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Government Bytes

Latest Taxpayer's Tab: How Deep Might Deficits Go?
Posted By: Michael Tasselmyer - 08/29/14

Taxpayer's Tab Update

Higher revenues and growth admidst mounting debt and deficits: those are the latest projections from the Congressional Budget Office's Economic Outlook report, and this week's edition of The Taxpayer's Tab dives a little deeper into the numbers to see where the economy might be headed over the next decade.

CBO's latest report on federal spending, deficits, and revenue growth forecasts modest improvements in some areas -- for example, higher tax revenues and a deficit almost $200 billion lower than last year's -- while indicating that there's plenty of room for improvement in others. Federal outlays are expected to grow by an average of five percent per year over the next decade, and in that time, federal debt could grow to 77 percent of GDP (in 2007, that figure was less than half that, at 35 percent).

And although Congress has been out of town on a 5-month summer recess, NTUF continues to update our database of cost estimates for the thousands of bills introduced in Congress so far. According to our latest findings, the 113th Congress has introduced nearly 5 bills to increase spending for every budget cut proposal in the House; the ratio is over 6:1 in the Senate.

Also featured in this week's edition of The Tab is a look at one particular type of legislation that consistently receives nearly unanimous support in Congress: bills to rename public land and buildings. Since the 108th Congress, nearly 20 percent of all bills that have been signed into law have been those that rename post office facilities, according to a report from the Congressional Research Service. Although these bills typically cost the government very little, taxpayers may be surprised to learn there have already been over 100 introduced in the 113th Congress so far.

As always, you can read the latest edition of The Tab and subscribe to email updates online. 

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CBO Reports More Debt Ahead if Congress Stays the Course
Posted By: Nan Swift - 08/28/14

Yesterday, the Congressional Budget Office (CBO) released a rather dismal long-term budget outlook that illustrates how “persistent deficits” will make our debt continue to climb over the decade ahead. The projections show that the debt will increase from 74 percent of GDP in 2014 (already twice as high as the 35 percent of GDP seen as recently as 2007) to 77 percent in 2024. Even worse, there is  no end in sight thereafter unless serious reforms are implemented. Some news outlets are trying to paint a rosier than deserved picture of the report by focusing on the fact that the CBO’s projection is slightly less terrible than previous projections by about $400 billion or .8 percent, but the debt and deficit problems cannot be ignored.

Here are three major take-aways taxpayers should have from CBO report:

1.  The Budget Control Act was a success – but we need to do more to curb spending.

The CBO report notes that:

The federal budget deficit has fallen sharply during the past few years, and it is on a path to decline further this year and next year.

The federal budget deficit for fiscal year 2014 will amount to $506 billion, CBO estimates, roughly $170 billion lower than the shortfall recorded in 2013. At 2.9 percent of gross domestic product (GDP), this year's deficit will be much smaller than those of recent years (which reached almost 10 percent of GDP in 2009) and slightly below the average of federal deficits over the past 40 years.

This temporary deficit reduction is largely thanks to the modest spending restraint imposed by the Budget Control Act (BCA) of 2011. For those who suggested that the BCA and subsequent sequester would be nothing short of disastrous for our economy and society writ large, the numbers beg to differ. Unfortunately, the BCA doesn’t completely put the brakes on spending and budgets are on track to continue to creep upward, albeit at a slower pace than before.

Unfortunately for taxpayers, even as the CBO confirms the BCA was a success, some legislators are working to undermine those spending caps, hoping to pass to a budget-busting bill as soon as this fall, potentially during a lame-duck session of Congress when legislators feel less accountable to their constituents.  Taxpayers need to urge their legislators not to bust the BCA’s caps and to do more to rein in spending.

2The debt is still growing – thanks largely to out-of-control entitlement spending.

The CBO report explains that even as deficits have fallen for the time being, our debt has grown under the BCA and will continue to do so. This is largely due to massive growth in spending in mandatory spending on entitlement programs, which are largely unaffected by BCA spending limitations. Over the next decade, discretionary spending is expected to increase by “only” about 20 percent. During the same time period, mandatory spending will sky-rocket:

Boosted by the aging of the population, the expansion of federal subsidies for health insurance, rising health care costs per beneficiary, and mounting interest costs on federal debt, spending for the three fastest-growing components of the budget accounts for 85 percent of the total projected increase in outlays over the next 10 years:

  • Annual spending for Social Security is projected to grow by almost 80 percent. Under current law, outlays for that program would climb from 4.9 percent of GDP this year to 5.6 percent in 2024, according to CBO's estimates.
  • Annual net outlays for the government's major health care programs (Medicare, Medicaid, the Children's Health Insurance Program, and subsidies for health insurance purchased through exchanges) are projected to rise by more than 85 percent. Outlays for those programs would grow from 4.9 percent of GDP to 5.9 percent, CBO anticipates.
  • Outlays for net interest in 2024 are projected to be more than triple those in 2014—the result of both projected growth in federal debt and a rise in interest rates. Net interest outlays would rise from 1.3 percent of GDP this year to 3.0 percent by the end of the coming decade, CBO expects.

