Wednesday, November 17, 2010

'What the Heck is a 'Tax Expenditure' and Why Should I, Ricky Bobby, Care Anyways?'

Do you ever get the strange feeling that someone might be getting a better deal under the same federal tax code than you are?

Well, they are…millions of your fellow Americans are.  To the tune of close to $1 trillion in saved tax payments per year. Each year.  And you keep paying all of your taxes like a great American without even knowing why.

Here’s the answer: ‘Tax Expenditures’.

There is a very technical definition in the federal budget books but the basic idea behind tax expenditures is that they represent the amount of tax revenue that is not sent to Washington each year because someone had a better lobbying or trade association than you do or did.

More precisely, they accomplish essentially the same public policy goals/special favors that spending programs are created to do. Washington could send you a check for the tax-deductible part of your mortgage interest each year, for example, and it would have the 'same' effect on the federal budget as you continuing to take the deduction and not paying taxes on that amount.

And, yes, that number you saw above was correct.  Close to $1 trillion more tax revenue would be sent to Washington each year if the tax code was not absolutely machine-gun riddled with special tax treatment and most favored status for hundreds of thousands of different entities, other than you, of course.

To put that $1 trillion in lost revenue into perspective, our annual deficit was ‘only’ $1.4 trillion in FY 2010 that just ended, down from 'only' $1.5 trillion a year earlier so that $1 trillion in tax-hidden revenue sure looks enticing.

Until you realize it means the end of your mortgage interest deduction and employer-paid health insurance deduction, that is.

You are gonna start hearing a lot about tax expenditures in the Bowles-Simpson report coming up so you might as well understand just what the heck they are so you can call or write your congressman and senator and tell them what to do about them when the Commission sends a bill to Congress to vote on.

First off, a disclaimer:  We have come to the conclusion that the US tax code is counterproductive, archaic and sclerotic and about as adapted to current times as Hammurabi's Code written in hieroglyphics. We should 'can it' and move to a completely new tax system based on consumption taxes such as excise taxes, VAT taxes or the so-called ‘Fair Tax’…but not as an add-on to the current corrupted individual income and payroll tax system.

We also have advocated the abolition of the entire US corporate income tax code, much for the very same reasons:  it is riddled with favors and special treatment for certain industries vis-à-vis other industries and acts as a yoke on the creative genius of the American free enterprise system to grow, innovate and, most importantly, make things here instead of over in China and India and create jobs over there, not here.

We think the size of the federal government is way too expansive now with spending at 25% of GDP and the debate going forward should be over the 'size' of government, not merely over how to 'pay' for an ever-escalating monolith in Washington but more on that in a later post.

So call us the ‘Abolitionists of the US Income Tax System’ if you want.  The entire code reads like hieroglyphics, doesn’t work well any more and should be replaced with a tax system that reflects the dynamism of the 21st century.

Getting back to ‘tax expenditures’, take a quick look at this article by Donald Marron. He identifies the crux of the problem when he says:

'The Office of Management and Budget has identified more than 170 such tax expenditures…The deductibility of state and local taxes, for example, runs almost $70 billion each year. Favorable tax treatment for life insurance savings is about $23 billion. Credits for alcohol-based fuels total almost $9 billion. And dozens of rifle-shot provisions benefit narrow interests, such as special tax rules for NASCAR venues.

Living in the heart of NASCAR country might not be the best place to advocate the end to favorable tax treatment of NASCAR venues. However, the good people at Joe Gibbs Racing and Childress Racing gross over $100 million in revenue each year….and the earnings from race winnings are just a small part of that number with the rest being big corporate endorsements and the like.

If you have ever seen ‘Talledega Nights: The Legend of Ricky Bobby’, you know that race car drivers and owners are free enterprisers and true blue Americans to the nth degree.  We think people would still flock to see them race and have car crashes going 200 mph if their special tax expenditure line-item was repealed.

