Article 1 Section 8

1
Article 1 - Section 8

• Congress has the power to lay and collect any
  taxes to pay debts, provide for the common
  defense, and general welfare of the United
  States. Amendment 16 in 1913 ended legal debate
  on income tax.
• Article II makes president only cop to enforce
  law. Congress, by Article I law making power and
  its necessary proper clause power - passed
  laws making tax avoidance a crime, and created
  the IRS to help President collect taxes
  prosecute criminals.
• If not mandatory, how could we pay for services
  demanded by people?
• Consider Hym Solomon in Revolutionary War. Who
  was he?

2
Why pay taxes?

• While we complain about taxes
• We pay them is because legislative majorities,
  representing voting majorities, have decided that
  for the common good we each should share in the
  cost of services we enjoy.
• Examples include streets, water, parks, museums,
  police and fire protection, health, national
  defense, libraries, air traffic control, schools
  and many others. They are not free.
• Deadbeat citizens enjoy services but want others
  to pay their share of taxes.
• That would hardly be fair. So we prosecute
  punish them.

3
Article 1 - Section 8

• Congress authorized to borrow money in Article 1.
  These are the governments IOUs.
• But Presidents set budget tone, have strong
  budget recommendation powers, political clout,
  veto power! While Congress is responsible for
  money, the President is responsible for
  submitting the budget bill to Congress and twists
  arms with political clout.
• Example Congress argued hundreds of billions of
  taxpayer money to Iraq to be loan President
  said NO should be a gift. Who won?
• Deficit difference between revenue raised
  additional amount spent with borrowed money in
  that fiscal year. Surplus?
• National debt accumulation of all annual budget
  deficits.
• Democrats (tax spend!) Republicans (borrow
  spend!) Is one better?
• 11/25/03 ABC News reported Reagan cut spending
  13.5, Clinton cut spending 1, GW Bush increased
  21! Liberal big spender for big government!

4
Bankruptcy of America?

• Can an individual get into financial trouble
  because of irresponsible decisions or disaster?
• Can our government get into the same financial
  trouble? Other countries do! Does our
  government waste money?
• Where does government money come from? YOU!
• This is why you care!

5
How much is a trillion?

• 1 million seconds are the equivalent of 11 days
  1 billion seconds are 32 years. How much are one
  trillion seconds? 317 centuries.
• A billion is a thousand millions a billion
  seconds ago, it was the year 1959 humans first
  learned to write 252 billion seconds ago a
  billion minutes ago, Jesus was alive a billion
  hours ago, our ancestors were living in the Stone
  Age.
• A trillion dollars is even more incomprehensible
  a trillion is a thousand billions 1 trillion
  seconds equals 1,688 years the oldest record of
  humans on earth was 110 trillion seconds ago.
• It is 93 million miles to the sun. From earth to
  Pluto is 3,720,000,000 billion miles. 1
  light-year (distance light can travel in one
  year) is 5,700,000,000,000 trillion miles.
• The 2006 national debt is 8.25 trillion and in
  miles would get us about half way to our next
  nearest star, Proxima Centauri.
• A TRILLION is a VERY BIG NUMBER!

6
Consider PORK!

• Some things politicians borrow for worthy
  necessary others not, like
• 350,000 for the Ft. Worth Cowgirl Hall of Fame,
  750,000 to the Baseball Hall of Fame, 350,000
  for the Rock Roll Hall of Fame, Lawrence Welk
  NP, 200 million for bridge in Alaska to an
  island of 100 people! 160,000 to support
  composted poultry poop in West Virginia 50
  million to build a rain forest in Iowa 225,000
  to repair a swimming pool he clogged with
  tadpoles Delay is a golf fanatic and got 3
  million to promote the sport. PORK!
• Like politicians went to the candy store like
  drunk sailors and bought anything that struck
  their fancy put on 30 year loan.  That would
  bankrupt a family.
• Are those the kinds of things you want to pay for
  over the next 30 years of your working taxpaying
  career?
• Would you buy a car on 30 yr loan? Groceries
  other small purchases? Irresponsible!
• These politicians will be dead and gone when you
  are sent their dramatic bad news bill !!!!

