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Federal Budget in Balance FY 2011: Comparison of Bush and Obama HA-28-2-10

 

By Tony J. Sanders

sanderstony@live.com

 

“We do not inherit the Earth from our ancestors we borrow it from our children.”

                                                                                  Native American Proverb

 

Part I Constitutional Rationale

Part II Economic Damages

Part III Operation

Part IV Concluding Remarks

 

Table 1: Federal Budget Master Balance 2009-2012 (in millions)

Table 2: Overview of the President’s Budget 2005-2012 (in billions)

Table 3: Gross Domestic Product Annually and Quarterly 2008-2009 (in billions)

Table 4: Revenues 2005-2012 (in billions)

Table 5: Gross Federal Debt 2005-2012 (in billions)

Table 6: Status of the Troubled Asset Relief Program as December 31, 2009 (in billions)

Table 7: State Budget Shortfalls FY2009 (in millions)

Table 8: Presidential Outlays by Agency, and Annual % Change 2002, 2005-2012 (in millions)

Table 9: Legislative and Judicial Spending FY 2005-2012 (in millions)

Table 10: Department of Treasury Balance 2008-2012 (in millions)

Table 11: Department of Justice Spending 2008-2012 (in millions)

Table 12: Departments of State, International Assistance and Homeland Security Spending 2009-2012 (in millions)

Table 13: Department of Defense Spending 2008-2012 (in millions)

Table 14: Veterans Affairs Spending 2008-2012 (in millions)

Table 15: Civil Corp of Engineers Spending 2008-2012 (in millions)

Table 16: Department of Health and Human Services Spending 2008-2012 (in millions)

Table 17: Department of Interior Budget Authority and Receipts 2009-2011(in millions)

Table 18: Department of Agriculture Balance FY 2008-2009 (in millions)

Table 19: Department of Commerce Spending 2008-2012 (in millions)

Table 20: Department of Labor Spending 2008-2012 (in millions)

Table 21: Social Security Administration Balance 2008-2012 (in millions)

Table 22: Housing and Urban Development Spending 2009-2012 (in millions)

Table 23: General Services Administration Recovery Act Spending 2008-2012 (in millions)

Table 24: Small Business Administration Budget 2008-2012 (in millions)

Table 25: National Aeronautics and Space Administration and National Science Foundation Spending 2009-2012 (in millions)

Table 26: Department of Transportation Spending 2008-2012 (in millions)

Table 27: Environmental Protection Agency Spending 2008-2012 (in millions)

Table 28: Department of Energy Budget 2009-2012 (in million)

Table 29: Office of Personnel Management Budget Appropriations 2008-2012 (in millions)

Table 30: Department of Education Spending 2009-2012 (in billions)

Table 31: Savings to the Deficit Accrued by Imposing Agency Spending Limits 2009-2012 (in millions)

Table 32: Impact of FY 2011 Revenue Proposals 2010-2020 (in millions)

Table 33: Impact of Health Insurance Options on the Budget 2011-2020 (in billions)

Table 34: Effects of Spending Limit, Revenue and Health Measures 2009-2012 (in millions)

 

I.                   Constitutional Rationale

 

Although most of it holds true, several provisions of the Hospitals & Asylums Political Platform 2009-2012 are reversed in order to more precisely and proportionally neutralize the armed attack by President of the United States and Democratic and Republican (DR) partisans that has needlessly taken an estimated 211,002 lives 2009-2010 and lead the economy from the Great Recession.  To make peace on a spirit level the tobacco tax of April 1, 2009 must be amended to provide for a flat 159% increase, reversing the greater than 2,000% increase on hand-rolling tobacco and small cigars and taxing the large cigars favored by investment bankers, while the Economic Stabilization Act of 2008 and the American Recovery Reinvestment Act of 2009, that were formerly called upon for repeal to limit damages there-under to the 111th Congress, that has been dissolved in its entirety, are herein reconciled.  Like in the colony of Virginia, the normalization of tobacco prices can be accepted as payment in lieu of currency, however immediate payment is imperative whereas this work accounts for a deficit of less than 3% of GDP by 2011, otherwise neither the Administration nor Congress will have performed.  If the President cannot, henceforth, keep the Peace, to the satisfaction of the Armed Forces Retirement Home Trust Fund, he shall be impeached under Art. 1(6), Art. 2(4) of, and Amendment 25(2), to the US Constitution, by the 111th Congress, that would otherwise be dissolved, and a Chief Justice, who would otherwise be dismissed.  This work, like all of my work, however, is not intended to create strife, it has been carefully crafted, with less than 1% deviance from Office of Management and Budget (OMB) figures, to correct the budgetary imbalances in the Historical Tables of the Office of Management and Budget (OMB), for the vindication of OMB Director Peter Orszag.