A full discussion of how to reduce these amazing budget deficits and this gargantuan national debt, or at least stop adding to it, can not be done without the inclusion of the repeal of many of the special tax break provisions currently residing in the US code.

You pay your full amount of taxes (sans the mortgage interest deduction or the amount your employer deducts for providing you with health insurance) each year, right?

So should everyone else, don’t you agree?

* for a full list of tax expenditures ranked by size, see and go to page 220-222

picture courtesy of

Sunday, November 14, 2010

‘If You Don’t Play By ‘MY’ Rules, I Am Taking My Basketball Home With Me!’

The upcoming 'debate', such as it will be, on the recommendations of the Bowles-Simpson Deficit-Reduction Commission remind us of the annoying kid who would invite you to play basketball at their house on their backyard court with their basketball.

Inevitably, almost as if scripted, some foul would be inflicted on said annoying kid (SAK) and he would say it was ‘intentional’ or ‘not fair’ or ‘that really hurt!’  In the aftermath of the ensuing argument, SAK would then threaten to ‘take my basketball and go home!’ and we would let him and then the game would be over and done with for the day.

Aren’t both sides already revving up over the Bowles-Simpson Commission to become the SAK of American politics to the detriment of us all?

And the heck of it is that Mr. Bowles and Mr. Simpson have not even gotten 14 out of the 18 commissioners to produce a final set of recommendations to send to Congress to consider passing one day, we all hope.

Liberal economist Paul Krugman and Nancy Pelosi have already lurched hard to the left and declared that any changes to Social Security are ‘off-limits’ and not touchable.  They say this even though SS is technically bankrupt this year, 2010, because it is paying out more than the payroll tax receipts coming in to fund the program.

Grover Norquist, president of Americans for Tax Reform, has lurched hard to the right and declared that any abolition of the mortgage interest deduction is a ‘tax increase’ even though making the tax code ‘simpler’ and devoid of a myriad of deductions has been a goal of the American conservative movement since the income tax was declared constitutional in 1913.

So here's what people like Mr. Krugman and Ms. Pelosi and Mr. Norquist are really saying like SAKs when they dig their heels in on any deficit-reduction package:

'We do not care one whit about the national debt exploding. We don't care that we are adding on at least $2 trillion in debt by the extension of the W tax cuts in 6 weeks. If the debt goes to $20 trillion in the next 2 years, we just plain do not care! And if you don't agree with us 100% on everything my side wants, we are going to take our basketball home and end this game!'

What these so-called 'leaders' don't understand is that they are not writing the rules to this game. And neither did the Founders, as brilliant as they were.

The rules to 'this game' were written long ago in the physics of fundamental economics and the Natural Laws under which economics operates. Rampant inflation, exorbitantly high interest rates and a further debasement of our currency awaits those who adamantly refuse to negotiate any deal on deficit-and-debt reduction that will benefit the entire nation.

So congratulations Mr. Krugman, Ms. Pelosi, Mr. Norquist and the AARP on trying to give us a much larger debt that we can't handle because of your obstinate obstructionism.

For those of you who see the Tea Party as the salvation, here's a pleasant conversation we had with a Tea Party activist right after the election. (S)he said: ‘If we don’t see a budget put out by the Republicans by the end of January, 2011 that balances the budget in several years, we are gonna primary every incumbent in 2012 and go after the Democrat incumbents in primaries as well!’

Which all sounded well and good until the following disclaimer came out of the same mouth: ‘And if any of them touch my Medicare benefits, I am gonna take them all on myself!’

We hate to inform well-meaning people in the Tea Party movement but Medicare is perhaps the largest example of federal government involvement in any industry ever in the history of America and almost defines the word ‘socialism’ in any textbook or dictionary you can find.

In short, everyone wants their programs to be protected from any changes that will balance the budget.

‘And if you don’t like it, I am going to take my ball with me and go home!’

