Balancing the Budget – The Hellinois Way

Guest post by Nick Primrose Twitter: @npwrites

As Illinois gets closer and closer to a vote on raising the income tax 50%, I can’t help but shake my head when I hear Governor Quinn, Speaker Mike Madigan, and Cook County President Todd Stroger use draconian budget tactics to scare citizens into supporting the tax hike. Much like what you will hear from Congress, the only way some politicians see to surviving these economic times is by raising revenue (i.e. raising taxes, higher fees/fines, and adopting new ‘sin’ taxes). Whenever you question this thought the immediate response is what we see today in Illinois, ‘doomsday’ budgets and draconian cuts.

Todd Stroger said the 1.75% county home-rule sales tax was responsible for keeping sick people in hospital beds and criminals off the streets, anything less would ruin this harmony. Governor Quinn released his ‘doomsday’ budget on May 18^th citing massive teacher cuts, reducing funding for public transportation, and cutting countless other government services. All of these scare tactics seem to work too well, and most likely we’ll see the newly increased Cook County sales tax live on and a 50% income tax hike in Illinois.

I’m here to tell you that this is nothing but a smart political move on behalf of the Democrats, the one party that has consistently utilized this tool. In reality raising taxes only furthers the agendas of Stroger and Quinn by giving them more money to spend on non-essential government services.

THE DEVIL IS IN THE DETAILS

How do I know this? I’ve read through the Illinois budgets from fiscal year 2008, 2009, and proposed 2010. In every one of those budgets there is countless amounts of wasteful spending, increased spending, and non-essential spending that could be cut to meet revenue. However year after year politicians in Chicago, Springfield, and Washington are allowed to spend because the typical citizen is oblivious to where the money is going. This is a perfect reason for further transparency in the budget process from Federal to local levels of government.

Chicago’s own Barack Obama is/was trying to create a new level of transparency by putting stimulus spending online, but he seems to have fallen short on that effort. Many state and local governments have seen savings by adopting transparency and accountability sites. Kansas, Texas, and Missouri have all created online databases for everyone to search spending. DuPage County in Illinois has seen success from their database and Cook County looks to adopt a similar check register soon.

When spending habits, checks written, and funds transferred are open to the public, then politicians start to reign in their spending. Politicians are held accountable for every dime that is spent whether it is $50 at an office supply store or thousands of dollars on travel. Last week, HB35 passed both houses to create an accountability portal in Illinois. This is a great step towards allowing citizens to act as a spending watch-dog in the state – but it is only the first step of many more towards fixing the corruption and out-of-control spending in Illinois and the Federal government.

Update: 5/19/09 9:15 AM See what Laffer and Moore say about Quinn in the Wall Street Journal

Vampire Economics

Obama has enough deficit spending to bring life to the dead.

At the time of this writing, the current federal public debt stands somewhere north of $11.2 Trillion dollars, yes, with a “T”. In February of 2009, the Congress established a debt limit of $12.104 Trillion, yes, with a “T”. According to the numbers released by the White House today, the budget deficit will top $1.8 Trillion (yes, with a “T”) this fiscal year alone, and will require Congress to raise the official federal public debt limit.

Gross domestic product (GDP) includes the market value of all final goods and services in a year, and is a basic measure of economic performance of the US. GDP is currently estimated to be somewhere around $14.5 Trillion for 2009, but that number may be somewhat lower as a result of the current recession.

In the very near future, the amount of the public debt, and the service on the interest of the debt will soon equal the total GDP of the US.

Using data from the non-partisan Congressional Budget Office, the General Accounting Office and analyses from the Wall Street Journal, we can investigate the obligated expenditures and guarantees of the US government. If we add together every program that has been obligated by the Federal Government, the taxpayer liability will be about $15 Trillion, yes, with a “T”. This enormous number is equal to one out of every five dollars spent on goods and services IN THE ENTIRE WORLD.

Here’s a quick breakdown on the heavy hitters of what you, the taxpayer are on the hook for from your elected officials:

$3.5 Trillion (yes, with a “T”) of expenditures, which includes:

$168 Billion Bush stimulus

$787 Billion Obama stimulus

$366 Billion Mortgage backed securities insurance

$300 Billion Aid to mortgage borrowers

$290 Billion CITI guarantees

$173 Billion AIG guarantees

$ 29 Billion Bear Sterns bailout

$ 15 Billion GM bailout

$700 Billion in TARP guarantees (of which $600 billion distributed)

$7 Trillion (yes, with a “T”) in Federal Reserve guarantees

The following guarantees have been established, but it is not anticipated that any taxpayer losses will occur, but who can guarantee that?

$2.8 Trillion (yes, with a “T”) money market guarantees

$300 Billion Corporate financing guarantees (e.g. GMAC, Chrysler Finance)

Expenditures and guarantees total roughly $15 Trillion, yes, with a “T”. These are the commitments we made ONLY during the past 12 months. Remember, that while George W. Bush participated this profligate, irresponsible spending, all of these commitments were made after the Democrats assumed complete control of both houses of Congress in the 2006 election.

We have seen a flattening of some of the indicators associated with the current recession. The free-fall in the markets is temporarily reversed. The freefall in new unemployment claims is slowing.

Is there any doubt that the recession has slowed when you look at how much money has been thrown at this problem? With this kind of money you know there will be waste. With this kind of money you know there is spending on unnecessary programs. This is not Voodoo Economics, it is Vampire Economics. With this kind of money the dead can be resurrected. But are we going to kill our children under the weight of debt?

Contact: frank.canzolino@gmail.com