 

I have reviewed the written opinions of the principal officers of the executive departments, relating to their agency budgets under the FY 2011 Federal Budget pursuant to Art. 2(2)(1) of the U.S. Constitution. I have taken the liberty to faithfully transcribe, and in some cases justify, agency budget requests for the realization of our common goal of a balanced federal budget.  I brought the federal deficit under 3% of GDP FY 2005-2007, and after taking a leave of absence in FY 2009, I am proud to announce the FY 2011 budget is balanced on paper.  The deficit, after being adjusted upward from $1.4 trillion, 9,8% of GDP, to $1.6 trillion, 10.9% of GDP, in 2009, to account for the American Recovery and Reinvestment Act of that year, goes down dramatically.  With Recovery Act capital to soften hardship agencies enjoy financial stability under reasonable 1-5% growth rates using 2008 as a base year.  Many agencies did this themselves, but several recapitalized upon Recovery Act funding levels, they were corrected.  Others, namely OPM with no FY 2011 budget, have been over-reported by OMB for years, others like SSA and DHS are limited to OMB appropriation levels.  DOE needs to take responsibility for the Low Income Energy Program to justify budget increases and control energy prices. The entire column Defense – Civil is a duplicate of mostly mandatory VA benefits and the cost of reconstructing my beloved AFRH Gulfport home needs to be put on the VA books to justify its large increases.  Congress is punished with 2007 levels of revenue until they produce a deficit less than 3% of GDP.  Their social health insurance agenda is censured until its cost would not cause more than a 3% deficit, some talk of nationalizing health insurance to balance the budget is okay.  Health and Human Services spending growth is limited to an annual 2.5% from 2008 and health care industry price increases are limited to 3% by law.  The $200 billion annual DoD lending is forfeited to the General Fund of the Treasury and the Overseas Contingency Operations fund is terminated in FY 2011 for a DoD budget of $400 billion, world peace and a $214 billion deficit, 1.2% of the GDP, in FY 2012.  The $200 billion TARP fund shall be returned in FY 2011 when a disciplined administration would enjoy a $427 billion deficit, 2.8% of GDP, not quite enough for health insurance, but better than one with a $1.067 trillion deficit, 6.9% of GDP.  In other words, this document can save FY 2011, FY 2012 and the first term of the President.

 

Table 1: Federal Budget Master Balance 2009-2012 (in millions)

 

2009

2009 s

2010

2010 s

2011

2011 s

2012

2012  s

Legislative Branch

4,702

4,702

5,423

4,294

5,579

4,294

5,292

4,294

Judicial Branch

6,645

6,645

7,159

6,711

7,512

6,777

7,351

6,845

Executive Office of the President

742

742

715

715

501

501

427

427

Agriculture

114,440

100,334

142,016

89,689

145,748

100,452

137,917

105,474

Interior

11,775

11,371

12,042

12,216

14,045

12,177

12,803

12,000

Environmental Protection Agency

8,070

7,600

11,301

10,300

11,177

10,000

9,980

9,624

Energy

23,683

70,581

38,278

26,525

44,390

28,400

34,792

30,311

Commerce

10,718

10,718

16,714

16,714

11,500

8,400

10,430

8,600

Education

53,400

137,600

106,900

59,200

94,300

77,800

85,200

80,000

State

21,472

15,826

25,726

17,613

28,754

16,400

30,065

16,500

International Assistance

14,794

34,308

23,899

35,441

24,343

36,400

28,223

38,500

Homeland Security

51,725

51,725

52,903

52,903

54,723

54,723

46,847

46,847

Housing and Urban Development

61,019

61,811

62,518

49,347

53,082

48,913

48,153

48,153

Transportation

73,004

112,344

90,944

68,899

86,665

70,966

82,817

73,095

Office of Personnel Management

72,302

41,158

71,603

42,200

73,463

44,000

75,956

46,000

General Services Administration

319

319

1,782

1,782

2,279

2,279

2,170

2,170

National Aeronautics and Space Administration

19,168

18,784

19,123

18,724

17,863

19,000

18,953

19,570

National Science Foundation

5,958

6,872

7,819

7,424

7,647

7,500

7,558

7,725

Small Business Administration

2,246

2,127

5,978

5,598

1,388

1,228

1,112

1,112

Justice

27,711

27,711

30,333

23,816

31,924

24,054

33,700

24,295

Labor

138,157

142,503

209,265

162,003

116,902

79,982

90,790

70,000

Treasury

701,775

896,972

502,980

400,472

593,550

560,863

685,279

600,000

Veterans Affairs

95,457

97,000

124,565

111,035

124,215

121,604

122,369

125,252

Defense- Civil

57,276

0

54,317

0

55,719

0

56,457

0

Civil – Corps of Engineers

6,842

5,242

10,536

10,189

6,929

5,438

5,879

5,500

Defense – Military

636,775

464,775

692,031

497,031

721,285

508,000

653,424

400,000

Health and Human Services

796,267

858,953

868,762

735,902

934,426

754,299

911,291

773,157

Social Security Administration (on-budget)

78,657

78,657

85,108

85,108

80,933

80,933

77,304

77,304

Social Security Administration (off-budget)

648,892

683,000

683,867

709,000

708,620

735,000

738,430

773,000

Other Independent Agencies (on-budget)

47,636

47,635

2,001

2,001

31,832

31,832

26,928

26,928

Other Independent Agencies (off-budget)

304

304

6,426

6,426

4,226

4,226

-13

-13

Allowances

-4

-4

18,750

18,750

21,676

21,676

-4,187

-4,187

Undistributed Offsetting Receipts

-274,193

-274,193

-271,127

-271,127

-283,287

-283,287

-288,823

-288,823

Effect of Agency Spending Limits

 

 

 

 

 

 

 

 