If by that, activists on all sides mean that everyone else has to come to their way of thinking of 100% before an agreement can be struck, all we can offer is this following observation:

‘You have picked the wrong country to be a totalitarian dictator to live in then.’

There is no way on God’s green earth that we are ever going to be able to balance the budget without touching any existing program in SS; Medicare; Medicaid; Defense; Education; Welfare; Environment; Energy; Housing or any other of the hundreds of thousands of federal programs now in existence.

There is no way that a bill is going to get 50%+1 votes on final passage of any deficit-reduction package without eliminating many of the tax deductions and/or raising taxes in some form or fashion now that the House is in GOP control; the Senate is ruled by the Democrats and President Obama still resides in the White House with a trusty veto pen by his side.

Ain’t going to happen in this lifetime or any other. That is one thing you can go to the bank with 100% ontological certitude as the commentator John McLaughlin used to say.

The American Democratic Republic will then be working precisely as the Founders intended:  Pass a bill for the common good of the nation using reason and persuasion with a majority of support in Congress while protecting the rights of the minority.

The essence of a functioning democracy is to be able to persuade, cajole and/or reason with enough legislators to get over that 50%+1 goal line.  This debt is not going to go away on its own without adult leadership in Congress.  If they don’t negotiate a deal to do it early in the session, they'll have to redouble their efforts and get it done by the end of the session.

Real American leaders don't run away with their ball back to mommy and leave the game. You'll see who they are based on their involvement with a deficit-reduction package that has real substance in it.

All the rest are pretenders.

Friday, November 12, 2010

‘You Can NEVER Get Every Thing That You Want….”

In a democratic republic, that is.

And that is a great thing we all ought to be thankful for on this day after Veterans Day.

Click on this great early Rolling Stones song, ‘You Can’t Always Get What You Want’  and just let these alternative words in the title of this post seep into your consciousness as you read the rest of this and see if it doesn’t make eminent sense to you.

Who knew that a couple of hundred years from now, political archeologists are going to dig up some vinyl 45-rpm record somewhere and declare that Mick Jagger was ‘one of the foremost philosophers of the 20th century just like Aristotle and Socrates centuries before him!’

Anyway, with the Simpson-Bowles Deficit Reduction Commission coming up with their initial thoughts on how to slay this magnificent debt beast we have created all by ourselves (the nasty Rooskies didn’t make us do it and neither did the dirty red Chinese either…and not even Osama Bin Laden and Al Qaeda), let’s take a look at what we should reasonably expect out of the democratic process in the next 6 months or so:

1) President Obama is still in the White House whether you like it or not and he still holds the veto pens in his left hand.  (Each time he signs something, a US president now uses like 15 pens to write out each letter of his name separately.  Why?  So 15 congresspeople can hang it on the wall and say proudly:  “I got National Mule Day passed way back when.  Now vote for me again!’)

2) Republicans control the House and with some cross-over from the now-emboldened Blue Puppy Dogs (or what is left of them in Congress, that is) since they have been released from under the thumb of their former leader, Nancy Pelosi, The Speaker from the West, perhaps they could cobble together a veto-proof majority of 290 votes from time to time on big important issues.

3) The Senate remains in Democrat control and with the rules over there being what they are, ‘difficult’, it is fair to say that nothing much gets done for the next 2 years to the great advantage of either major political party.

‘Good! No, GREAT!’ our Founders James Madison and Thomas Jefferson might be shouting in their graves.  'We abhor absolute totalitarian tyranny at any level of rule…including Congress!’

As part of our on-going ‘reality-based politics’ series, let’s face the truth of the matter:

Whenever one party has had total control of the 2 main branches of the federal government lately, they have pretty much screwed things up.  The GOP had the White House and Congress from 2001-2007 and the Democrats had both from 2009-2010.   All we now have to show for it is a humongous $14 trillion national debt bomb and still ticking, up from around $5 trillion at the end of Bill Clinton’s second term.

