What do all the income taxes collected (as opposed to FICA, etc.) get spent on?
One organization has a handy pie chart which summarizes it nicely for the last Fuiscal Year, 2009:
Current military” includes Dept. of Defense ($653 billion), the military portion from other departments ($150 billion), and an additional $162 billion to supplement the Budget’s misleading and vast underestimate of only $38 billion for the “war on terror.” “Past military” represents veterans’ benefits plus 80% of the interest on the debt.*
These figures are from an analysis of detailed tables in the “Analytical Perspectives” book of the Budget of the United States Government, Fiscal Year 2009. The figures are federal funds, which do not include trust funds — such as Social Security — that are raised and spent separately from income taxes. What you pay (or don’t pay) by April 15, 2008, goes to the federal funds portion of the budget. The government practice of combining trust and federal funds began during the Vietnam War, thus making the human needs portion of the budget seem larger and the military portion smaller.
*Analysts differ on how much of the debt stems from the military; other groups estimate 50% to 60%. We use 80% because we believe if there had been no military spending most (if not all) of the national debt would have been eliminated.
However you slice it, your income taxes fund more defense spending than the next 15 countries in the world combined (and yes, that includes China and Russia). Which means of course that as a Responsible Republican you can only propose that we must extend the Bush tax cuts, cut off unemployment benefits and raise the the retirement age to 70 for Social Security.
A few of them also want to repeal Health Care Reform.
What would be the effect on the deficit if the Republicans get their way on repealing the Bush tax cuts? Well we know that in 2005 alone those tax cuts helped add add $539 BILLION to the deficit. Here’s what the CBO said at the time regarding the Bush tax cuts:
In 2005, the cost of tax cuts enacted over the past four years will be over three times the cost of all domestic program increases enacted over this period.
The new CBO data show that changes in law enacted since January 2001 increased the deficit by $539 billion in 2005. In the absence of such legislation, the nation would have a surplus this year. Tax cuts account for nearly half — 48 percent — of this $539 billion in increased costs. [1] Increases in program spending make up the other 52 percent and have been primarily concentrated in defense, homeland security, and international affairs.
Got that? By 2005, Bush’s tax cuts and uncreased defense spending (much of it for his unnecessary war in Iraq) was responsible for turning what would have been a Federal Budget surplus into a $539 Billion deficit. Now the Republicans want to make those tax cuts which are about to expire permanent.
And here’s what the Committee for a Responsible Federal Budget are saying about the cost of extending the Bush tax cuts. Between the years 2011 and 2018, extending the the Bush tax cuts of 2001 and 2003 would add $3.28 TRILLION DOLLARS to the Federal deficit. That is simply a staggering amount of money that republicans are willing to forego while voting for more Defense spending and refusing to extend unemployment benefits.
Yet, Republican Senator John Kyl said that deficits be damned, these tax cuts are too important to not extend them regardless of their effect on the deficit. Senator Minority Leader Mitch McConnell (R) backed Kyl up by making the statement that cutting taxes increases tax revenues, despite all the evidence in the Bush years that they had no such effect.
Rachel Maddow last night pointed out that even George Bush’s economic team never made the claim that tax cuts increase tax revenues. Indeed, here is what Greg Mankiw, Chair of the Bush Administration’s Council on Economic Advisers recently stated regarding the revenue generating fantasy of the Bush tax cuts:
How about George W. Bush’s CEA chair, Greg Mankiw, who used the term “charlatans and cranks” for people who believed that “broad-based income tax cuts would have such large supply-side effects that the tax cuts would raise tax revenue.” He continued: “I did not find such a claim credible, based on the available evidence. I never have, and I still don’t.”
Again, Professor Mankiw is a conservative economist, not some “leftist Obama worshiper” (as those who read his blog well know). Yet even he acknowledges that to claim Large tax cuts are the way to increase Federal revenue and reduce the deficit are, in his own words, “charlatans and cranks.” In franker terms he is calling these tax cut favoring Republicans either liars or crazy people, depending on whether they really believe what they claim they believe.
The claims that tax cuts are beneficial and the more tax cuts the better, especially for the wealthiest among us, have always been based on the belief that decreasing tax cuts for wealthy people will create job growth. The theory goes that rich people and corporations with extra cash in their pockets will invest in industries that fuel job growth in America. Unfortunately, the record does not support that theory or their ideological (or selfish) fervor in promoting such policies:
Well over the eight years of the Bush Presidency, when the largest tax cuts in modern times were passed by Congress because Bush demanded them, 3 million jobs were created, not enough to keep up with the growth of the US work force during those years. Even the Wall Street Journal, hardly a Socialist hotbed of Obamabots, found this to be, as the title to this article states rather bluntly:
“Bush On Jobs: The Worst Track Record On Record”
The Bush administration created about three million jobs (net) over its eight years, a fraction of the 23 million jobs created under President Bill Clinton’s administration and only slightly better than President George H.W. Bush did in his four years in office.
Here’s how they arrive at those figures:
Here’s a look at job creation under each president since the Labor Department started keeping payroll records in 1939. The counts are based on total payrolls between the start of the month the president took office (using the final payroll count for the end of the prior December) and his final December in office.
Because the size of the economy and labor force varies, we also calculate in percentage terms how much the total payroll count expanded under each president. The current President Bush, once taking account how long he’s been in office, shows the worst track record for job creation since the government began keeping records.
Yet this is what the Republicans are running on in their bid to retake control of Congress: More Tax Cuts fro the rich and corporations, more Defense spending (even for items the Pentagon doesn’t want), and more sacrifice for everyone else, i.e., anyone who doesn’t make over $200,000 per year, and major corporations who can evade taxes.
Oh and cutting the deficit, of course. Just don;t ask them how they plan to do that if you want a serious answer.
