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Tax Cuts And Spending Cuts

With the passage of the Tax Cuts and Jobs Act of 2017, there is an addition $1 Trillion projected to be added to the deficit over the next 10 years.  However, this increase in the deficit should be offset some by a projected increase in economic growth due to the tax breaks.  So, now that the revenue side of the budget has an 8 to 10-year decrease because of the bill, any financial consultant with their head on straight would tell you that there needs to be an equal reduction on the expenses side.  This, however, isn’t how the government seems to work.  Every year since 1974, the budget deficit has averaged at a level of -3.1% according to the Congressional Budget Office.

To put this into perspective, let’s bring it down to a household level.  Let’s imagine that you bring home $50,000 per year (to use an even number).  If your household were using the US Government model, you would spend about $1,550 more each year than you actually bring home.  That is money going onto a credit card, a bank loan or some other form of consumer debt.  Extrapolating this over a period of 39 years (’74-’13), your household would have spent $60,430 more than it made in salary, and that isn’t including the interest that is being accrued on the balance every month.

So, what is the answer?  Cut spending, of course.  But that is where the problem comes in.  When the US Government spends money on something 1 time, the expectation is that they would spend money on that same line item indefinitely.  If you increase a handout to the citizens, it’s almost impossible to rollback those handouts because of the political fallout that would ensue.  Don’t believe me?  Go down to the Social Security office and tell everyone in line that their unemployment checks are about to be cut off and report back on how well that goes.

While cutting spending isn’t very popular, there are many areas that the US Government could cut or reduce spending where the people wouldn’t necessarily “feel” the cut, in fact, some of these cuts don’t even affect the American people at all.  Let’s look at a few areas that the US could reduce spending while continuing to help real people with real needs.

Tomato Research.

In 2017, the US government spent $1.5 Million to fund research on how to make the tomato taste better.  Now, don’t get me wrong here… who doesn’t want a better tasting tomato?  But to the tune of 1.5 million taxpayer funded dollars?  Someone call up John Kerry and see if his wife’s family would be willing to pitch in a couple mil to help their own cause.

Foreign Aid.

This past year, the United States gave away $50.1 billion in aid to other countries.  Former presidents have tried to downplay this number as being “only 1% of our total budget”, but this argument falls short because that is more than 7.5% of the total budget deficit for 2017.  If we start dismissing the “smaller” parts of the budget, then it will never balance.  Anyone who has ever had to do a personal budget knows that when you find yourself $30 in the hole on your monthly budget, you usually chip away small amounts from several places, rather than a lump from one spot.  It hurts less that way.

Now, I know that we cannot eliminate all of that foreign aid for various reasons, but there are plenty of places we can cut back.  In the late 2000’s, we were sending $4.5 billion per year to Pakistan while they continued to mock us with their nuclear program.  We gave Iran $3.4 million this past year and look what they have been doing lately to their own people.

In the days of President Bill Clinton and a balanced budget, we were only spending around $20 Billion in foreign aid.  Those numbers grew quickly in the early 2000’s, due mostly to war, but then continued throughout the 2010’s.  Cutting back foreign aid would be a huge step to righting the sinking ship.

Big Sugar.

The US subsidizes the sugar system in the country to the tune of $1.2 billion dollars per year.  This subsidy actually costs you double because part of the subsidy is government regulations that set a minimum price for sugar in the US, which is about double the average price worldwide.

Improper spending in Medicare. 

The Center for Medicare and Medicaid Services (CMS) released a report in 2016 that showed 11 percent of payments made were incorrect or improper.  That comes out to $4.1 billion dollars in improper payments.

Social Security.

Hold on to your britches for just a second.  Not trying to eliminate it, but revise it.  The current system allows older adults to being drawing (reduced) social security checks at 62 under the early retirement program.  If you wait til 65, you can draw full social security (This will eventually become 67 years of age through a revamp of the system already in progress).  The problem with social security is that when it was implemented in 1935, the average life expectancy of a US adult was 59.1 years of age.  Today, it is 78.8 years of age.

Raising the age of social security eligibility to 70 would save $200 million over the first year and a whopping $7.6 billion over a 5-year period.  It’s time for American’s to work longer and be more responsible for their own retirement funds.

Afghanistan Highways.

Last year we spent $255 billion dollars on building highways in Afghanistan.  I get that they are a war tattered country, but $255 billion is more than 1/3 of the total budget deficit.

Sesame Street.

Yep, you read that right.  We spent $14.8 million to finance international versions of Sesame Street.  14.8 million isn’t that much though right?  Yes. It is way too much.

Walmart Cashiers… in Mexico.

We spent $15 million to train Walmart cashiers in Mexico.  I have 2 issues with this. First and foremost, it’s Mexico.  Second, it’s Walmart.  Isn’t everyone going to self-checkouts these days anyway?

Kenyan Farmers.

And finally, while small in decimal places, this one is a real doozie.  The US Government spent nearly $100,000 to teach Kenyan farmers how to use Facebook.  What the what?  My budget would have a great big ole’ “X” through that little program right there.

 

So, with these 9 examples from a little bit of digging, we have been able to successful eliminate about $290,531,400,000 or 290 Billion dollars in just 1 year.  Extrapolating that out to 10 years (including a greater savings in the Social Security field), we would save a total of $2.9 trillion. So, we just took a 1 trillion dollar addition to the deficit over 10 years due to the tax cuts and successfully turned it around to an extra 1.9 trillion dollar savings over the next 10 years.  And there is plenty more where that came from.

