How Much Is Enough?

The cure for the evils of democracy is more democracy!

H. L. Mencken, Notes on Democracy, 1926

The entirety of mass media has been focused almost entirely on the tragedy of the missing Malaysian Airlines flight. The number of hours dedicated to an issue for which there is achingly little information is staggering.

It is thus perhaps understandable that the aforementioned media has chosen not to focus its attention on more domestic issues. In this era of political gridlock and ridiculous claims of ‘unfairness’, there still remains some hard realities that must be addressed by our elected leaders.

To wit:

This nation is still far from a true economic recovery, and yet the body politic refuses to address the issues of debt, deficit and responsible budgetary restraint. There are continued cries for increasing taxes on the rich, and that more money is needed for this infrastructure or another.

In short, the electorate is bombarded daily with the message that the government requires more cash to continue fulfilling its purpose.

The reality is that government as a whole can longer manage its fiduciary mandate and as such has voluntarily relinquished its responsibility to America for no other reason that political cowardice and budgetary ineptitude.

For proof of that fact, consider this edited compendium of information from various sources relative to the budgetary madness currently in play in Washington. It should be of both deep concern and outrage on the part of the American people.

As they say, you can’t make this stuff up. The numbers do not lie.

Consider:

Inflation-adjusted federal tax revenues hit a record $1,104,947,000,000 in the first five months of fiscal 2014, but the federal government still ran a $377,379,000,000 deficit during that time, according to the Monthly Treasury Statement for February.

Each month, the Treasury publishes the government’s “total receipts,” including all revenue from individual income taxes, corporate income taxes, social insurance and retirement taxes (including Social Security and Medicare taxes), unemployment insurance taxes, excise taxes, estate and gift taxes, customs duties, and “miscellaneous receipts.”

In constant 2014 dollars, the $1,104,947,000,000 that the federal government collected from October through February in fiscal 2014 was $90,193,750,000 more than the 1,014,753,250,000 it collected in October through February in fiscal 2013.

Although the federal government brought in a record  of approximately $1,104,947,000,000 in revenue in the first five months of fiscal 2014, according to the Treasury, it also spent approximately 1,482,327,000,000—leaving a deficit of approximately 377,379, 000,000.

After the current fiscal year, the second highest federal tax intake in the first five months of a fiscal year occurred in the first five months of fiscal 2007, when the government collected 1,076,721,860,000 in 2014 dollars—or 28,225,140,000 less than in the first five months of this fiscal year.

At the beginning of 2013, Congress passed and President Obama signed “The American Taxpayer Relief Act.” While this act made permanent some of the lower tax rates enacted for ten-year periods under President George W. Bush, it also increased some tax rates.

The Congressional Research Service summary of the law said it: “Amends the Internal Revenue Code to: (1) revise income tax rates for individual taxpayers whose taxable income is at or below the $400,000 threshold amount ($450,000 for married couples filing a joint return) and increase the rate to 39.6% for taxpayers whose taxable income exceeds the threshold, (2) set the threshold for the phaseout of personal tax exemptions and itemized deductions at $250,000 for individual taxpayers ($300,000 for married couples filing a joint return), and (3) increase the top marginal estate tax rate from 35% to 40%.

The law also: “Increases the capital gains tax rate from 15% to 20% for taxpayers whose taxable income exceeds the $400,000 threshold amount.”

Tax Day

The cure for the evils of democracy is more democracy!

H. L. Mencken, Notes on Democracy, 1926

In facetious ‘honor’ of this being the week that federal law mandates the submission of income tax filings, the Madison Conservative is presenting an abbreviated version of the blog this week to provide some insight into the current realities of income tax law and the hypocrisy of the Obama administration in its continued histrionics relative to ‘tax fairness’.  The President has been continually haranguing the electorate that those who can afford to pay more in taxes should do so, in order to demonstrate their patriotism.

Consider these facts about the tax system in this nation and the incredulity of the two most powerful men in the world with regard to the tax ‘fairness’ issue.

First, here is the idea of taxation as intended by the framers and founders of this country:

The United States Constitution, Article I, Section 9:

No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken

Concisely and specifically written; to demonstrate the dangers of a Congress acting ‘in the best interests of fairness to the nation', consider the sixteenth amendment to our august governing document:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

A direct reversal of the founders’ intent, and one that has become a blight and a plague upon the freedom of the American people.