Maybe a little, no a lot of, gridlock and compromise will help things along this time around.

Whoops!  There we went and said a bad word: ‘Compromise’.  You think it is written with only 4 letters, wouldn’t you nowadays?

But it is not, most definitely not when our Founders worked on forming the United States in the first place. They ‘compromised’ their brains out in Philadelphia in 1787!  You think the big states like Massachusetts, Virginia or South Carolina at the time were ‘wild’ about giving tiny little states such as Rhode Island 2 US Senators to vote on issues that directly affected them?  Do you think the anti-slavery forces in the North were ‘wild’ about allowing the ‘peculiar institution’ of slavery to remain intact in the South and, on top of that, include 3/5th of every slave to count for Southern presentational purposes in the House?

Nobody went home after the Constitutional Convention in 1787 completely 100% ‘thrilled’ with the results of the new thing they called the American Constitution.  No one.  James Madison probably cried himself to sleep every night because his original plan had been gutted and amended by those delegates who were ‘intellectually inferior’ to him such that ‘only’ 60% of what he proposed actually got passed.

In fact, some of the best legislation ever passed by Congress has the following characteristics:  No one is completely happy with the results of the legislation and feels somewhat disheartened by it in total.  But there is usually also something in the bill that they absolutely love and wanted to get passed somehow, someway so they negotiated it in there and went home at least 50.0000001% happy.

Would we be so fortunate as to have 60% pass of what the Bowles-Simpson Commission is going to recommend for our nation right now!  We are in a steadily declining financial situation relative to national debt buildup. Every day we wait to pass something to arrest its accumulation is a day closer we have to some really crazy economic outcomes like rampant inflation, out-of-control interest rates and further debasement of our currency.

Maybe we’ll be lucky like Philosopher-King Mick Jagger says when he sang these prophetic words:  ‘But you might find sometimes…you get what you need.’

Like hundreds of billions of dollars of spending reductions that lead to deficit-reductions of a massive scale proposed and passed by some adults in Congress.

Tuesday, November 9, 2010

The High Cost of Collecting Corporate Taxes

Ever wonder if all of the money and energy that goes into political fights over the US corporate income tax is really 'worth it' or is all this argument over corporate taxes just a huge waste of time and a 'political pinata'?

We have been pretty upfront about our support for the abolition of the US corporate income tax code as a prime way to get our economy rejuvenated and going once again. We think that there are far more reasons to abolish it than to continue trying to 'make it right' which is what all of the polemics and commercials are all about every two years during election season.

Here's a 'rational man argument' for you to consider as you contemplate abolishing federal corporate income taxes: The cost of complying with and/or trying to avoid the bite of corporate taxes is more than the total amount of revenues the federal government collects each year.

And one alternative definition of insanity is this: 'When it costs more than what you get coming in, you just keep doing it because 'that is the way we have always done it!'

As part of our 'reality-based politics' series, let's take a look at the numbers as they are, and not as the talking heads or the politicos in Washington want you to believe in their dream of dreams:

In 2009, corporate tax revenues to the federal government totalled $135 billion. For 2010, they are expected to be only $185 billion.

Both of these represent around 1% of GDP; approximate the amounts collected from national excise taxes; and account for less than 7% of total revenues collected from all sources, including individual, payroll, excise and estate (death) taxes.

Even in the optimistic growth projections put out by CBO and OMB, the $307 billion in corporate taxes they expect to be collected in 2011 and $353 billion in 2012 would represent just under 2% of GDP.

Seriously, is it worth all of the political anger, angst and cost each year to collect less than 2% of GDP for the federal tax revenue coffers? We don't fight over federal tobacco or gasoline excise taxes the same way and they bring in comparable amounts of revenue. (see CBO Budget Projections)

The animus generated by some over the 'failure' of corporations to 'pay their fair share!' is almost laughable given the small percentage those collections actually play in modern American politics. If corporate taxes represented 10%; 20% or 50% of overall US tax revenues, then that would be a fight worth fighting about and spending a lot of money on both sides of the issue.