This isn’t rocket science, it’s just simple math.  But it means that some of the extra fat needs to be trimmed off.  None of the proposals above would put any American into poverty, nor would it wouldn’t keep a child in the slums of Detroit from eating dinner.  All it takes is some effort, bipartisanship discussions and hard work on the part of those we elected to run our country.  Rather than talk about who used foul language in a meeting, or who tried to mislead people with medical records, let’s put Washington to work to get rid of all this debt.  Because as you know, the borrower is slave to the lender.

The Cannabis News Network

On December 31, 2017, CNN provided its annual New Year’s Eve coverage from Times Square and around the country. Their coverage included Randi Kaye reporting from Colorado, but there was something different about her live on-site reports. Rather than showing people square dancing in Nashville, or in costume parties in New Orleans, or pool partying in Miami, we saw Randi riding on a “Cannibus” where participants ride around and smoke their joints. We saw her at a “Puff, Pass and Paint” event where, as the event name suggests, participants puff on a joint, pass it to their neighbor, all while painting on a canvas.

So, what’s the big deal? She was in a state where it is legal to possess, smoke and distribute the plant. Colorado joins 7 other states (Alaska, California, Maine, Massachusetts, Nevada, Oregon and Washington) that have legalized the recreational use of marijuana. Interestingly enough, marijuana is still classified as a Schedule 1 drug by the federal government.

Schedule 1 drugs are drugs that have been labeled as such by the US Controlled Substance Act from 1970. Along with marijuana, this includes heroin, LSD, ecstasy, bath salts, peyote and many others. To be classified as a schedule 1 drug, it must meet 3 different criteria:

1. The drug or other substance has a high potential for abuse.
2. The drug or other substance has no currently accepted medical treatment use in the U.S.
3. There is a lack of accepted safety for use of the drug or substance under medical supervision.

It is definitely debatable as to whether marijuana should be included as a Schedule 1 drug because it has been found to have “medical treatment use in the U.S.”, but federal law still lists it under Schedule 1. The only way for it to be removed from the Schedule 1 listing, a petition must be filed with the DEA (Drug Enforcement Agency). Many petitions have been filed since 1972, but as recently as August 2016, the DEA denied the petition to reclassify marijuana from the Schedule 1 list.

“Right now, the science doesn’t support it,” Chuck Rosenberg, acting administrator of the Drug Enforcement Administration, citing a lengthy analysis conducted by the Food and Drug Administration. He said the decision “is tethered to the science.”

There is currently no immediate end to the classification of marijuana as a Schedule 1 drug, therefore, it will still be an illegal substance according to federal law.

Interestingly enough, it has been reported yesterday that the Department of Justice will be modifying the current DOJ policy regarding marijuana. Currently, while it is an illegal substance, it has not been prosecuted by the federal government as such. It appears that with the coming ruling, the DOJ will let US Attorneys in each state make the determination if a federal suit will be filed against offenders.

So, it appears that the Cannabis News Network (CNN) may have started a little bit of controversy that goes all the way up to the top of government. Only time will tell what the fate of Cannabis will be, as more and more states move to a form of legalization, whether it is for medical or recreational use. One thing is for sure, the DEA doesn’t have any intention of reclassifying marijuana from the Schedule 1 designation anytime soon.

Comey Fired

Let’s talk about Comey. If you have been in a box for the last 24 hours or so, you may not have heard that the FBI director, James Comey, has received the loudest “You’re Fired” from President Trump. In a short letter to Director Comey, President Trump stated that he was following the recommendation of the Justice Department to terminate his tenure at the nation’s top law enforcement post.

The announcement was followed with all kinds of reactions from the political world. Some praised the action as a long time coming, while others saw it as a cover up for current FBI investigations.

From what I have seen, the responses from politicians and the media to the ouster, depends largely upon what side of the aisle that your political ideations lay. Most Republicans and the right leaning media have praised the move in the last 24 hours. Most Democrats and the left leaning media have condemned it. The interesting part of all of this is that at one point or another, both groups have been upset with how the FBI has conducted itself over the past year or so.

It was only 6 months ago that the Democrats were up in arms with Director Comey as he sent a letter to Congress announcing that the FBI was reopening it’s investigation into the email scandal that has surrounded Hillary Clinton. Democrats were furious at this announcement because it hurt the candidacy of Secretary Clinton. Mrs. Clinton herself has pointed the finger at the FBI and the Russians as the reason she lost (never mind the fact that she ran the worst presidential campaign in modern history).

Rewind 10 months from today and you will find the Republicans angry with Director Comey as he admitted that Secretary Clinton had mishandled classified information on her private email server, but neglected to recommend charges because he didn’t feel like she intended to violate the law. Republicans argued that the law never allows for intent to be part of the process.

So, over the last year, both Democrat and Republicans have been upset with the FBI Director and many of them have called for his removal from office, at least until the present day, when it actually happened. The Democrats are up in arms now with accusations against the President that he fired Director Comey, because he wants to cover up any connection his campaign had with Russia. The lack of any proof to this allegation notwithstanding, President Trump would have to fire a multitude of FBI agents to have any chance at covering up a collusion or conspiracy.

The FBI Director may have been involved in investigations relating to Russian hacking and election tampering, but he was by no means the only person involved. There would be several layers of agents who would have been leading the investigation, compiling reports and presenting them to the Director. Removing and replacing the Director would not tamper with any ongoing investigations.

What this all boils down to is that a moderately unpopular FBI Director has been relieved from his duties and will be replaced by someone of the Presidents choosing. The next question is “who will that replacement be?” Many have weighed in on the issue with who they think will be the favorite, but a White House spokesperson said today that the replacement will be non-partisan, in hopes to bring back some integrity to the Bureau.

Whoever the new FBI Director ends up being, hopefully they can settle parts of the great divide that continues to separate our nation between the left and right.

 

Jason – Three Patriots