Total Outlays

3,517,734

3,724,122

3,720,657

3,016,901

3,833,909

3,194,830

3,754,874

3,139,660

Total Receipts

2,105,000

2,105,000

2,165,000

2,165,000

2,567,000

2,567,000

2,926,000

2,926,000

Total Deficit

-1,412,734

-1,619,122

-1,555,657

-851,901

-1,266,909

-627,830

-828,874

-213,660

% GDP

9.8%

11.3%

10.6%

5.8%

8.2%

4.1%

5.1%

1.2%

Total Public Debt

11,876,000

12,082,000

13,787,000

13,289,000

15,144,000

14,008,000

16,336,000

14,584,000

% GDP

83.4%

84.7%

94.3%

90.9%

99.0%

91.6%

100.8%

90.0%

Effect TARP Termination

NA

NA

NA

NA

200,000

200,000

NA

NA

TARP Termination Effect on Deficit

NA

NA

NA

NA

-1,066,909

-427,830

NA

NA

% GDP

NA

NA

NA

NA

6.9%

2.8%

NA

NA

TARP Termination Effect on Debt

NA

NA

NA

NA

14,944,000

13,808,000

16,136,000

14,384,000

% GDP

NA

NA

NA

NA

97.6%

90.3%

99.6%

88.7%

Effect of Revenue Provisions + TARP

 

 

 

 

 

 

 

 

No on Make Work Pay Extension

NA

NA

NA

NA

30,132

30,132

31,075

31,075

No on Information Reporting Tax

NA

NA

NA

NA

-326

-326

-1,029

-1,029

Total Effect of Revenue Provisions

NA

NA

NA

NA

29,806

29,806

30,046

30,046

Revenue Provision Effect on Total Deficit

NA

NA

NA

NA

-1,036,000

-398,000

-799,000

-184,000

% GDP

NA

NA

NA

NA

6.7%

2.6%

4.9%

1.1%

Revenue Provision Effect on Public Debt

NA

NA

NA

NA

14,914,000

13,778,000

16,106,000

14,354,000

% GDP

NA

NA

NA

NA

97.5%

90.1%

99.4%

88.6%

Effect of Health Care Proposals + TARP + Rev.

 

 

 

 

 

 

 

 

Social Health Insurance Plan

NA

NA

NA

NA

-75,000

-75,000

-80,000

-80,000

 Effect of Social Health on Deficit

NA

NA

NA

NA

-1,111

-473,000

-909,000

-294

% GDP

NA

NA

NA

NA

7.2%

3.1%

5.6%

1.8%

Total Effect of Social Health on Debt

NA

NA

NA

NA

14,989,000

13,833,000

16,186,000

14,434,000

% GDP

NA

NA

NA

NA

97.9%

90.5%

99.9%

89.1%

National Health Service

NA

NA

NA

NA

688,000

688,000

709,000

709,000

Effect of NHI on Deficit

NA

NA

NA

NA

-379,000

+261,000

-119,000

+495,000

% GDP

 

 

 

 

2.5%

+ 1.7%

0.7%

+ 3.1%

Effect NHI on Debt

NA

NA

NA

NA

14,256,000

13,120,000

15,427,000

13,875,000

% GDP

NA

NA

NA

NA

93.2%

85.8%

95.2%

85.6%

Source: Table 31 and Table 34

 

The correlation between war and debt has haunted the United States Constitution since the Revolutionary War.  In the 18th century both Adam Smith in his Inquiry into the Nature and Causes of the Wealth of Nations (1776) upon which our free market economy is founded and Immanuel Kant in his essay Perpetual Peace (1795) held that nations at war tend to get into debt to evade the people, who quickly tire of such a poor game, and act to end such nonsense.  A Balanced Budget Amendment to the United States Constitution is called for in Chapter 8-D of the Constitution of Hospitals & Asylums Non Governmental Economics (CHANGE) that recalls as early as 1798, before the Louisiana purchase, Thomas Jefferson apologized, “I wish it were possible to obtain a single amendment to our Constitution… taking from the Federal Government the power of borrowing. I know that to pay all proper expenses within the year would, in case of war, be hard on us. But not so hard as ten wars instead of one. For wars could be reduced in that proportion”. Unfortunately, James Madison, in drafting the Bill of Rights (1791), aggravated the debasement of the Supremacy clause at Art. 4(2) to public debt, by brandishing an unconstitutional right to bear arms in the face of the First Amendment right to sue the government for a redress of grievances, he and Jefferson had fought so hard to defend. Later Civil War debt was written into the Fourteenth Amendment.  Several balanced budget amendments have been proposed however no one proposed Amendment has yet been agreed to, probably because the duty to balance the budget is subjugated by these technical errors in the Constitutional law that need to be repealed, for economic and constitutional law and reason in general to be truly superior to threats of violence, as is the true intention of all law and writing and learning. 

