Wednesday, April 6, 2011

Republican 2012 Budget for the Future

Well it’s finally here folks!! Paul Ryan unveiled the GOP's 2012 budget titled "The Path to Prosperity" and it is aggressive and controversial.  While many of the details have yet to put out the framework or backbone is there for America to see. 

Now first I have to say that I applaud and respect the Republican Party for putting out a budget that seriously addresses deficits and government spending.  There can no argument that our government is simply creating too much of a deficit. We can not continue on the status quo, change to our government's economic policy is necessary and vital to our countries continued success. So first let's address the good things in this budget.  This budget cuts out an estimated (estimated by Republicans) 6.2 TRILLION; yes that’s trillions with a "T", dollars over the next 10 years.  This amount of deficit spending reduction would lead to greater economic security as well as fewer budget dollars being spent on the interest of our national debt. Fewer dollars being spent of interest and debt means greater flexibility and our government could then pursue other programs later on.  The Republican budget also proposes sweeping healthcare reform for the large entitlement programs, such as Medicaid and Medicare, which would not affect anyone over the age of 55; giving those affected, all citizen under the age of 55, adequate time to alter any retirement plans or change insurance policies. If current spending trends remain with Medicaid and Medicare the strain on our government’s budget will pass the point of sustainability in the future and the programs could fail. 

Now with all that praise I do have a few bones to pick with the budget.  First, the fact that this budget does nothing about taxes, yes I know it’s a Republican budget so what should I really expect. However if you are truly going to project this budget as a serious deficit budget you have to address tax reform.  Paul Ryan said in an interview of Fox News Sunday ..."we do not have a tax problem, we have a spending problem"...well he was half right.  Large businesses and corporations that conduct business in the United States and generate huge profits should still be required to pay their fair share by paying whatever the tax rate is.  Reports and studies of all kinds have been in the media lately showing that U.S. based companies as well as foreign companies that operate inside the United Sates and generate large revenues pay ZERO or minimal tax dollars.  Republicans shout to the heavens that taxes are too high and “the job creators” need lower taxes so they can get richer and make more jobs.  Well it’s just not working out that way in reality. 

This particle link shows the extent to which corporations have gamed the system to there own benefit in dodging taxes.  In this article Senator Bernie Sanders compiled a list of some of some of the 10 worst corporate income tax avoiders, which I have posted below.
1)      Exxon Mobil made $19 billion in profits in 2009.  Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS, according to its SEC filings.
2)      Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion. 
3)      Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.
4)      Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009.
5)      Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS last year. 
6)      Valero Energy, the 25th largest company in America with $68 billion in sales last year received a $157 million tax refund check from the IRS and, over the past three years, it received a $134 million tax break from the oil and gas manufacturing tax deduction.
7)      Goldman Sachs in 2008 only paid 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion from the Federal Reserve and U.S. Treasury Department.
8)      Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury.
9)      ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2007 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction.
10)  Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent.
I think I have driven that point home enough so moving on…my other bone to pick is that while the end result of the healthcare reform proposed in the GOP’s 2012 budget for Medicare and Medicaid is a good thing its policy and affect on people is still very suspect.  It does turn Medicare and Medicaid into voucher programs after 2022 not the guaranteed programs they are today.  Medicaid would provide you a fixed amount of money that you could your towards a private insurance plan or your choosing.   That fixed amount of money, Paul Ryan has said, would increase as you got sicker and enable you more options, hmmm wasn’t it’s the Republican who created the term "death panel" and tried to kill Obamacare with it. How exactly are you going to get more money the sicker you are….some federal employee going to make that decision…sounds like a death panel to me…j/k.  But seriously there are many questions to answer about the how exactly these new proposed programs would really be beneficial to the people it is supposedly designed to assist. You are creating an entire goverment healthcare assistance system which is completely reliant on the private market (stock market crash/housing market crash...ringing any bells??). What if the costs are too high, what if private plans are not available due to market trends. What about pre-existing conditions and other consumer protections that Obamacare had implemented?  Details on this must be released, reviewed, and debate at length.

Lastly, my problem with this budget is it has ZERO, yes ZERO percent chance of being passed by the Senate and the Oval Office, while they cut spending and save 6.2 TRILLION dollars over the next 10 years it is in no way bipartisan so really all it can do is drive the debate either to a more divided place than we are now or hopefully and eventually to a better overall Federal 2012 budget later on this year. 

What do you think of the GOP's 2012 budget, or any of my thoughts?