Subjective Invective v.3

source: OMB Table 1.1—Summary of Receipts, Outlays, and Surpluses or Deficits (-): 1789–2016

The federal budget debate and potential shut down have been in the news lately. I started reading the overview of the budget from the President's Office of Management and Budget and found the expected double talk and misdirection.

The Budget includes more than $1 trillion in deficit reduction – two-thirds of it from cuts -- and puts the nation on a path toward fiscal sustainability

If you read a little further, you find out that the the $1 trillion deficit reduction is projected over a 10 year period. The President is claiming that a 6.6% reduction in the current year $1.5 trillion deficit is sustainable. It's not. The OMB makes optimistic projections for the next 5 years of job and wage growth and assumes no new recession will appear. Even in that case, the deficit never gets smaller than $500 billion.

Five-year non-security discretionary spending freeze will reduce the deficit by over $400 billion over the next decade and bring this spending to the lowest level since President Eisenhower sat in the Oval Office.

Non-security discretionary spending is less than 15% of the budget, and the part that is not growing. What is growing automatically every year are Social Security, Medicare, and Medicaid, accounting for over half of the budget. The other large outlay, the MIC, is also deemed untouchable. To mention Eisenhower in the same sentence as making defense spending off limits is the height of hypocrisy, like putting Jackson on the $20 Federal Reserve Note.

Pays for a three-year patch to prevent an increase in taxes on middle-class families through the Alternative Minimum Tax (AMT) by limiting the rate at which high-income earners can itemize tax deductions.

Why does Congress insist on patching the AMT every year? Here is my permanent fix: index the AMT amounts to the CPI and forget about it. Inflation is why the AMT is hitting so much of the middle class now. Full disclosure: I had to pay about $800 extra in AMT this year, the first year I ever had to pay it. The only reason I can imagine why they don't want a permanent fix is because they plan to stop patching it at some point when it applies to everyone and just becomes the base line for higher taxes.

The whole thing is further evidence that the US is politically incapable of fixing the budget and deficit problems that face the country.