7
Record Deficits

• Record deficit under GHW Bush (father) 1992 was
  290 billion. Defeated.
• Clinton shifts policy. Surpluses in 1998, 99,
  2000 in 2001 was 127B. Began to pay off some
  of debt.
• GW Bush (son) wins election 2000 (takes office
  2001 now have new record deficits 375B
  (FY2003) 425B (2004) 318B (2005) 423B
  (2006)!
• Why increase? Tax cut, unwillingness to restrain
  spending binge, recession, war.

8
Annual Deficits
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Budget deficits 1962-2006 (billions)

• 1962, -7
• 1963, -5
• 1964, -6
• 1965, -1
• 1966, -4
• 1967, -9
• 1968, -25
• 1969, 3
• 1970, -3
• 1971, -23
• 1972, -23
• 1973, -15
• 1974, -6
• 1975, -53
• 1976, -74
• 1977, -54
• 1978, -59
• 1979, -41
• 1980, -74

• 1984, -185
• 1985, -212
• 1986, -221
• 1987, -150
• 1988, -155
• 1989, -152
• 1990, -221
• 1991, -269
• 1992, -290
• 1993, -255
• 1994, -203
• 1995, -164
• 1996, -107
• 1997, -22
• 1998, 69
• 1999, 126
• 2000, 236
• 2001, 127

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Who in charge of deficits 1997-2006

• 1997 Clinton, Republican House Senate
• 1998 Clinton, Republican House Senate
• 1999 Clinton, Republican House Senate
• 2000 Clinton, Republican House Senate
• 2001 Bush, Republican House, Demo Senate
• 2002 Bush, Republican House, Rep Senate
• 2003 Bush, Republican House, Rep Senate
• 2004 Bush, Republican House, Rep Senate
• 2005 Bush, Republican House, Rep Senate
• 2006 Bush, Republican House, Rep Senate

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Current National Debt, 2/23/2006

• Total debt
• 8,248,764,007,091.15 (8.24T)
• Debt held by the public (Treasury Bills, Notes,
  Bonds, TIPS, United States Savings Bonds, and
  State and Local Government Series) Is all Federal
  debt held by individuals, corporations, state or
  local governments, foreign governments.
• 4,778,273,969,992.42 (4.8T)
• Intragovernmental holdings (Government Account
  Series securities held by Government trust funds
  federal government borrows from social security
  and other trust funds to pay for other costs of
  government. Congress borrows hundreds of
  billions to fund programs! Biggest threat to
  social security is Congress will not leave the
  money in the fund!)
• 3,470,490,037,098.73 (3.5T)

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The National Debt

• 1789-1980 national debt 930,210 billion for 39
  presidential administrations when Reagan took
  office in 1980.
• Gathered over 191 years, many wars, inflation and
  depression!
• 1980 to 1993 under Reagan Bush 41 debt jumped
  to 4.4 TRILLION, or jumped an extra 3.5
  trillion (for those 12 years).
• 1993 to 2/06 (Clinton Bush 43 Republican
  Congress) jumped to 8.25 trillion, about an
  additional 4 trillion over 12 years since 1993.
  Now adding almost a half trillion in debt per
  year.
• 2006 8 TRILLION in just 25 years since 1980!
  Debt eight times bigger than the 191 year history
  to 1980!