But less than 7%? Not really that important, is it?

Here are some of the numbers relating to the whole corporate law industry in America today. See if you think all of the expense and Sturm und Drang in the political theater is worth all the effort:

  • $4 billion spent on direct lobbying in DC in 2008.
  • $128 billion in accounting revenues, the majority of which is spent on filing corporate income taxes.
  • $180 billion in legal fee revenues, of which 45% is estimated to be related to corporate law work by outside private firms
  • This does not count all of the hundreds of thousands of in-house corporate lawyers at corporations which could amount to a comparable amount to the $180 billion figure above or more

Right there, we are looking at close to $300 billion spent each year on a process that will produce only $185 billion in corporate tax revenues for the federal government in 2011, maybe.

Now some naysayers would say: "What about all the corporate tax lawyers/accountants/specialists and the poor corporate tax lobbyists and PACs in Washington? Wouldn't they be thrown out of work if we abolished the corporate tax code in American tomorrow?'

Isn't that the same argument as a defense subcommittee chairman saying he wants muzzle-loading muskets to be made in his district regardless of whether DOD wants them anymore to fight modern wars?

We think American productivity and economic growth would explode if corporate taxes were repealed tomorrow by the new Congress. We think all of these highly-educated and motivated former corporate tax people would find new work by the truckload in such a positive scenario.  They might even start their own new manufacturing business.

Aside from the accounting, legal and lobbying profession having to readjust to the new reality, wouldn't the end result be far more productive for America over the rest of the 21st century than wasting all this time and effort on attacking/protecting certain provisions of the US corporate tax code?

Mr. Boehner and the New GOP in the US House of's your chance to prove the American private sector and capitalism works by abolishing the corporate income tax code.

It will help all of us.

courtesy of

Friday, November 5, 2010

'Happy Days 'Can' Be Here Again' ...and Both Obama And the GOP Can Get Credit For It

Here's a sure-fire hit that both the Obama Administration and the new GOP House can agree on to create millions of new jobs in America:

-Abolish the US corporate income tax 

Now before they send Robert Gibbs out to castigate someone in public for speaking such heresy, hear us out.

-Pay for the loss of corporate tax revenue with the repatriation of foreign profits idea put forth by John Chambers, Chairman of Cisco awhile back.

The economy would correct itself in almost no time flat (relatively); unemployment would plummet; people could buy houses and goods once again...and both President Obama and the Republicans will be praised and fanned with palm fronds down Constitution Avenue come next spring for being able to 'do something to get our economy going again' in a bi-partisan way.

'Happy Days Will Be Truly Here Again!'-- (and at least 7 years sooner than when it took 10 years for our parents and grandparents to get out of the Great Depression)*

Let's look at the numbers:

The slack economy drove the receipts of the corporate income tax down to only $130 billion in 2009. That is less than the amount Washington receives from all various federal excise taxes including gas and cigarette taxes paid directly by the consumer.

Corporate taxes are just another form of 'excise tax paid by the consumer' except in a more indirect way each time you pay for any good or service. There is no corporate tax that is paid solely by the corporation without you, the consumer, paying it first in the form of higher prices. So start to think of a corporate tax repeal as being the same as a 'direct tax cut' for you as an individual consumer.

Corporate tax receipts are expected to only be around $180 billion in 2010. Both of the 2009 and 2010 amounts represent the almost pitifully low level of around 1% of GDP.

That hardly seems worth fighting for nowadays in the land of trillions and gazillions of debt being accumulated. And all the lobbying and legal fees and accounting and PACs and fundraisers that go along with the corporate income tax...honestly, wouldn't the world be a little better off without a few of those types on K Street in Washington, DC?