 

While avoiding all contact with the family and government, to escape persecution, in 2009, I took the time, four hours, having already been fully briefed, to fully amend the U.S. Constitution HA-26-7-09, to create a government I could deal with, wherein the Balanced Budget Amendment replaces the Second Amendment right to bear arms.  The general idea is the same one that brought immigrants fleeing tyranny to the American continent in the first place. We claim the privilege of worshiping Almighty god according to the dictates of our own conscience, and allow all men the same privilege, let them worship how, where, or what they may (Articles of Faith 1:11).  For the most part all the people want is the freedom of the press, trade, speech, religion, association and peaceable assembly.  As for government, in the words of Thomas Jefferson, in his inaugural address in 1801, all that is wanted is “for a wise and frugal government, which shall restrain men from injuring one another, and leave them otherwise free to regulate their own affairs and industry”.  Milton Friedman and his wife Rose’s classic inquiry into the relationship between freedom and economics Free to Choose (1980) explains the superiority of capitalist self-interest over socialist collectivism whereby “No external force, no coercion, no violation of freedom is necessary to produce cooperation amongst individuals, all of whom benefit.”  In other words to enforce the law is to break the law and one would prefer to petition the government rather the barrel of a gun, or General of the United Nations (GUN) for that matter.  By associating the First Amendment right to sue the government for a redress of grievances and a Second Amendment duty to balance the budget, rather than a bizarre right to bear arms, never before heard, never again repeated in any other countries and in a strictly legal sense definitely inferior to a constitutional right that is specifically intended to be superior to the awesome power of State sanctioned violence.  More than any other Amendment to the U.S. Constitution this duty to balance the budget would bring the government into harmony with the writer rather than the fighter, and thereby forever increasing the peace and prosperity in our society.

 

The proposed Second Amendment duty to Balance the Budget states:

 

Section 1 Total outlays for any fiscal year shall not exceed total receipts for that fiscal year.

 

Section 2 Prior to each fiscal year, the President shall transmit to the Congress a proposed budget for the United States Government for that fiscal year in which total outlays do not exceed total receipts.

 

Section 3 The Congress shall enforce and implement a balanced budget by appropriate legislation.

    

II. Economic Damages

 

As everyone is well aware, the federal government, usually runs on a deficit, with some famous exceptions, such as when Andrew Jackson paid off the federal debt in 1835 and more recently when Bill Clinton ran a surplus in 1998-2000, is running the highest deficit in dollar terms in national history, well over $1 trillion in 2009, 2010 and 2011, the second highest as a percentage of GDP since WWII and the Confederacy during the Civil War.  Unless federal spending is corrected the public debt will exceed 100% of GDP as soon as 2012.  This 2010 the President and his Cabinet have proposed an FY 2011 budget that, although they freely admit outlays exceed receipts, can theoretically be balanced.  At war since 2001, and financially dependant upon Hospitals & Asylums after bombing the largest reparation in world history on the Spring Equinox of 2003, and being directed to international economic cooperation in 2004, and national fiscal responsibility in 2005, by 2006, the war economy had been completely decoded whereas the deficit was neatly financed with bonds issued by the SSA off-budget surplus and military budgetary funds in excess of $300 billion propped up the stock market.  The budget could be balanced if the military budget surplus and half of the social security revenue surplus was returned to the federal treasury.  Under my command surplus defense spending was called in, by locally infringing OMB Director Robert Portman (now with Squire, Sanders and Dempsey a law firm receiving TARP funds), bringing the deficit from a high of $414 billion in 2004, 3.5% of GDP, to -$318 billion in 2005, 2.5% of GDP, to -$248 billion in 2006, 1.9% of GDP, and more effectively in 2007, when the deficit was reduced to a socially responsible -$161 billion, 1.1% of GDP.  But without official acknowledgment of the source of these surplus military revenues, SSA could not be divested of their property, to achieve the common goal of peace and a balanced budget. 

 

Table 2: Overview of the President’s Budget 2005-2012 (in billions)

                                                                                                                                                                                    

 

2005

2006

2007

2008

2009

2010

2011

2012

GDP

12,638

13,399

14,078

14,441

14,259

14,624

15,299

16,203

% Change

 

6%

5.1%

2.6%

-1.3%

2.6%

4.6%

5.9%

Receipts

2,154

2,407

2,568

2,524

2,105

2,165

2,567

2,926

% GDP

17%

18%

18.2%

17.5%

14.8%

14.8%

16.8%

18.1%

% Change

 

11.7%

6.7%

-1.7%

-16.6%

2.9%

18.6%

14%

Outlays

2,472

2,655

2,729

2,983

3,518

3,721

3,834

3,755

% GDP

19.6%

19.8%

19.4%

20.7%

24.7%

25.4%

25.1%

23.2%

% Change

 

7.4%

2.8%

9.3%

17.9%

5.8%

3%

-2%

Deficit

-318

-248

-161

-459

-1,413

-1,556

-1,267

-828

% GDP

2.5%

1.9%

1.1%

3.2%

9.9%

10.6%

8.3%

5.1%

% Change

 

22%

35%

-185%

-208%

-10%

18.6%

35%

Sources: OMB Historical Table 1.1 Summary of Receipts, Outlays and Surpluses or Deficits 1780-2015 and BEA Gross Domestic Product 1929-2009

 