There is also this fact to confirm the belief of the American people that they are in fact being taxed too much and that indeed this nation does not have a taxation problem, it has a definite spending problem – (please note the dates provided – they occur AFTER Tax Day):

April 18 will be Tax Freedom Day, the day when Americans have worked enough to pay all of their federal and state taxes for 2013 – a round total of $4.22 trillion, according to an analysis done by the Tax Foundation.

That's five days later than in 2012.

Americans will pay more than $2.76 trillion in federal taxes and $1.45 trillion in state taxes for 2013 -- for a total of $4.22 trillion in taxes, or 29.4 percent of income. (Figures are rounded.)

April 18 is the 108th day of the year, or 29.4 percent of the calendar year.

Mitt Romney was chastised mercilessly by the political left when it was revealed that his tax rate was a shade over 15%. He was accused of squirreling money away in off shore accounts, and the point was raised about his ‘economic patriotism’ for having such a low rate. The mass media went apoplectic that his rate was not closer to the accepted ‘fair’ rate of 39%, the intended target of “tax equity’, so that the middle class would not have to pay for ‘tax cuts for the rich’.

In that context, consider this official government release:

President Barack Obama and First Lady Michelle Obama paid $112,214 in federal income taxes in 2012 on adjusted gross income of $608,611, an effective rate of 18.4%, the White House said Friday.

Finally, a favorite of the Madison Conservative. There are many terms to describe this type of arrogance and outright theft. It is a fitting encapsulation of exactly what is wrong with the political class, the tax system and the mindset of a bloated and ineffective government.

To wit:

Vice President Joe Biden and his wife, Dr. Jill Biden, took in $26,400 in 2012 by renting a cottage on the property of their Delaware home to the Secret Service, tax records released by the White House revealed.

They netted $17,944 of that rental money.

The namesake of this blog would be appalled.

The tax-paying electorate of America should be equally outraged and figuratively take pitchforks in hand and storm the castle.

The Sequester and Political Cowardice

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

The Sequester reality check:

President Obama, February 28th, 2013:

“Starting tomorrow everybody here, all the folks who are cleaning the floors at the Capitol. Now that Congress has left, somebody’s going to be vacuuming and cleaning those floors and throwing out the garbage. They’re going to have less pay. The janitors, the security guards, they just got a pay cut, and they’ve got to figure out how to manage that. That’s real.”

…Later that day:

Carlos Elias, the Capitol Building superintendent, sent out a memo reminding staffers that the current sequestration plan does not include “reductions in force or furloughs” and that “pay and benefit of each of our employees will not be impacted.”

Last week while discussing the potentially apocalyptic nature of the ‘cuts’ a cabinet secretary said this:

Education Secretary Arne Duncan told CBS “there are literally teachers now who are getting pink slips, who are getting notices that they can’t come back this fall."

…And then a few days later:

Duncan appeared to backpedal Wednesday, coming up with just one example, a West Virginia county, and the disclaimer that “whether it’s all sequester-related, I don’t know.”

It has now been two days since the sequester was signed by the President. There has been no quantifying negative effect as had been prognosticated by the legislative class.  In what was a political gambit soundly lost, the attempts by the current administration to garner support against House Republicans and force tax increases failed for several reasons, but the most significant was this:

The facts were against them and the American people instinctively knew it.

The President, his administration and their media sycophants wasted a truly singular opportunity to secure the blessings of liberty for ourselves and our posterity by simply being honest with the citizenry.

To wit:

Consider this missed true leadership scenario:

The President could have made a nationally televised speech and informed the people that given our sixteen trillion ($16,000,000,000,000) and growing national debt, our one trillion ($1,000,000,000,000) annual budget deficit – projected to be such each year for the foreseeable future – it would be untenable to continue this budgetary madness. He had thus directed his administration to undertake a literal line by line evaluation of the national budget - which for four years he has opted not to present – and to reconsider the nation’s priorities. He will be publishing his budget online within the next 24 hours so that each and every citizen can examine his choices.

It would have been historic; it would have put this nation on firm fiscal footing for a generation and spurred economic growth not seen for fifty years.

Regardless of his choices, it would have passed by an almost unanimous congressional vote, given that the American people would have voiced support to their representatives. The American electorate is smarter than the government understands. Securing a firm financial foundation is greater than short term political, cowardly choices.