Corporations would save billions in lobbying, legal and accounting fees alone if the corporate tax was eliminated simply because there would be no tax code to fight or loopholes to find and protect. And probably pass along those savings to you in the form of lower prices because their competitors certainly will.

'But' as Keith Olbermann on MSNBC (who shoulda stayed on ESPN with Dan Patrick) would fulminate and fluster, 'wouldn't that increase the very debt you (crazy, stupid, idiotic, ignorant) conservative Republicans say you want to reduce?'

'Glad you asked that question, Keith! Let me tell you how we would pay for it...if you would quit glaring at me.'

Mr. Chambers' idea of repatriating foreign profits back to the US at, say a 5% tax rate instead of 39%, would yield close to $50 billion in new tax revenue that is not already assumed to be in the federal budget revenue baseline totals. That would pay for at least a third of the 'loss' of corporate tax revenue for 2010 from the existing baseline.

But the repatriation of $1 trillion in new privately held money would lead to an unprecedented boom in capital available to the every companies and people who can and will create new jobs under more favorable circumstances.  It is $ONE TRILLION, all available on Day 1, not spread out over 5-10 years like the $787 billion Obama Stimulus that has not proven to be stimulative at all yet.

With no massive bills such as cap-and-trade to worry about and the more onerous parts of the Obamacare legislation already showing signs of being pulled out and eliminated (such as the reporting requirement for every expenditure over $500), 'gridlock' is already working to creating an environment where businesses can once again do what they do best which is to invest, create jobs and make money for shareholders and employees alike.

The ensuing economic boom and job expansion will generate far more than enough revenue to cover the loss of the corporate tax forever and then some.  But just to be sure that these two changes can be made to our tax code and be completely and irrefutably 'budget-neutral' and not add to the deficit, we have added specific line-item budget cuts at the end of this posting, any of which or combined in some fashion could total close to $4 trillion in scored budget savings over the next 10 years.**

You don't think many American companies with plants overseas and foreign corporations as well will start flocking to the US if they could see that The United States would soon become a 'corporate tax-free zone'? That strains credulity when you consider that one of the major factors corporations go overseas in the first place is to flee high taxes in the US, aside from lower wages, of course.

And the 'wealth effect'? When stockbrokers start cranking out present values for stocks without a 39% tax rate in them, their computer consoles may melt down with all the bigger numbers. One way to get people spending again and regain confidence is to see their savings and 401(k)s rise again...this will do that in spades overnight.

You wanna get out of the chute right away on January 1, 2011 with a plan to defibrillate this American economy?

Call or write your representatives in Washington and tell them to tell Speaker-to-be John Boehner and the New GOP (we hope and pray!) leaders to pass these two tax bills on January 2, 2011.

And then we will truly be on our way to the 'Happy Days Are Here Again!' scenario our parents and grandparents could only imagine in 1930.

* Lyrics to "Happy Days Are Here Again!' from the movie 'Chasing Rainbows' (appropriately enough) and sung because of the impending repeal of Prohibition and the end of moonshine and out-running the revenooers.
So long sad times. Go long bad times. We are rid of you at last. Howdy gay times. Cloudy gray times. You are now a thing of the past. Happy days are here again. The skies above are clear again. So let's sing a song of cheer again.
Happy days are here again. Altogether shout it now. There's no one; Who can doubt it now. So let's tell the world about it now. Happy days are here again
Your cares and troubles are gone. There'll be no more from now on. From now on ...
Happy days are here again
The skies above are clear again
So, Let's sing a song of cheer again

Happy times
Happy nights
Happy days
Are here again!