3.  Increased taxes won’t solve this debt crisis.

The CBO’s report projects revenues will grow at an annual rate of 4.9 percent, yet makes it clear that these potential revenue increases aren’t nearly enough to close the spending gap. What continues to be apparent is the increasing debt continues to erode our potential prosperity and hampers economic recovery. Policy options such as closing tax “loopholes” and otherwise increasing revenue will only further imperil our already fragile economy.

Though the future may look grim, Congress has many opportunities to ensure that the CBO’s latest projects are an unfulfilled prophecy. Enacting legislation that will put people back to work, reform entitlements, and reduce wasteful spending would all ensure that the next CBO projection isn’t quite so bleak. 

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Big Government Tries Again to Tax Soda Like a Sin
Posted By: Melodie Bowler - 08/25/14

Once again, soda taxes have reached the November ballot in two California cities, Berkeley and San Francisco. Berkeley’s city leaders have chosen to place a 1-cent-per-ounce tax on the ballot; San Francisco’s measure attempts to levy a 2-cents-per-ounce tax. While called a “soda” tax, these measures would actually tax all beverages sweetened with sugar, including juices, iced teas, sports and energy drinks. For two liters of Coca-Cola, typically about $2.00 in a grocery store, Berkeley’s measure would raise the price by almost 70 cents; San Francisco’s would cost consumers an additional $1.35.

The opposition to taxing soda is remarkably robust since the issue aligns generally unaffiliated voting blocks: free-market, low-tax proponents and advocates for the impoverished. Soda taxes are regressive, burdening all individuals equally rather than proportionally based on income. Low-income families would be hit hardest by a soda tax because the additional cost of groceries would encompass a greater portion of their budgets.

These ballot measures may worry some soda drinkers, but supporters of the tax face an uphill battle. In 2012, the California cities of El Monte and Richmond tried to implement similar soda taxes of 1 cent per ounce through ballot measures. While voters in these cities overwhelmingly supported President Obama’s re-election, 76 percent of voters rejected the soda tax in El Monte and 67 percent rejected the tax in Richmond. The small town of Telluride, in the San Juan Mountains of Colorado, voted down another soda tax last November, with 68 percent against the measure. Many cities and even some states have attempted to implement soda taxes, but none have been successful.

Fortunately for soda drinkers, restrictions are pushed by a small crowd and overwhelmingly disliked by the electorate. In 2010, the Washington State Legislature passed a tax on soda (along with bottled water and candy), but voters responded by getting an initiative on the ballot and overturning the tax. Even the courts of New York stopped former Mayor Bloomberg’s attempt to limit the sale of large sodas to sixteen ounces. One soda-related measure did pass years ago in Ohio, but rather than creating a new tax, it amended the state constitution to prohibit any taxation of soda.

On November 4th, voters in Berkeley and San Francisco will decide whether drinking soda is a sin worth taxing. Each soda measure that will reach voters this fall will be featured on NTU’s upcoming Ballot Guide. Keep up with the fight against these measures and other attempts at nanny-state overreach on NTU.org.

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Latest Taxpayer's Tab: Presidential Library Donations
Posted By: Michael Tasselmyer - 08/24/14

Taxpayer's Tab Update

Presidential libraries are expensive propositions, and while the federal government foots most of the costs associated with archiving and maintaining the various papers, photos, and memorabilia on display within them, private foundations finance most of the construction and maintenance costs. However, private donors are allowed to give as much as they'd like to a president's library (even those who are still in office) and foundations that accept them do not usually have to identify those who donate large sums of money. This has lead to allegations of donors "buying" perks such as White House access and Presidential pardons, and a call for more transparent financial disclosures.

In this week's edition of The Taxpayer's Tab, NTUF featured Congressman John Duncan's (R-TN) and Senator Tom Carper's (D-DE) Presidential Library Donation Reform Act, which would require presidential library foundations to disclose the names of donors who give more than $200 in any financial quarter. H.R. 1133/S. 2640 would make those disclosures accessible and searchable online, an effort the Congressional Budget Office estimates would cost about $1 million per year.

Also featured this week:

  • Most Expensive: Congressman Larry Bucshon (R-IN) introduced the NIST Reauthorization Act, which would provide additional funding to the National Institute of Standards and Technology. H.R. 5035 would increase federal spending by about $260 million per year.
  • Least Expensive: Senator Tim Scott's (R-SC) Charity Care Expansion Act would create a new tax deduction for medical professionals to offset the costs they incur by providing free or reduced cost "charity care" to uninsured Americans. S. 2492 would also repeal the Preventive Health and Health Services Block Grant, which would reduce federal spending by $3 billion over five years.