Sadly, neither party opted for this choice of action.

Instead, it was preferable to take the ridiculous route of making claims of starving children, refusing medical care to our seasoned citizens and laying down our arms so that our enemies could defeat our shell of a once dominant military.

Truly absurd, but more importantly it is demonstrating a true lack of leadership.

The President of the United States is the most powerful political figure on the planet.

He was unable to rationally cut 44 billion ($44,000,000,000) dollars from a 1.4 trillion (1,400,000,000,000) dollar budget, or about 2 percent.

Such ineptitude by all members of our government does not bode well for freedom, and the American people deserve better.

Bob Woodward And The Truth of the Sequester

The first and foremost fact about the impending created crisis that is in fact not a crisis at all – the so-called Sequester – is that it will not result in true budget cuts as the political and media class are currently claiming. What it will do is cut the growth of proposed spending increases. In the Looking Glass world that is Washington, increasing anything by seven percent instead of a planned ten percent increase is presented as a dire three percent cut that will undoubtedly wind up starving children, allowing terrorists to board planes and leave Grandma out in street to fend for herself as she struggles with healthcare being denied.

This is all nonsense – the federal government, WITH the Sequester, will spend more money this year than last, with almost a trillion dollars of it unfunded.

The Sequester is scheduled to take effect this week and so the Madison Conservative will await its outcome before discussing the absolute absurdity of it.

However, it serves a useful purpose to understand the idiocy that led to this manufactured crisis, and who is telling the truth about its proposal and planning.

The President is claiming innocence and attempting to foist sole responsibility onto House Republicans. They should indeed shoulder some of the culpability in this nonsense, but the following column is from Bob Woodward of the Washington Post, and neither Woodward nor the Post can be accused of being biased against the administration. Woodward has clearly sourced and documented the reality of the Sequester nonsense, and his reporting is both telling and worrisome on the nature of truth in government from a President who still claims to have the most transparent administration in history.

He is at the least obfuscating – at the worst he is outright lying.

Neither option should be accepted by the American people.

Please read the entire column from Woodward, published February 22^nd in The Washington Post. To wit:

“What is the non-budget wonk to make of this? Who is responsible? What really happened?

The finger-pointing began during the third presidential debate last fall, on Oct. 22, when President Obama blamed Congress. “The sequester is not something that I’ve proposed,” Obama said. “It is something that Congress has proposed.”

The White House chief of staff at the time, Jack Lew, who had been budget director during the negotiations that set up the sequester in 2011, backed up the president two days later.

“There was an insistence on the part of Republicans in Congress for there to be some automatic trigger,” Lew said while campaigning in Florida. It “was very much rooted in the Republican congressional insistence that there be an automatic measure.”

The president and Lew had this wrong. My extensive reporting for my book “The Price of Politics” shows that the automatic spending cuts were initiated by the White House and were the brainchild of Lew and White House congressional relations chief Rob Nabors — probably the foremost experts on budget issues in the senior ranks of the federal government.

Obama personally approved of the plan for Lew and Nabors to propose the sequester to Senate Majority Leader Harry Reid (D-Nev.). They did so at 2:30 p.m. July 27, 2011, according to interviews with two senior White House aides who were directly involved.

Nabors has told others that they checked with the president before going to see Reid. A mandatory sequester was the only action-forcing mechanism they could devise. Nabors has said, “We didn’t actually think it would be that hard to convince them” — Reid and the Republicans — to adopt the sequester. “It really was the only thing we had. There was not a lot of other options left on the table.”

A majority of Republicans did vote for the Budget Control Act that summer, which included the sequester. Key Republican staffers said they didn’t even initially know what a sequester was — because the concept stemmed from the budget wars of the 1980s, when they were not in government.

At the Feb. 13 Senate Finance Committee hearing on Lew’s nomination to become Treasury secretary, Sen. Richard Burr (R-N.C.) asked Lew about the account in my book: “Woodward credits you with originating the plan for sequestration. Was he right or wrong?”

“It’s a little more complicated than that,” Lew responded, “and even in his account, it was a little more complicated than that. We were in a negotiation where the failure would have meant the default of the government of the United States.”

“Did you make the suggestion?” Burr asked.