* *
-Repeal or rescind any and all stimulus money that has not been already spent on 'shovel-ready' projects.  Which, according to the President, should mean close to $500 billion of it since he admitted there were no 'shovel-ready' projects
-Allowing the Bush tax cuts to expire would free up close to $4 trillion over 10 years (hey! you either do it for individuals or corporations...which one do you think would generate the most job growth?)
-Scored recommendations from The Committee for the Fiscal Future of the United States = $3 trillion
-Hold overall spending growth to about 2% annually and allow the economy to grow and generate sufficient revenues to balance the budget in 2020 or so, even with the repeal of the corporate income tax code

Wednesday, November 3, 2010

So…What Does This All Mean Now?

Now that Nancy Pelosi has been fired as the first female Speaker of the US House by the American voter and the Republican Tea Party has taken control of the lower house of Congress, what exactly does that mean to you and the country starting this morning?

For one thing, it means that the days of passing massive spending bills like the Obama stimulus package and ObamaCare are over. Certain parts of each bill will come under attack and be rescinded by the House, most likely, but the efforts will probably not pass the Democratic-controlled Senate or be signed by President Obama (more in later posts).

Gridlock is back in the United States Capitol and after a decade of spending unrestraint from either party, it didn’t come back a moment too soon. Go can admit it that you are glad to see Mr. Gridlock back in our nation's capital once again.

But really, what does this mean for me and you and the people on the street, both currently employed and unemployed?

We are going to engage in a relatively brief, yet informative series, probably for the rest of this year, that we like to call ‘Reality-Based Politics-101’. 

In it, we are going to give you the basic truths of the US federal budget/tax policy and health care issues that actually mean something to you and your family’s future.  We will bring in some expert opinions and creative ideas for your to consider and ponder.  We will not engage in any ‘wishful thinking’ or Santa Clauswitzian dream world where you are ‘given everything by the federal government without any cost to you as a taxpayer!’

Those days of politicians acting like Jon Lovitz as ‘Tommy Flanagan- Pathological Liar’ on SNL (‘Yeah, yeah…that’s the ticket!’), or some loud-mouthed used car salesman promising you 'incredible deals' on television ads, are over.

(We hope and pray.)

So beyond the end of passage of any new massive spending program in Washington, what else can you reasonably expect?

We think this election just about guarantees the passage of the extension of the Bush tax cuts on a double-tiered basis in the lame duck session between now and the end of the year.  The middle-class tax cuts will be passed on a permanent basis and the tax cuts for the wealthy will be extended for the next year at least and possibly, two as a way to help get us out of this nasty recession that doesn’t feel like it is over as the economists claim.

Even a lame-duck Congress and a weaker President Obama can see that not extending these tax cuts in such a weak economy would do far more harm than good.

But guess what else the newly-elected Members and Senators have ‘won’ as a result?

Extending or making the tax cuts permanent will increase the federal deficit projections officially on January 1, 2011 by ANOTHER $2 trillion or so the day it is passed.

Remember:  Current law has the expiration of the Bush tax cuts baked into them. With the expiration intact this moment, for today at least, ‘official’ deficit projections are about $3 trillion lower over the next 10 years than they would be if all the Bush tax cuts were extended for the next decade.

To put it very bluntly, if you are at all concerned about the burgeoning national debt, we will have increased the amount of debt we will incur at the very same time a whole new crop of ‘fiscal hawks’ will be coming into Washington to ‘reduce those bloody deficits and the national debt’ in the first place!

Talk about a confusing electoral message the voters are ‘sending to Washington’!

So now, instead of digging out of a projected national debt of ‘only’ $14 trillion as of today, this whole new crew of energetic eager beavers will have a Sequoia tree of debt of close to $16 trillion to start gnawing away at right off the bat on January 1, 2011.

Congratulations and welcome to Washington!

That is reality-based politics at its finest, ladies and gentlemen…so you better get used to it.  You are going to see a lot of it over the coming weeks. We’ll try to help you understand it all so you can contact your representatives and put pressure on them to ‘do the right thing’, whatever that is nowadays.

If you are ecstatic about last night’s elections, enjoy it as long as you can.  Because there is some serious heavy-lifting and decision-making about to come your way.