To cover the tracks of his relatively benign stock market speculation, the lame duck Bush administration, with the help of Fed Chairman Bernanke, concocted a scheme to sabotage the economy through a series of bailouts, in the absence of Federal Reserve landing, to allow him and other war criminals and energy tycoons to launder their proceeds in the safety and security of Federal Treasury bonds, and to create such a torturous financial and economic mess, that the subsequent administration of medically abusive Democrats would not have the standing to prosecute the war criminals from the previous administration.  After massacring Afghan civilians right after a campaign stop to the extremely corrupt hometown of the former OMB Director, Rob Portman, in July 2008.  When Obama was not responsible for his war crime and then selecting the most reprehensible torturer to be his Vice, from a list of chauvinist pigs, open to blackmail by the Secretary of Defense of his predecessor Obama committed himself to continuing the legacy of lies, deception and torture as a defense attorney for the war prosecutor.  In self defense Hospitals & Asylums ceased serving the government shortly before the Fall Equinox 2008, and without any accountability, whatsoever, the economy was punished with a parody of robbing from Peter, then CBO Director (the free market), to pay Paulson, the Treasurer (the investment bankers), within days.  Both Obama and McCain went along with the bailout propaganda, although it would undermine the budget of their administration, neither are idealists.  The $700 cost of Economic Stabilization Act of 2008 broke the camels back as investment capital fled Wall St. to the safety of Treasury securities.   The stock market immediately crashed and the shortage of investment capital caused firms to curtail employment and unemployment spread like wildfire.  The cost of the bailouts leaves a nearly exact impression on the growth of the GDP from the previous quarter. 

 

  Table 3: Gross Domestic Product Annually and Quarterly 2008-2009 (in billions)

 

 

2008 1Q

2008 2Q

2008 3Q

2008 4Q

2008

2009 1Q

2009 2Q

2009 3Q

2009 4Q

2009

GDP

14,374

14,498

14,547

14,347

14,441

14,178

14,151

14,242

14,463

14,259

 Growth

1.0

3.5

1.4

-5.4

2.6

-4.6

-0.8

2.6

6.4

-1.3

Source Bureau of Economic Analysis Gross Domestic Product 1930-2009

 

The effects of stimulus and bailout measures were counterintuitive and immediate.  Already stretched beyond capacity, the federal government did not have enough off-budget surpluses to finance more deficit spending, wherefore the cost of the bailout was foisted on the market.  The market, struggling with the $165 billion cost of the Recovery Rebates and Economic Stimulus for the American People Act of 2008 P.L. 110-185 of February 13, 2008 and the $250 billion Fannie Mae conservatorship, Housing and Economic Recovery Act (HERA) of 2008 P.L. 110-289 on July 30, 2008, that caused record number of foreclosures and a first negative credit extension in history in August of 2008, could not bear the $700 Troubled Asset Relief Program (TARP) created in the Emergency Economic Stabilization Act (EESA) HR 1424 of October 3, 2008 that immediately triggered -5.4% economic growth and millions of layoffs.  Money was being diverted from relatively high levels of employment on the stock market to zero employment in Federal Treasury bonds to very low levels of employment, per dollar, in the largest financial institutions, determined to be “too big to fail” by the Federal Reserve and Democratic and Republican (DR) party, in mockery of a century of anti-trust break-ups of large corporations into smaller, more manageable companies.  Panicking, the federal government could not learn from their mistakes. Although the naturally resilient free economy, the United States is so proud of, had nearly recovered, the Obama administration embarked on another stimulus package in the beginning of his administration, the $787 American Recovery and Reinvestment Act (ARRA) P.L. 111-5 of February 17, 2009, assuring an official recession, defined as two quarters of negative growth, triggering -4.6% economic growth in first quarter 2009, and -0.8% in the second quarter and commensurate unemployment.  Shortly thereafter the Congress made their fiscal oppressiveness clear with the passage of Children's Health Insurance Program Reauthorization Act of 2009 (Public Law 111-3) that increased the tax on child-proof hand-rolling tobacco 2,159% and the small cigars favored by the poor, 2,653% while the tax on the President’s Taylor made cigarettes went up only 159% and the cigars of investment bankers, not at all. All this while the $8 billion Attorney General Master Tobacco Settlement equal to the demands of CHIP goes un-appropriated.  The hypocrisy was enough to fuel a Tea Party to throw the 111th Congress into the harbor.  Without any more bailouts, the economy recovered in the latter half of 2009, but the term “Great Recession” sticks and the laws of the 111th Congress, which completely abolished torture statute, do not. 

 

Table 4: Revenues 2005-2012 (in billions)

 

 

2005

2006

2007

2008

2009

2010

2011

2012

Individual Income Taxes

927

1,044

1,163

1,146

915

936

1,121

1,326

Corporate Income Taxes

278

354

370

304

138

157

297

366

Social Insurance and Retirement

794

838

870

900

891

875

935

1,005

Excise Tax

73

74

65

67

62

73

74

81

Other

81

97

100

106

98

124

140

148

Total

2,154

2,407

2,568

2,524

2,105

2,165

2,567

2,926

On-Budget

1,576

1,798

1,933

1,866

1,451

1,530

1,893

2,206

Off-Budget

577

608

635

658

654

635

674

720

Source: OMB Historical Tables Table 2.1 Receipts by Source 1934-2015

 