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National Debt accumulation 1917-1966

• World War 1 23 billion
• Great Depression 23 billion
• World War II 200 billion (would be about 2.2 T
  today if adjusted for inflation in a real war for
  the very survival of US)
• Korean War 256 billion
• 1955 274 billion
• 1960 290 billion
• 1965 322 billion

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National Debt 1966-2006 (billions to trillions)
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National Debt 1966-2006

• 1966 Johnson D Congress 329.3 billion
• 1967 Johnson, D Congress 344.7 billion
• 1968 Johnson, D Congress 358 billion
• 1969 Nixon, D Congress 368.2 billion
• 1970 Nixon, D Congress 389.1 billion
• 1971 Nixon, D Congress 424.1 billion
• 1972 Nixon, D Congress 449.3 billion
• 1973 Nixon, D Congress 469.9 billion
• 1974 Nixon, D Congress 492.7 billion
• 1975 Ford, D Congress 576.7 billion
• 1976 Carter, D Congress 653.6 billion
• 1977 Carter, D Congress 719 billion
• 1978 Carter, D Congress 789.2 billion
• 1979 Carter, D Congress 845.1 billion
• 1980 Carter, D Congress 930.2 billion
• 1981 Reagan, D House R Senate 1.1 trillion
• 1982 Reagan, D House R Senate 1.2 trillion
• 1983 Reagan, D House R Senate 1.4 trillion
• 1984 Reagan, D House R Senate 1.7 trillion

• 1986 Reagan, D House R Senate 2.12 trillion
• 1987 Reagan, D House R Senate 2.4 trillion
• 1988 Reagan, D Congress 2.6 trillion
• 1989 Bush, D Congress 2.86 trillion
• 1990 Bush, D Congress 3.23 trillion
• 1991 Bush, D Congress 3.67 trillion
• 1992 Bush, D Congress 4.1 trillion
• 1993 Clinton, D Congress 4.41 trillion
• 1994 Clinton, D Congress 4.69 trillion
• 1995 Clinton, R Congress 4.97 trillion
• 1996 Clinton, R Congress 5.23 trillion
• 1997 Clinton, R Congress 5. 41 trillion
• 1998 Clinton, R Congress 5.53 trillion
• 1999 Clinton, R Congress 5.66 trillion
• 2000 Clinton, R Congress 5.68 trillion
• 2001 Bush, R House D Senate 5.8 trillion
• 2002 Bush, R Congress 6.23 trillion
• 2003 Bush, R Congress 7 trillion
• 2004 Bush, R congress 7.43 trillion

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What it means to you?

• The estimated population of the United States is
  295,723,557
• Each citizen's share of this debt is 27,893.
  (The National Debt has continued to increase an
  average of 2.35 billion per day since September
  30, 2004!)
• But not all pay tax. Only 139 million individual
  and corporate tax returns.
• Average (mean) 59,343 per tax payer with 8.25
  trillion debt as of 2/06! Growing several
  thousand each year.
• Tax paying family of 5 (2 taxpaying parents
  children) owed 118,686 on 2/06!
• But children do not work pay taxes so this is
  parents burden!

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How Congress Spends Your Money?
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The National Debt Interest

• Interest payments on the national debt.
• 11 billion in 1959 50 billion in 1980!
• 2005/352,350,252,507.90 (352B) or 2,534 per
  tax paying person!  
• Compare that to NASA budget at 15 Billion,
  Education at 61 Billion, and Department of
  Transportation at 56 Billion.
• 1 rise in interest rate adds 60-70B to debt.

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Exercise in Hard Choices

• So how do we fix this growing monster debt
  problem?
• (1) Eliminate government! FY 2006 Federal budget
  2.8 trillion, eliminate all government for
  about 3 years to erase 2/06 8.25T debt.
• Think about what it means! How much now pumped
  into FtW how impact us the nation? No
  president, no judges, no CIA, no FBI, no mail, no
  nothing!
• (2) Raise taxes to pay for it. One year maybe
  57,000 extra per tax paying person. Or maybe
  10,000 per tax paying person for 6 years! Or
  3,000 extra for 19 years!

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Exercise in Hard Choices

• Or (3) combination of both spending cuts tax
  increases!
• No matter what, the solution to the problem we
  caused equals pain!
• Is why most politicians refuse to discuss, or
  dismiss the problem as scare mongering.