For more on these bills and the latest NTUF research, check out The Tab online.

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Gone Fishing - Speaking of Taxpayers, August 22
Posted By: Douglas Kellogg - 08/22/14

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NTU Federal Affairs Manager Nan Swift explains how a dispute over who inspects catfish could get so complicated (hint: government) and cost so much. Then, NTU State Affairs Manager Lee Schalk lends a much needed state update as election season nears and taxes are on the ballot. Plus, the Outrage of the Week is a big one!

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Export-Import Bank: A Bad Deal for Taxpayers
Posted By: Melodie Bowler - 08/19/14

If you haven’t heard about the Export-Import Bank, here’s a quick rundown of the basics:

  • Commonly called Ex-Im, the bank was established by executive order of President Franklin D. Roosevelt on February 2, 1934.
  • Ex-Im provides loans and loan guarantees to U.S. companies attempting to export and to foreign companies wanting to import U.S. goods.
  • If Congress does not reauthorize Ex-Im by the end of September, it will cease providing loans or loan guarantees. It would continue to service current loans.

While budget-neutral in theory and often on paper, this notion is perpetuated only through faulty accounting and misleading statistics. Let’s debunk some of the rumors running wild on Capitol Hill.

Myth

Fact

90 percent of Ex-Im loans go to small businesses.

Based on the number of loans, almost 90 percent did benefit small businesses in 2013 (according to the bank’s very inclusive definition of “small”). Based on the number of dollars loaned, the large majority of taxpayer-backed financing went to behemoth businesses. In fact, Congress requires 20 percent of the total dollar value of Ex-Im transactions to go to small businesses, but the bank has repeatedly failed to meet that number.

Ex-Im financing is necessary for American businesses to compete in the global market.

In 2013, Ex-Im financed only 1.6 percent of U.S. exports.

Ex-Im is a “self-sustaining agency” that returns profits to the Treasury.

Ex-Im uses faulty accounting procedures rather than fair value accounting to create an illusion of profits. The Congressional Budget Office estimates that Ex-Im costs taxpayers $200 million each year.

If we take a closer look at Ex-Im’s transactions, the bank’s financing becomes even more questionable. In many cases, large corporations benefitting from Ex-Im financing could have received loans from the private sector. In other instances, the Ex-Im-backed ventures were so risky that private lenders would not fund them. In either scenario, U.S. taxpayers should not be responsible for providing low-interest loans that are unnecessary or unlikely to be paid.

To demonstrate the true horror of what Ex-Im does with our money, the House Financial Services Committee created a blog series titled “Egregious Ex-Im Bank Deal of the Day.” Each weekday, the staff publishes another awful deal that Ex-Im decided was worthy of taxpayer funding. Remember Solyndra, the failed manufacturer of solar panels? After receiving $535 million from the stimulus package, Ex-Im officials decided the now-bankrupt company could use additional help, in the form of a $10.3 million loan guarantee for a foreign supermarket chain to buy Solyndra’s products. In a recent deal, the Australian Roy Hill Iron Ore project received a $694 million loan from Ex-Im after the private market refused to offer financing. Not only are Americans funding this without their consent to bear the risk, but the project will compete with U.S. mines, jeopardizing domestic jobs. Possibly the most egregious deal yet has been $4.975 billion in direct loans to assist building Sadara Chemical Company, a project of Saudi Aramco, the state-owned oil company of Saudi Arabia. If the Saudi Arabian government needs American exports for its pet project, they can likely finance those purchases without help from U.S. taxpayers.

If that weren’t enough reason to let Ex-Im’s authorization lapse, in addition, the bank’s transactions are fraught with bribery and cronyism. Abengoa International, a Spanish green-energy company, managed to receive about $150 million in total loans from Ex-Im, to no one’s surprise, since former governor of New Mexico Bill Richardson sat on the board for both the company and the bank. Four other Ex-Im officials are currently undergoing investigations of bribery and favoritism. While Ex-Im is financing growth for our foreign competitors, including Russia and Brazil, the U.S. continues to experience economic and employment hardships at home. Rather than risking taxpayers’ dollars for the benefit of other countries, it is time to let the Export-Import Bank expire.

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Administration Stonewalling Government Watchdogs
Posted By: Nan Swift - 08/18/14

The offices of Inspector General were created under the “Inspector General Act of 1978” to serve as internal watchdogs within federal agencies by conducting audits and investigations into programs, providing policy recommendations to “promote economy, efficiency, and effectiveness,” preventing fraud, and communicating administrative problems to Congress.  Since their inception, the Inspectors General (IG) have served an invaluable role for taxpayers by rooting out waste and increasing transparency. However, the important work of the IGs is being hindered by the Obama Administration according to a letter sent earlier this month from IGs across the federal government to members of the House Oversight and Government Reform Committee and the Senate Homeland Security and Government Affairs Committee.  NPR reports:

Forty-seven IGs signed a letter this month highlighting problems with access to federal records — problems they say slow their investigations and threaten their independence.