Despite the massive bailout funding revenues plunged.  Every dollar of the bailout came out of the free market to finance the half baked ambitions of the political economy, to be the Chairman of the Federal Reserve, who it turns our had taken 2008 off, neither citing authors in contravention to the Berne Convention, nor more significantly to the financial or economic system lending to those poor bankrupt too big to fail financial institutions usually broken up and sold in these circumstances under bankruptcy and anti-trust statutes or on the free market debt sales.  Without private investment financial firms declared losses and had to curtail hiring and in worst case to fire their employees, rising unemployment cut into national income and consumption in the classic economic recession described by John Maynard Keynes in his General Theory on Employment, Money and Interest (1936).  The propaganda proliferating in the literature however directs textbook readers to deficit spending although in the economic cannon, so often attributed to being synonymous with deficit spending, in fact complains that deficit spending is unpredictable and often devastatingly counterproductive.  As the result of the bailout the fiscal crisis spread to the general economy and this in turn caused a downturn in revenues.  This financial crisis weighed particularly hard on corporate income taxes, that plunged from $304 billion in 2008 to $138 billion in 2009.  These are the longest downturns in revenues since the OMB began keeping records in 1934.  True there were downturns in 1939, a false decline after a massive doubling in 1945-1946 in 1946-1950, 1955, 1958-1959, 1971, 1983,  After a massive jump from $879 billion in 1999 individual income tax revenues jumped to $1,004 billion before plunging to $994 in 2001 and not climbing above $1 trillion until 2005 and plunging again to $900s in 2009 and 2010, total receipts were proportionate.  The war interested tax cuts and bailouts of the Bush administration have caused two of the longest drops in revenues in U.S. history.  The Obama administration needs to be careful to adhere to Pay-go policies in regards to his tax initiatives so as to maintain a profitable margin of rational capitalist self-interest to avoid falling into the deficit trap of his immediate predecessor.                  

 

Table 5: Gross Federal Debt 2005-2012 (in billions)

 

 

2005

2006

2007

2008

2009

2010

2011

2012

Gross Federal Debt

7,905

8,451

8,951

9,986

11,876

13,787

15,144

16,336

% GDP

63.5%

63.9%

64.4%

69.2%

83.4%

94.3%

99.0%

100.8%

Change

546

500

1,035

1,890

1,911

1,357

1,192

% Change

 

6.9%

5.9%

11.6%

18.9%

16.1%

9.8%

7.9%

Federal Reserve Debt

736

769

780

490

769

% GDP

5.9%

5.8%

5.6%

3.4%

5.4%

Change

 

33

11

-290

279

% Change

 

4.5%

1.4%

-37%

57%

Source: OMB Historical Table 7.1 Federal Debt at End of Year 1940-2015

 

The debt to individual, corporate, State and National purchasers of T-bonds is quite real, and the federal government has no intention of defaulting on their debts, in fact, one of the major impulses causing the crisis was an irrational importance, honor and panic tied to credit and the particularly stupid and unjustified debtor way of life.  Since 2000, under President Bush, the level of Gross Federal Debt has risen from $5.6 trillion, 57% of GDP, to $9.9 trillion, 69% of GDP in 2008.  Under Obama and the bail outs the level of debt has risen alarmingly and threatens to exceed 100% of the GDP by 2012.  This is the largest debt incurred in real terms and second only, as a percentage of GDP, to the debt incurred to win World War II that rose to 122% of the GDP.  The situation today is however much difference, the United States is fighting neither a real war, nor a real economic crisis, such as the Great Depression, that deficit spending could theoretically alleviate.  What occurred is that in his final, lame duck, year in office President Bush with the assistance of Federal Reserve Chairman Bernanke concocted a scheme to sabotage the economy and launder his war chest.  In 2008, while publicly illiterate, without any citations in the Federal Reserve newsletter, and lamenting the dastardly state of the credit industry in the free press, the Federal Reserve secretly called in $290 billion more loans than they made, devastating the financial industry that normally benefits from these loans, that went negative for one month in August, whereupon an enormous $700 billion Congressionally sponsored TARP bailout was called for, ostensibly at the taxpayers expense, but actually at the expense of investors.  While this great reduction in loans in 2008 might be used as a defense against allegation of conflict of interest in the procurement of Federal Reserve loans, it in fact serves to convict Chairman Bernanke of the market manipulation, the federal reserve procurement and non-procurement, that gave rise not only to the financial crisis, but to the propaganda and bailout that gave rise to the economic crisis, wherefore his loyalty to the previous President is in question and there is sufficient cause for his removal from office.  It is the first time since 1949 the Federal Reserve’s loan portfolio went down in value, and although they have sabotaged the economy a number of times, during the recessions of 1920-21 and 1980-82, never so dramatically, or with such ill effect, by means of withholding their pride and joy, lending.

 

Table 6: Status of the Troubled Asset Relief Program as December 31, 2009 (in billions)

 

 

Authorization

Expenditure

Unspent

Repayments

Dividends

Unpaid

Bankrupt

Proceeds 12/2009

Annual Return

TARP

698.8

549.4

149.4

165.2

16.9

140.7

2.6

321.5

46%

Source: Special Inspector General of the TARP. Quarterly Report to Congress. January 10, 2010

 

