White House's $10 Trillion Spending Spree Cap Finds No Resistance
5 October 2007:
As the White House's fiscal year 2008 gets underway (begun 1 October,) the sitting Congress approved all money President George W Bush requested to build the nation's military.
The Democratic (Party) majority led Senate also increased the amount of debt the White House can tap by nearly $1 trillion to a new debt amount of $10 trillion. The current outstanding debt on 3 October 2007 was $9.06 trillion. The amount of debt has risen 60 percent since fiscal year 2000. Not to worry though says one government watch dog group The Heritage Foundation of Washington DC.
The debt burden is declining The Heritage Foundation reports. The nation's gross domestic product figure is about $13.5 trillion (for 2006,) and annual growth rates are projected to be about 3.4 percent in 2007 and 2.7 percent in 2008. The debt ratio since 1946 (inflation-adjusted) has grown 84 percent, but the economy (gross domestic product) has grown by 429 percent, which the Foundation says keeps federal spending balanced.
There are approximately 150 million tax-paying workers in the United States. The new annual federal debt limit equals $65,433 per tax payer up from $59,766 in fiscal 2007. (Incidentally the median household income in the United States is about $48,000 per year.)
For years 2001 to 2006, during the current administration, the dollar currency had already been in a slow decline even before hitting new lows against major currencies in 2007. For the data we know however, in 2001 dollars, the gross domestic product (GDP) has grown 30 percent. In terms of pre-Bush administration dollars, the GDP only grew half the rate -- or 15 percent up through December 2006.
The White House claims that per capita income has risen (in today's value of the dollar) by 25 percent to $44,071, but in today's dollars the real GDP per capita growth is up only 8 percent to $37,807.
When the dollar was considered a solid currency in 1990, the rates of change are even more dramatic. In terms of White House dollars in 2006 the GDP has grown 126 percent. But when factoring the actual value of the dollar from 1990, the GDP growth is up only 59 percent. Per capita income is up 91 percent in current dollars, but factoring in the less valued currency of 2006 per capita income is up only 32 percent. These figures will show even a wider gap for 2007 as the dollar has fallen by double digit percentages against other currencies. The projected GDP for 2007 is about $14.2 trillion.
Whether economic growth continues to support the Foundation's figures though is a variable not discussed. The European Union passed the United States as the world's No.1 economy with a gross domestic product figure of $14.5 trillion in 2006. China and India are projected to surpass the United States, but they have a long way to go (China = $2.6 trillion and India = $1 trillion.)
David Walker, comptroller general for the United States, doesn't hold the optimism of debt ratio gurus however and says the current budget is deeply flawed for not reducing federal spending. Walker says the most serious threat to the United States is not war or terrorism, but the rampant spending increases on programs that do not take into account future baby boomer entitlement programs. Walker said the federal government must at least cap expenses now while working out a long term solution to health care related costs coming in the next 30 years.
Interestingly enough, if you --the consumer-- was allowed to carry the same debt as the White House based upon your projected income in 2008 the following would apply:
Which credit card company would allow you to charge-up 70 percent of your estimated earning power?
Federal Government Debt Cap: || $10,000,000,000,000 |
| Projected GDP: || $14,200,000,000,000|
|*Median Household Income: || $48,000|
|Allowable Household Debt: || $33,600|
For the White House's fiscal 2008 budget it plans to spend tens of billions more to develop nuclear weapons, purchase military supplies, and fund expenses in Iraq and elsewhere. The new spending increases in Iraq prompted some Democrats to suggest an income tax surcharge just to pay for burgeoning expenses in Iraq. The White House scoffed at the proposal.
Dana Perino, spokesperson for the White House, said a $150 billion annual tax increase being tossed around on the Senate floor, which progressively taps into higher incomes, was not required to fund Iraq. "We don't think it is necessary," she said. The Democrat-backed tax increase was intended to help pay for the $190 billion additional spending President Bush requested for Iraq this fiscal year, a spending bill that so far is estimated to be approaching the $1 trillion mark, and could reach $2 trillion by year 2011.
The Senate approved $459 billion additional money for the Pentagon, on top of the $190 billion request from President George W Bush to occupy Iraq in 2008. The only senators to oppose the measure were: Robert Byrd (D-WV,) Russ Feingold (D-WI,) and Tom Coburn (R-OK.)
Democrats David Obey (WI,) John Murtha (PA,) and Jim McGovern (MA,) were behind the dead-in-the-water tax surcharge for 2008, which proposed an increase of between 2 percent and 15 percent to pay for the Iraq occupation. The more one earned in 2008 -- the higher the tax rate. One who earns $10,000 would pay $200 in 2008 and the corporate CEOs who earn $2,000,000 would pay $300,000 in 2008 in new taxes.
The president will not approve domestic bills that increase income taxes, nor will he approve additional spending on homeland programs that he deems too expensive his spokeswoman said.
Tax surcharge author Obey said, "The war will cost future generations billions of dollars in taxes that we're shoving off on them and it is devouring money that could be used to expand their educational opportunities, expand their job training possibilities, attack our long-term energy problems and build stronger communities."
Authors of the bill claim surcharges were put into place following WWII.
"By putting together this bill we hope people will stop ignoring what this war is costing American taxpayers and call the president's bluff on fiscal responsibility," Obey said.
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