"If the IG community cannot rally around getting access to data, access to information, what can they rally around?" asks Brian Miller, who served as inspector general at the General Services Administration for nine years. "You know, this is, this is vital."

Miller says by failing to hand over documents and access to electronic databases, bureaucrats can deprive IGs of the fuel they need to do their work.

Taxpayers have real reason to be concerned at the news IGs aren’t receiving the support and access to information they need from the “most transparent administration in history.” Over the years, the important work of the IGs has been the source of critical information. Here’s just a small sample of what IGs have uncovered:

Just from the handful of cases above, it’s clear the IGs fulfill an essential role in ensuring tax dollars aren’t misused and federal programs are properly administrated. Best of all, unlike so many other government endeavors, taxpayers can be sure they are making a good investment when it comes to these vital people. A 2011 Government Accountability Office (GAO) report found that the savings IGs generated through their audits and investigations “represented an $18 return on every dollar invested in IGs.”

Of course, if IGs are finding it harder to do their jobs and obtain the information necessary to conduct thorough analyses, taxpayers will see less and less of that investment recouped and more and more waste across all agencies. Taxpayers will have to hope that Congress and the Administration can find a way to ensure our IGs can continue to be an effective tool that raises the bar for bureaucracy.

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Taxpayers Already Fighting November Ballot Measures
Posted By: Lee Schalk - 08/18/14

As we head towards fall, debates regarding state and local November ballot measures are heating up. In many places, groups of citizen activists are organizing to push back against the threat of greater spending and higher taxes. In Georgia, the Cobb County Taxpayers Association (CTA) is one such group, speaking out against a Special Purpose Local Option Sales Tax (SPLOST) measure that is a shoe-in for the infamous “negative” rating in the 2014 edition of NTU’s Ballot Guide.

If passed, the measure would renew a one percent sales tax hike for six years. If thwarted, Cobb County taxpayers would see their sales tax rate drop to 5 percent, which would be the lowest rate in the region. As CTA points out, many counties in the Atlanta area have a rate of 7 percent, meaning that this SPLOST proposal’s defeat would greatly benefit Cobb County residents and businesses by helping to attract more retail activity.

If you’re a concerned taxpayer living in the area, you may want to keep tabs on CTA’s activities. They held an organizational meeting this past Saturday in Marietta and will continue to work to defeat the tax measure. More info can be found HERE. Additionally, be sure to keep an eye on NTU.org as we continue to weigh in on state and local ballot measures. In particular, stay tuned for the release of our annual Ballot Guide, which will be available in the fall.

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Latest Taxpayer's Tab: Publicly Funded Art
Posted By: Michael Tasselmyer - 08/17/14

Taxpayer's Tab Update

Did you know that in 2002, taxpayers funded a $10,000 grant that went to support the Arctic Chamber Orchestra's tour through rural Alaska? The government agency that administered the funding is the National Endowment for the Arts, which was established in 1965 and received about $146 million in appropriations last year.

Congress has tried to defund the NEA before, and this week's edition of The Taxpayer's Tab features the latest version of such legislation, introduced by Representative Matt Salmon (R-AZ). H.R. 5090 was introduced as part of the Congressman's "Shrinking Our Spending" (SOS) initiative, and would prohibit any future funding of the NEA.

Also featured this week:

  • Most Expensive: Congressman Matt Cartwright (D-PA) and Congresswoman Rosa DeLauro (D-CT) introduced the VARIETY Act, which would refund 30 cents of every SNAP dollar used to purchase fresh fruits and vegetables in order to encourage healthier eating habits. H.R. 4904 would cost about $824 million per year.
  • Wildcard: Senator Chris Coons' Manufacturing Universities Act would offer additional federal funding to American colleges and universities that develop engineering programs with a special focus on manufacturing applications. S. 2719 would cost about $125 million per year.
  • Farewell, interns: NTUF had the pleasure of hosting 11 interns this summer, all of whom helped us research legislation and write about our findings. Find out more about them and our internship program!

You can read the latest issue of The Tab online.

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Linda Remeschatis, Owner of WisconsinMade - Speaking of Taxpayers, August 14
Posted By: Douglas Kellogg - 08/15/14

Pete & Doug have a great discussion on the potential havoc of an Internet tax scheme like Marketplace Fairness Act with small business owner Linda Remeschatis of WisconsinMade. A final pair of interns stop by to lend insight into NTUF's work - plus, the Outrage of the Week! 

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