The termination of the Emergency Economic Stabilization Act (EESA) HR 1424 of October 3, 2008, that created the Troubled Asset Relief Program (TARP) and provides the Secretary of the Treasury with various authorities to restore liquidity to the United States financial system and stimulate lending, is a priority.  As of December 31, 2009, Treasury had announced programs involving potential spending of $549.4 billion of the $698.8 billion maximum available for the purchase of troubled assets under TARP as authorized by Congress in EESA. Of this amount, Treasury had planned TARP expenditures of approximately $500.1 billion through the 10 implemented programs to provide support for U.S. financial institutions, the automobile industry, and homeowners.  As of December 31, 2009, the TARP program had made gross purchases totaling more than $450 billion. After accounting for the roughly $150 billion repaid, the TARP program has net holdings of approximately $300 billion. As of December 31, 2009, there was $140.7 million in outstanding unpaid CPP dividends. Finally, three TARP recipients that received a combined $2.6 billion in TARP funds have filed for bankruptcy.  TARP ends on October 3, 2010. The Treasury reports that usage in 2009 was far lower than expected and at the end of TARP, by the beginning of FY 2011, all proceeds and unspent funds, an estimated $400-600 billion should be returned to the General Fund of the Treasury to help offset the deficit. Congress is highly encouraged to pass legislation so that all repayments, interest and dividends on TARP loans are immediately returned to the General Fund to offset the deficit.  Recent estimates by the Treasury put the expected fiscal cost of the TARP program at around $120 billion. The president proposes to assess a 0.15 percent fee on the liabilities of all large financial firms operating in the United States, a “too big to fail tax” similar to deposit insurance.

 

Table 7: State Budget Shortfalls FY2009 (in millions)

 

 

Total State Budget Gap

FY2009

Total Gap as % of FY General Fund

Unemployment Rate December 2009

Recovery Act Allocations High Est.

United States

$93,000

14.2%

10.0%

$338,590

Alabama

$1,800

22.2%

11.0%

$4,010

Alaska

$360

6.8%

8.8%

$1,548

Arizona

$3,500

34.5%

9.1%

$5,910

Arkansas

$107

2.4%

7.7%

$2,552

California

$35,900

35.5%

12.4%

$35,400

Colorado

$604

7.7%

7.5%

$4,140

Connecticut

$1,500

8.5%

8.9%

$3,702

Delaware

$43

12.2%

9.0%

$977

Florida

$5,700

22.2%

11.8%

$15,137

Georgia

$2,400

11.5%

10.3%

$8,076

Hawaii

$232

4.0%

6.9%

$1,520

Idaho

$131

7.4%

9.1%

$1,775

Illinois

$3,800

13.4%

11.1%

$12,518

Indiana

$763

5.8%

9.9%

$6,690

Iowa

$484

7.6%

6.6%

$2,674

Kansas

$185

2.9%

6.6%

$2,227

Kentucky

$722

7.8%

10.7%

$3,767

Louisiana

$341

3.7%

7.5%

$3,777

Maine

$265

8.6%

8.3%

$1,521

Maryland

$1,500

10.0%

7.5%

$5,119

Massachusetts

$3,600

12.7%

9.4%

$8,595

Michigan

$672

2.9%

14.6%

$10,908

Minnesota

$1,400

7.9%

7.4%

$5,148

Mississippi

$265

5.2%

10.6%

$2,711

Missouri

$342

3.8%

9.6%

$5,195

Montana

NA

NA

6.7%

$1,472

Nebraska

NA

NA

4.7%

$1,443

Nevada

$1,400

19.6%

13.0%

$2,713

New Hampshire

$250

8.0%

7.0%

$1,490

New Jersey

$4,600

14.2%

10.1%

$9,115

New Mexico

$454

7.5%

8.3%

$2,583

New York

$6,400

11.7%

9.0%

$23,872

North Carolina

$800

3.7%

11.2%

$8,321

North Dakota

NA

NA

4.4%

$867

Ohio

$1,900

6.8%

10.9%

$10,396

Oklahoma

$114

1.7%

6.6%

$3,270

Oregon

$42

6.6%

11.0%

$3,983

Pennsylvania

$2,300

8.1%

8.9%

$12,712

Rhode Island

$802

24.5%

12.9%

$1,360

South Carolina

$804

11.7%

12.6%

$8,321

South Dakota

$27

2.2%

4.7%

$1,080

Tennessee

$1,400

12.0%

10.9%

$5,746

Texas

NA

NA

8.3%

$20,110

Utah

$620

10.4%

6.7%

$2,022

Vermont

$125

10.3%

6.9%

$840

Virginia

$2,300

13.8%

6.9%

$5,666

Washington

$509

3.4%

9.5%

$7,576

West Virginia

NA

NA

9.1%

$1,937

Wisconsin

$998

7.1%

8.7%

$5,493

Wyoming

NA

NA

7.5%

$658

Source: Kaiser Family Foundation. State Health Facts. January 29, 2009; BLS Regional and State Employment and Unemployment Summary January 10, 2010; Recovery.gov Agency Report U.S. Totals. February 16, 2010

 

III. Operation

 

