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The Road to Tax Reform: Passing the Federal Budget

The Road to Tax Reform: Passing the Federal Budget
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Thursday, 26 October 2017 12:32 PM Current | Bio | Archive

It’s been a long time between Republican congressional victories. So the fact that the senate passed the 2018 budget calling for $1.5 trillion in budget cuts over 10 years is a big step forward.

Not only did Republicans vote in a bloc (with the exception of Rand Paul), but it paves the way toward similar victories for long overdue tax reform. In essence, it includes a plan that will allow the passage of a tax plan by a simple majority, without threat of a Senate filibuster to block it.

The Senate budget now needs to be reconciled with a House version. A final budget vote is expected by the end of the month. The addition to the deficit will be offset by spurred economic growth.

While it’s a good step in the right direction, we can’t lose focus of the fact the federal debt topped $20 trillion earlier this month and is projected to grow by another $10 trillion over the next decade.

Romina Boccia, Deputy Director, Thomas A. Roe Institute for Economic Policy Studies and Grover M. Hermann Research Fellow at the Heritage Foundation appeared on my Made in America radio show, proposing that a priority for the budget is getting enough money for the military and defense, especially for our military preparedness capabilities.

She was right on the money, since POLITICO reported that one key change allows for higher defense spending without offsets, a way to win over House defense hawks, according to amendment text obtained by the publication. Under the amendment, the Pentagon's fiscal 2018 budget could be increased to $640 billion — without offsets — if lawmakers reach a deal to raise the current spending caps.

Treasury Secretary Steven T. Mnuchin predicted the tax package will unleash so much economic growth it will begin to pay down the nation’s debt.

The Washington Post reported that Mick Mulvaney, director of the Office of Management and Budget, entitled the budget plan “A New Foundation for American Greatness., and is focused on protecting taxpayer money and cutting spending on programs that are ineffective or encourage people not to work.

The poster child should be Lyndon Johnson’s 1964 War on Poverty. Billed as a program that was designed “…not only to relieve the symptom of poverty, but to cure it and, above all, to prevent it.”

Louis Woodhill, writing for Forbes suggests that “Measured against this objective, the War on Poverty has not just been a failure, it has been a catastrophe. It was supposed to help America’s poor become self-sufficient, and it has made them dependent and dysfunctional.

If you devote 50 years and $21.5 trillion to anything, and people are arguing about whether it was a success or a failure, then you can be sure that it was a failure”.

Shortly after the War on Poverty got rolling (1967), about 27% of Americans lived in poverty. In 2012, the last year for which data is available, the number was about 29%.

Forbes notes that “What turned the War on Poverty into a social and human catastrophe was that the enhanced welfare state created a perverse system of incentives, and people adapted to their new environment.”

Is it any wonder that Donald Trump is finally calling the nation’s bluff by suggesting that it’s time America stopped rewarding people for not working? We need to see a final budget that provides incentives for people to work instead of living off entitlements. America cannot grow as a welfare state. It’s a message that guides Donald Trump’s budget approach.

Even CNN, who blathered about the proposed $800 billion in Medicaid cuts, had to agree with many of Trump’s budget recommendations; including the proposal that “instead of spending federal funds, it is more efficient for the states to fund their own local activities — such as school and antipoverty programs — because doing so eliminates the expensive federal middleman. By ending numerous federal aid programs, the Trump budget would cut the need for high-paid bureaucrats in Washington to administer the money going back to the states. It would also free the states from costly federal regulations that are tied to aid programs.”

According to Market Watch, without any changes in existing programs, entitlements and interest on the national debt will consume virtually all federal tax revenue by 2027. Then Washington will have to raise taxes to levels that absolutely cripple business and growth while withering the military and vital civilian services. The only other solution would be to impose draconian cuts on social security and assistance to the truly needy.

The budget must go through now that Republicans have finally voted as a united party. But as much as I would like to see Obamacare repealed and replaced, Republicans should resist the temptation to tackle this divisive issue right now, and instead work together to get tax reform passed. It’s the most important economic issue of our time and is the key to sustained growth for our entrepreneurs and job creators. 

Neal Asbury is chief executive of The Legacy Companies.

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NealAsbury
It's been a long time between Republican congressional victories. So the fact that the senate passed the 2018 budget calling for $1.5 trillion in budget cuts over 10 years is a big step forward.Not only did Republicans vote in a bloc (with the exception of Rand Paul), but...
tax, reform, federal, budget
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2017-32-26
Thursday, 26 October 2017 12:32 PM
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