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THE HERITAGE FOUNDATION
Justin Bogie and Adam Michel: How did the feds spend your taxes?

It’s nice to have more money in your pocket. And thanks to the 2017 tax cuts, the typical American is now paying less in taxes.

Bogie

Michel

But that’s not to say we’re not still sending a hefty sum of money to Washington.

Tally up all the payroll and other taxes on earnings and income, and you’ll find that the average American household forks over more than $26,000 to the feds each year.

Last year, Washington collected more than $3.3 trillion in taxes. So where exactly does all that money go?

Some believe most of it goes to foreign aid and defense. Others think corporate subsidies dominate the budget.

In reality, health entitlements — Medicare, Medicaid, Obamacare — and Social Security are the largest and fastest growing programs.

Unless Congress fixes these four programs, they — and the ever-growing interest payments on the national debt — will consume every dollar of taxes paid by 2041. That leaves no money for anything else. Uncle Sam couldn’t spend a penny on defense, food assistance, highways or education without driving the country further into debt.

Right now, Medicare, Medicaid and Obamacare subsidies account for more than a quarter (28.8 percent) of all federal spending. Ten years from now, it’s projected to gobble up more than a third of the budget.

Meanwhile, Social Security, the single largest federal program, accounts for roughly a quarter of all federal spending all by itself. Its trust funds already pay out more than they take in, and its finances will only deteriorate faster as more and more boomers retire.

The Social Security trustees project that unless Congress implements much-needed reforms, the program will run out of reserve funds by 2034, potentially triggering a 23 percent cut in benefits.

Other income security programs — veterans’ benefits, food and housing assistance, federal employee retirement, and disability — account for 16 percent of the budget.

That’s more than we spend on national defense.

And the defense budget covers everything from military paychecks to operations overseas to the research, development and acquisition of new technologies and equipment.

At 15 percent of the federal budget, defense spending is the last major category of federal spending. Most of what is left goes to people and corporations who hold Washington’s IOUs. Currently, 8 percent of the budget goes to interest payments on this debt.

During the coming decade, U.S. debt held by the public is projected to balloon to nearly 93 percent of gross domestic product. But don’t blame that on “inadequate taxation.” By 2024, the pro-growth tax enacted in 2017 will actually raise more revenue yearly than the old system.

No, the culprit here is runaway spending, driven primarily by huge increases in health and Social Security outlays. And the long-term consequences of deficit spending are dire.

Economic growth tends to slow in countries with debts that are as big as their economy. The U.S. is quickly joining this group.

As the debt increases, so does the cost of the interest we must pay to those who hold the debt. China is the largest foreign holder of U.S. debt.

Left unchecked, growing government spending and historically high levels of debt will ultimately require higher taxes — and just jacking up taxes on the rich won’t cut it. Paying for Big Government requires high taxes on middle-class Americans, too.

Eventually, rising debt will leave lawmakers with few options to avoid a financial crisis. Unless we can reverse course, it is only a matter of time before every American will be forced to pay higher income and payroll taxes.

On Tax Day 2019, be thankful for the extra money the 2017 tax cuts deposited in your pocket.

But know that, unless we insist that lawmakers suppress their seemingly insatiable appetite to spend, we could all soon be paying much, much more.


Columnists
COMMENTARY
Christine M. Flowers: Kirstjen Nielsen's resignation will only make Trump's immigration policy worse

When I found out that Kirstjen Nielsen was resigning as Human Services Secretary, I posted this on Facebook:

Flowers

“If the Cruella de Ville of the border isn’t tough enough for Trump, I’m thinking we won’t be getting another DHS secretary, for lack of qualified applicants. Last I checked, Madame Mao, Leni (Riefenstahl), and Evita are still dead. Nielsen deserves no sympathy but again, Trump is getting very bad, unsound advice from a bald millennial (Stephen Miller) who never had hands-on experience in the immigration field. Not good.”

Not surprisingly, many of my conservative FB family disagreed, because they don’t believe people have a right to seek asylum. And I’m done trying to parse words and explain away the misconceptions about the immigration process, because nuance stands no chance against fierce, catchy slogans like “We’re full.” If I hear someone tell me one more time that immigrants are OK as long as they come in legally, I think I will shove my miniature replica of the Statue of Liberty down my throat.

I regularly find myself on the edge of two opposing tectonic plates, just waiting for the earthquake to happen.