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Personal credit card debt

• Suze Orman, financial expert and author of The
  Laws of Money, advises that if one has 8,000 in
  Visa or Mastercard credit debt and only pays the
  minimum each month, will take 54 years to pay it
  off.
• Total paid will be 31,000 with about 24,000 in
  interest IF obtained a LOW interest rate
  remains there! Increases dramatically with
  higher interest rates typical of many cards.
• One of my students has 24,000 charged on a Visa
  credit/21 interest!
• Has 2 jobs trying to pay off debt while trying to
  be a full time student!
• Bank president Pay 400/mo minimum, 30 yrs,
  127,521 interest! 151,521 total! AND rate can
  go higher if late on ONE payment!
• Did you know that irresponsible debt ruins
  peoples lives? Can it harm governments too?
• Get Microsoft Excels amortization spreadsheet on
  my website under Links Other, under Money.
  Will help you make spending decisions when
  financing money.

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Personal credit card debt

• Not conservative budgeting! Imagine what you
  could do with the money you paid in interest!
• Might argue someday I will make a lot of money,
  will pay off and so no big deal.
• Maybe what if you dont?
• Well, governments get into the same trouble too.
• There is a difference between needs wants
  what individuals and governments can afford.

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Critics dismiss debt as unimportant

• In 1970 we had a 1 trillion economy and now have
  a 10 trillion economy. Current debt dismissed as
  small fraction of 10 trillion GNP, and we will
  grow more to make debt a smaller fraction.
• Current debt not adjusted for inflation, and if
  adjusted would not look as big. (True, in that
  the 930 billion debt owed in 1980 is equivalent
  to 2,196 trillion debt in 2005. But we owe 8
  trillion!)
• Guess what? Bottom line is that 8 trillion
  averages to some 59,343 owed for each of our 139
  million taxpayers and that is a lot of money no
  matter how YOU pay it off.

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Other considerations?

• What about graying of America and shifting of tax
  burden to the young --- you! There will be less
  tax payers in future because there are fewer
  children that means you pay higher share.
• Consider that DEFICITS forecasted to be any where
  from 300-500 billion per year for YEARS to
  come.
• At that rate, if we do nothing, the 8 trillion
  debt today could double to 16 trillion by year
  2025 or sooner! With fewer taxpayers, it could
  mean we each owe an average of 100,000! Wow!
• Consider other impacts. War costs? Reduced
  revenue due to tax cuts and poor economy?

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Other considerations

• When Govt borrows money in the form of bonds, it
  takes it out of circulation, promising to pay
  interest for up to 30 years.
• When Govt pays back its debt, those now
  available for business.
• Govt can use surpluses to buy back debt.
• Long term borrowing buys many things that are
  expendable of which we will no longer get any use.

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Act or not act to pay off debt?

• Ostrich head in the sand will not work. The only
  question now is how do we repair the fiscal
  damage caused by irresponsible leaders of our
  country since 1980?
• No action will only make it worse for this
  future generations who bear the sole burden of
  paying back the debt.
• (1) stop digging us deeper in debt. We must
  prioritize spending requests ranked from
  essential needs down to the non-essential and
  recognize that we must live within our means,
  except in emergencies.
• (2) start paying off the principal on the
  national debt.
• (3) enact laws that will discourage otherwise
  irresponsible politicians from taking us down
  this disastrous road again.

27
Act or not act to pay off debt?

• Delay could double the debt and the amount YOU
  owe.
• Dont let politicians (Presidents and Members of
  Congress) get away with it. Write to them with
  your views and VOTE to impact YOUR money!
• There is NO FREE lunch! Anything worth doing is
  worth paying for. And anything worth paying for
  is cheaper paying cash for, or financing for
  MINIMUM amount of time, rather than financing for
  decades and driving the cost of debt up many
  times.
• There is nothing wrong with pay as you go
  funding for routine government expenditures.