“Well, what I did was said that with all other options closed, we needed to look for an option where we could agree on how to resolve our differences. And we went back to the 1984 plan that Senator [Phil] Gramm and Senator [Warren] Rudman worked on and said that that would be a basis for having a consequence that would be so unacceptable to everyone that we would be able to get action.”

In other words, yes.

But then Burr asked about the president’s statement during the presidential debate, that the Republicans originated it.

Lew, being a good lawyer and a loyal presidential adviser, then shifted to denial mode: “Senator, the demand for an enforcement mechanism was not something that the administration was pushing at that moment.”

That statement was not accurate.

On Tuesday, Obama appeared at the White House with a group of police officers and firefighters to denounce the sequester as a “meat-cleaver approach” that would jeopardize military readiness and investments in education, energy and readiness. He also said it would cost jobs. But, the president said, the substitute would have to include new revenue through tax reform.

At noon that same day, White House press secretary Jay Carney shifted position and accepted sequester paternity.

“The sequester was something that was discussed,” Carney said. Walking back the earlier statements, he added carefully, “and as has been reported, it was an idea that the White House put forward.”

This was an acknowledgment that the president and Lew had been wrong.

Why does this matter?

First, months of White House dissembling further eroded any semblance of trust between Obama and congressional Republicans. (The Republicans are by no means blameless and have had their own episodes of denial and bald-faced message management.)

Second, Lew testified during his confirmation hearing that the Republicans would not go along with new revenue in the portion of the deficit-reduction plan that became the sequester. Reinforcing Lew’s point, a senior White House official said Friday, “The sequester was an option we were forced to take because the Republicans would not do tax increases.”

In fact, the final deal reached between Vice President Biden and Senate Minority Leader Mitch McConnell (R-Ky.) in 2011 included an agreement that there would be no tax increases in the sequester in exchange for what the president was insisting on: an agreement that the nation’s debt ceiling would be increased for 18 months, so Obama would not have to go through another such negotiation in 2012, when he was running for reelection.

So when the president asks that a substitute for the sequester include not just spending cuts but also new revenue, he is moving the goal posts. His call for a balanced approach is reasonable, and he makes a strong case that those in the top income brackets could and should pay more. But that was not the deal he made.”

The Sixteenth Must Go

“In order to form a more perfect union”.

The founders and the framers knew that the Constitution they had written was not perfect and thus this specific phrase contained within the preamble is testament to their belief that subsequent generations would need to amend it and so they created the constitutional mechanisms necessary to do just that.

Throughout our history the overwhelming majority of the amendments to the Constitution have been instituted in the pursuit of that elusive goal of a more perfect union. There have been two specific amendments however have been so ill conceived that one has been repealed and one must be rescinded for the country to fully prosper as it moves well into its third century of being.

One of these two aforementioned amendments passed was intended to regulate conduct by passing legislation aimed at outlawing the creation of a specific item of commerce – alcohol. This led to a decade (1920 -1933) known popularly as Prohibition. The folly of using the United States Constitution for this type of social engineering was repealed and to date there have been no further attempts to amend the Constitution based upon personal conduct.

The second of these amendments is the only one that directly contradicts the intent of the framers and the founders and has become such a blight upon the nation that it must be repealed.

The founding fathers wrote the following very specific language into the Constitution ( Article 1, section 9 )

No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.

Their intent was clear: to distribute the required and necessary financial needs of government evenly amongst the states via their respective population. There was never a thought to taxing income, which mandates that the government will first attach your earnings and decide how much of what you have earned you may keep. This is not how the founders intended to fund the cost of democracy. In no way intended to be presented here as the definitive or thorough discussion on the arguments encountered during the debate on the Constitution, the following quote attributed to Thomas Jefferson nevertheless best encapsulates the founders’ firm belief on the nature of how their fledgling nation should be construed:

A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned - this is the sum of good government.

In an act of legislative malfeasance which best exemplifies the dictum of unforeseen consequences, the Congress passed the sixteenth amendment which reads, in its entirety as thus:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

This completely reversed the intent of the framers of the Constitution. It has led to allowing the government to be first in line to take from the mouth of labor the bread it has earned, and for generations to believe that such actions are a de facto part of American democracy.

This is not the American way.

There is no argument amongst the populace that there needs to be proper funding of the government, but an income tax is not the vehicle for that need.

The sixteenth amendment must be repealed.