The American Recovery and Reinvestment Act of 2009 P.L. 111-5 of February 17, 2009 was not voted for by a single Republican in the House and only three in the Senate.  The Act includes federal tax cuts, expansion of unemployment benefits and other social welfare provisions, and domestic spending in education, health care, and infrastructure, including the energy sector.  The Congressional Budget Office (CBO) estimated that enacting the bill would increase federal budget deficits by $185 billion over the remaining months of fiscal year 2009, by $399 billion in 2010, by $134 billion in 2011, and by $787 billion over the 2009-2019 period, only $69 billion between 2012-2019.  The $787 billion is distributed as follows, $288 billion in tax cuts, $275 billion in contracts, grants and loans, and $224 billion in entitlements.  As of February 12, 2010 only $92.8 billion, 32.2%, had been paid in tax cuts, $86.9 billion, 31.6%, in contracts, grants and loans and $109 billion, 48.6%, in entitlements.  Despite the massive funding, mostly to stimulate employment, over 2009, jobless rates increased in all 50 states and the District of Columbia. The national unemployment rate was 10.0 percent in December 2009 but was 2.6 percentage points higher than a year earlier.  The 600,000 jobs created under the Recovery Act do not compensate for the 7 million lost.  The government is simply not more efficient at allocating resources than the free market, from whence the funds were taken.  There is however no doubt that the States needed the funds.  The Act would have made more sense, and been less controversial, if it was indeed grants, loans and contracts to States to offset their budget deficits.  The great mystery of the ARRA, besides where are the funds, and why don’t they just go to the States to offset their budget deficit’s is why does its cost not go away and leave the budget in balance?  This is the extraordinarily perplexing question that this work treats upon.  How do we account for the stimulus spending?  And why doesn’t the budget balance in 2011 when EESA profits should be rolling into the General Fund?

 

Table 8: Presidential Outlays by Agency, and Annual % Change 2002, 2005-2012 (in millions)

 

 

2002

2005

2006

2007

2008

2009

2010

2011

2012

Legislative Branch

3,187

3,984

4,101

4,294

4,410

4,702

5,423

5,579

5,292

% Change

 

2.9%

4.7%

2.7%

6.6%

15.3%

2.8%

-5.1%

The Judiciary

4,828

5,547

5,823

6,006

6,347

6,645

7,159

7,512

7,351

% Change

 

4.9%

3.1%

5.7%

4.7%

7.7%

4.9%

-2.1%

Agriculture

68,622

85,308

93,533

84,427

90,795

114,440

142,016

145,748

137,917

% Change

 

9.6%

-9.7%

7.5%

26%

24%

2.6%

-5.4%

Commerce

5,312

6,147

6,372

6,475

7,721

10,718

16,714

11,500

10,430

% Change

 

3.6%

1.6%

19.2%

38.8%

55.9%

-31.9%

-9.3%

Defense – Military

331,845

474,354

499,344

528,578

594,662

636,775

692,031

721,285

653,424

% Change

 

5.3%

5.9%

12.5%

7.1%

8.7%

4.2%

-9.4

Defense - Civil

35,136

43,481

44,435

47,112

45,785

57,276

54,317

55,719

56,457

% Change

 

2.2%

6%

-2.8%

25%

-5.1%

2.6%

1.3%

Defense -Total

366,981

517,835

543,779

575,690

640,447

694,051

746,348

777,004

709,881

% Change

 

5%

5.9%

11.2%

8.4%

7.5%

4.1%

-8.6%

Education

46,474

72,858

93,368

66,372

65,963

53,389

106,944

94,261

85,178

% Change

 

28.2%

-28.9%

-0.6%

-19.1%

100.3%

-11.9%

-9.6%

Energy

17,669

21,271

19,649

20,116

21,400

23,683

38,278

44,390

34,792

% Change

 

-7.6%

2.4%

6.4%

10.7%

61.6%

15.9%

-21.6%

Health and Human Services

465,326

581,390

614,274

671,982

700,442

796,267

868,762

934,426

911,291

% Change

 

5.7%

9.4%

4.2%

13.7%

9.1%

7.6%

-2.5%

Homeland Security

17,583

38,711

69,032

39,172

40,684

51,725

52,903

54,723

46,847

% Change

 

78.3%

-43.6%

3.9%

27.1%

2.3%

3.4%

-14.4%

Housing and Urban Development

31,788

42,453

42,435

45,561

49,088

61,019

62,518

53,082

48,153

% Change

 

0%

7.4%

7.7%

24.3%

2.5%

-15.1%

-9.3%

Interior

9,739

9,292

9,037

10,469

9,817

11,775

12,042

14,045

12,803

% Change

 

-2.7%

15.8%

-6.2%

19.9%

2.3%

16.6%

-8.8%

Justice

21,178

22,361

23,324

23,349

26,545

27,711

30,333

31,924

33,700

% Change

 

4.3%

0.1%

13.7%

4.4%

9.5%

5.2%

5.6%

Labor

64,686

46,949

43,138

47,544

58,838

138,157

209,265

116,902

90,790

% Change

 

-8.1%

10.2%

23.8%

134.8%

51.5%

-44.1%

22.3%

State

9,327

12,748

12,953

13,737

17,493

21,427

25,726

28,754

30,065

% Change

 

1.6%

6.1%

27.3%

22.5%

20.1%

11.8%

4.6%

Transportation

56,252

56,596

60,139

61,697

64,944

73,004

90,944

86,665

82,817

% Change

 

6.3%

2.6%

5.3%

12.4%

24.6%

-4.7%

-4.4%

Treasury

371,187

410,240

464,675

490,589

548,797

701,775

502,980

593,550

685,279

% Change

 

13.3%

5.6%

11.9%

27.9%

-28.3%

18.0%

15.5%

Veterans Affairs

50,686

69,815

69,777

72,792

84,749

95,457

124,565

124,215

122,369

% Change

 

-0.005%

4.3%

16.4%

12.6%

30.5%

0.3%

-1.5%

Corps of Engineers

4,727

4,719

6,944