I sympathize, as a conservative, with the desire to have order at the border and be fair to those fortunate enough to be able to do it the “right way.”

Yet I also understand that life isn’t always that tidy, much less equitable. The Evangelical Christian kid fleeing the gang that killed his father while he was preaching in church has just as much a right to live here as the highly skilled mechanical engineer who got his master’s at MIT or the tourist who fell in love with his cute American tour guide and got hitched before his visa expired.

Which brings me to another skirmish on Facebook recently. I had posted a link to an article about the cruel pushback Ivanka Trump was getting when she posted a photo of her youngest son Theodore sleeping on the floor instead of in his bed.

She made a cute comment about perhaps putting him back in his crib. The mean-spirited minions of social media took that as an opportunity to attack the president’s daughter for the child separation policies — which really do represent an embarrassing moment for our national character. That was cruel and unnecessary.

People taking out their anger on a sweet moment involving a little boy are beyond contempt. One so-called comedian wrote: “What about cages, isn’t that your thing?” So much for tolerant liberals.

But to be fair, the policy they’re critiquing does highlight the worst of Trump’s immigration agenda, which we’ll get more of with Nielsen out of office.

And not just from the administration. In response to the Ivanka link, a FB acquaintance who was angered at the attack on the president’s daughter wrote the following:

“Sure, we need more people who are functionally illiterate in their own countries and will never be literate in the U.S., with IQs that are below the U.S. average, and social mores that are incompatible with ours. Like we all need a hole in the head.”

That’s where we’ve come to, people, with this sick sense of superiority drummed up by a man like Stephen Miller, who has completely forgotten the immigration history of his Jewish ancestors. And so I pushed back against my now-former FB friend:

“My most recent asylum client has a doctorate in immunology. He was shot at by the Taliban during his work with an NGO, for vaccinating children against disease. The Taliban hate western phenomena like inoculation. He has a bullet in his leg they can’t remove, and a limp.”

So much for “incompatible, uneducated illegals.”

I had my problems with Nielsen. But she was a policy wonk who tried to follow the law.

In getting rid of her, the White House is signaling that it wants to take an even sharper turn in the dark direction that gave us child separation and quotes about low IQs and sub-par “social mores.”

Count me out.


Calendar
THIS DATE IN HISTORY

In 1850, the city of San Francisco was incorporated.

In 1865, President Abraham Lincoln died nine hours after being shot the night before by John Wilkes Booth at Ford’s Theater in Washington; Andrew Johnson became the nation’s 17th president.

In 1912, the British luxury liner RMS Titanic foundered in the North Atlantic off Newfoundland more than 2 1/2 hours after hitting an iceberg; 1,514 people died, while less than half as many survived.

In 1920, a paymaster and a guard were shot and killed during a robbery at a shoe company in South Braintree, Massachusetts; Italian immigrants Nicola Sacco and Bartolomeo Vanzetti were accused of the crime, convicted and executed amid worldwide protests that they hadn’t received a fair trial.

In 1945, during World War II, British and Canadian troops liberated the Nazi concentration camp Bergen-Belsen. President Franklin D. Roosevelt, who had died on April 12, was buried at the Roosevelt family home in Hyde Park, New York.

In 1959, Cuban leader Fidel Castro arrived in Washington to begin a goodwill tour of the United States. Secretary of State John Foster Dulles resigned for health reasons. He was succeeded by Christian A. Herter.

In 1960, a three-day conference to form the Student Nonviolent Coordinating Committee began at Shaw University in Raleigh, N.C. The group’s first chairman was Marion Barry.

In 1974, members of the Symbionese Liberation Army held up a branch of the Hibernia Bank in San Francisco; a member of the group was SLA kidnap victim Patricia Hearst, who by this time was going by the name “Tania” (Hearst later said she’d been forced to participate).

In 1986, the United States launched an air raid against Libya in response to the bombing of a discotheque in Berlin on April 5; Libya said 37 people, mostly civilians, were killed.

In 1989, 96 people died in a crush of soccer fans at Hillsborough Stadium in Sheffield, England. Students in Beijing launched a series of pro-democracy protests; the demonstrations culminated in a government crackdown at Tiananmen Square.

In 1998, Pol Pot, the notorious leader of the Khmer Rouge, died at age 73, evading prosecution for the deaths of two million Cambodians.

