the size of government. However, as we have said previously, even that low-level has attracted much animosity from the President and the Democrats. Apparently the President feels that any attempt at imposition to develop a continuous conversion to a Communist/Socialist government is a personal insult.
    Speaker Boehner, I have recommended to you previously and continue to recommend your continued attempts to use piecemeal funding of government as a technique to reduce government size. The facts are much against you, but you have made progress. Even if there is ultimate failure, the likelihood is that you will go down in history with other patriots, such as Patrick Henry with his "Give me liberty or give me death".

Government Shutdown Reduces Spending and New Debt

Open Email to Speaker Boehner:

Dear Speaker Boehner,
     In spite of the government shutdown, the government continues to spend, collect tax revenue, and sell bonds to accumulate new debt.
    According to cnsnews.com, in the first two days of the shutdown, the Treasury spent $63 billion. It collected $26 billion in taxes, and accumulated an additional $2 billion in government debt, through selling new Treasury securities..
    In the same period last year, spending was $124 billion, with $29 billion collected in taxes and added new debt of $101 billion, through selling new Treasury securities.
    So you see that government shutdown with subsequent piecemeal funding is making considerable contribution to developing smaller government.        
    Let's keep up the good work.

Israeli/Palestinian Peace Talks

Open email to Rep. Neugebauer and Senators Cornyn and Cruz (Texas): 

 

Dear Rep. Neugebauer and Senators Cornyn and Cruz,
    Our Secretary of State, John Kerry, is up and running on his new job. He is trying to make a name for himself and has succeeded in getting the Arabs and Israelis to sit down and talk with each other.
    The Jewish/Arab conflict has existed for a few thousand years. With this deep ingrained history of resentment, I sincerely doubt that there can be any significant resolution of differences by sit-down talks.
    I suspect that John Kerry has been able to get them to sit down by paying them US taxpayer funds. Both sides will receive money. They will sit and glare at each other, and that will be the end of that.
    I ask Rep. Neugebauer and Senators Cornyn and Cruz to find out how much the sitting and glaring is costing the US taxpayer.

Amnesty Cost

    The Washington Times has some comments from the Congressional Budget Office (CBO) , which yesterday released an analysis of the recently Senate passed Immigration Bill.
    The CBO says the $35 billion to be spent on 20,000 new border patrol agents and fencing would stop between a third and a half a half of future illegal immigrants.

Border Control Agents and Fencing    The southern border of the US is 1954 miles long and Wikipedia says 350,000 illegals cross this border each year http://en.wikipedia.org/wiki/Mexico%E2%80%93United_States_border. It Is apparent that 20,000 new border patrol agents and 350 miles of new fencing would only serve as an additional deterrent to new border crossing. I will not significantly dispute the CBO estimate of a 33 to 50% reduction in illegal border crossings, but that may be on the high side.
    Assuming a 50% reduction in effective illegal entries at the southern border, the question is whether we want to spend $200,000 to eliminate one effective illegal border crossing in a year. ($3.5 billion / 175,000 illegals). We could amortize this over 10 years to give an unrealistic estimate of $2000 per illegal, but it actually would be higher than that because of salary increases for the 20,000 additional border control agents plus maintenance of fencing.

$1 Trillion in New Tax Revenue    However, the larger objection I find with the CBO report concerns the statement that adding the additional workers,who are made legal by the amnesty provisions of the Bill, will boost the economy and lead to nearly $1 trillion in new tax revenue over the next 20 years.
    I don't see how adding additional workers made legal by the amnesty provisions boosts the economy. I can see a consideration of income tax revenues from new taxpayers formed by the declaration of amnesty.
    There are an estimated 12 million illegals in the US (http://www.cis.org/amnesty-for-illegal-immigrants-and-the-employment-picture-for-less-educated-americans,). Eight million illegals are already estimated to be employed. The 4 million illegals unemployed do not now pay income tax. The 8 million already employed likewise do not pay income tax, because their illegality does not make it possible for them to do so.
    With the creation of amnesty, the 8 million employed and perhaps half of the 4 million unemployed will be added to the federal income tax role for a total of 10 million people

    Illegal immigrants are generally unskilled, which means they are likely to draw a minimum wage of $7.25 an hour. Employers also also reduce medical expenses and other benefits for each employee by reducing worked hours below 40 for week. If the average work week is 32 hours for a new amnesty employee, yearly income will be $12,064 ($7.25 x 32 hours x 52 weeks).
    One reference says that a family of 4 will pay 5.3 % of its 2103 income in federal income taxes. A family of 4 likely contains 2 children, which means that for 2 new taxpayers in the family, the family tax bill will be $1278 ($12064 x 2 x 5.3%). For the 10 million new taxpayers, the annual increased tax revenue would be $6.4 billion or $128 billion over 20 years. This is somewhat less than 10% of the $1 trillion claimed by CBO.

        Another reference involves the IRS withholding tax calculator. For the "family of four", I assumed that each of the two adults would be considered a head of family with one child as a dependent. Filling in all the boxes with some reasonable deductions for medical expense and childcare, the calculator reported, "Based on the information you previously entered, your anticipated income tax for 2013 is $0. If you do not change your withholding arrangement, your withholding for 2013 will equal your tax and you will have nothing withheld. Your balance due will equal zero and you will not receive a refund". In other words zero increased tax revenue per year from 10 million new amnesty taxpayers.

        The IRS also has an Unearned Income Tax Credit. The IRS says, "The EITC Earned Income Tax Credit is a benefit for working people who have low to moderate income. A tax credit means more money in your pocket. It reduces the amount of the tax you owe and may also give you a refund".
    To determine the Unearned Income Tax Credit for new amnesty taxpayers with one child, I used the EITC Assistant Tool ( http://www.irs.gov/Individuals/Earned-Income-Tax-Credit-(EITC)-%E2%80%93--Use-the-EITC-Assistant-to-Find-Out-if-You-Should-Claim-it.). It reported, that the earned income tax credit is $3160. This is an IRS refund to taxpayers, who already pay no tax. Assume that half of the 10 million new amnesty tax payers apply for this credit. This calculates as a drain of $31.6 billion on tax revenue income to the federal government. Since the CBO likes 20 years, that's a negative $632 billion; a far cry from the positive $1 trillion claimed by CBO.
    I will grant that I've used some assumptions in challenging the CBO claim of an increased $1 trillion in tax revenue over the next 20 years, but these assumptions seem reasonable to me. Contrarily, I've not seen any calculations or basis of estimates for the CBO claimed $1 trillion.