In 2013, two bombs packed with nails and other metal shards exploded at the Boston Marathon finish line, killing two women and an 8-year-old boy and injuring more than 260. Suspected bomber Tamerlan Tsarnaev died in a shootout with police; his brother and alleged accomplice, Dzhokhar Tsarnaev, was tried, convicted and sentenced to death.

In 2014, Boko Haram terrorists kidnapped some 276 girls from a school in northeastern Nigeria.


Columnists
COMMENTARY
Catherine Rampell: Democrats' new tax plan is their clearest, most efficient blueprint yet

Just in time for Tax Day, we have new insight into the dueling partisan visions for the U.S. tax system.

We already knew that the GOP’s 2017 tax law mostly benefited corporations and the wealthy; that’s old news.

Catherine Rampell

But on Thursday, we got some illustrative examples, courtesy of the Institute on Taxation and Economic Policy. The organization found that at least 60 profitable Fortune 500 firms paid no federal income tax in 2018, about twice as many as in the years leading up to the law’s passage.

In fact, most of these companies got a federal tax rebate.

For context, Americans’ top complaint about the tax system remains the “feeling that some corporations don’t pay their fair share,” according to a March poll from the Pew Research Center. Now let’s consider what Democrats have on tap.

A lot of competing plans have piled up. Many 2020 presidential contenders have released proposals, covering everything from forcing big companies to report the same income to the tax man that they report to their shareholders (Elizabeth Warren); to using higher estate and inheritance taxes to pay for government-funded “baby bonds” savings accounts (Cory Booker); to something just shy of universal basic income administered through the tax code (Kamala D. Harris). Some of these ideas are better thought through — legally, fiscally, politically — than others. But the general theme is this: Forget (or reverse) those tax cuts for the rich. Focus on cutting taxes for low- and middle-income families instead.

Last week, we saw Democratic senators coalesce around a specific iteration of that theme. In new legislation, they offered the clearest blueprint yet for what they would do if they regained unified control of government.

It’s called the Working Families Tax Relief Act. Already, nearly every Democratic senator has signed up to co-sponsor it — including every senator now running for president.

The bill, introduced by Democratic Sens. Sherrod Brown (Ohio), Michael F. Bennet (Colo.), Richard J. Durbin (Ill.) and Ron Wyden (Ore.), focuses on expanding the earned-income tax credit (EITC) and the child tax credit.

For those unfamiliar, the EITC is a tax credit that incentivizes work by topping off workers’ wages.

Given the EITC’s record of lifting living standards and job growth, it has long enjoyed bipartisan appeal; Republican and Democratic presidents alike have presided over successive expansions. If passed, this new bill would boost the credit for families who have children and massively expand it for “childless” adults (which includes non-custodial parents), who are currently eligible for little support.

What about the child tax credit?

The new bill would make the existing child tax credit available to all children by making it fully “refundable.” That is, poor families whose income taxes are less than the credit could receive the entire balance as a refund.

It would also create an entirely new, fully refundable “Young Child Tax Credit” available to families with children under 6. Together, these changes would increase the child-tax credit’s maximum value to $3,000 per preschool-age child. That would surely be a welcome increase in living standards for families struggling with child care and other expenses.

The bill’s beneficiaries would be widespread — raising incomes for households containing an estimated 114 million people and putting a significant dent in the child-poverty rate, according to an analysis from the Center on Budget and Policy Priorities. No cost estimate is available yet, but it appears less expensive than other ambitious proposals Democrats have put forward.

It also has the virtue of building on ideas that have traditionally had bipartisan support without undermining that support, as some other rival Democratic proposals risk doing.

An alternative plan that Brown introduced, for instance, would expand eligibility for the EITC to include those performing non-market work, such as full-time caregivers.

I wholeheartedly agree that caregiving is hard work worthy of government support. But opening up something called an “earned income” credit to people without dollar earnings virtually guarantees Republican opposition. Which in the long run might jeopardize a successful program now seen as apolitical.

There are other tools available to help hard-working populations not eligible for the EITC — including of course expanding the child tax credit. The politics of the child tax credit are very different from those of the EITC, because it’s not defended on the grounds of moving people into paid jobs; it’s about supporting parents and children.

All told, for all the criticism of Democrats as a politically tone-deaf party devoid of any message other than “Not Trump,” they’ve worked hard to craft an economically efficient, politically formidable plan.

Family-values-and-job-growth-supporting Republicans should take note.