Senator Johnny Isakson’s Five Point Plan for Debt and Deficit Issues
October 25, 2011 at 7:20 pm in Accountability by Steve Davies 12 Comments
During August 2011, Senator Johnny Isakson, R-Georgia spoke at a series of town hall and similar meetings around Georgia, and presented his “Five-Point Plan” for how the Congress and Federal Government should address the national debt and deficit issues. The summary of the Isakson “Five Point Plan” given below is based on and quotes from a transcript provided by Senator Isakson’s office, of a speech Senator Isakson gave to the Rotary Club of Augusta on August 8, 2011.
Point One – Reprioritize expenditures and get the budget in line with available resources. Senator Isakson recalled his experiences cutting expenditures for his former real estate business during recessionary times, and cutting expenditures for his congressional office operations. “Cutting is difficult but it’s not as difficult as you think.” “I returned $3.1 million to the U.S. government out of my [congressional office] budget in 13 years. It’s about 12% of what’s been appropriated. That’s what we need to do across the board of the United States federal government. We can find those kinds of savings, we can find them through attrition, you can find them by slowing down growth, you can find them by getting more out of less, you can find them by doing more efficiencies, through adding better IT in your company and your country. We can do it, and so cutting is the number one thing we can do to put our expenses in line.”
Point Two – Social Security Reform. “We can’t deal with our long-term debt and deficit problem unless we deal with Social Security and we deal with Medicare.” Senator Isakson mentioned his public support of the Bowles-Simpson Commission proposals, but thought they could be improved by following the strategies used by Ronald Reagan and Tip O’Neil in their 1983 compromise that reformed Social Security.“You push eligibility out in the out years,” noting that the 1983 compromise moved eligibility from age 65 to age 67. “We have to do the same again today. Not to the current recipients, not to current people receiving benefits, but for those down the line like my children and my grandchildren who are probably going to live to be 100, work until they’re 80.”
Point Three- Medicare Reform. Senator Isakson stated “Medicare, depending on whose economist you want to believe, runs until 2017 which is only six years, maybe 2024….Now how do you fix this?…. One way is mean testing the benefit.” Isakson noted that all three of the Ryan Plan, the Bowles-Simpson Plan, and the Gang of Six Plan had proposed means-testing Medicare benefits, and noted that “[Y]ou’re going to have to do some means testing on benefits to get it back sound again.”
Point Four – Tax Reform. Senator Isakson named Ronald Reagan and John Kennedy as his two favorite presidents: “One, they were hawks, they were strong in the military, strong in defense, and two, they both inherited recessions and they both fixed it…. Primarily through tax policy.” Isakson stated that “Simpson-Bowles made a good recommendation to take all tax expenditures, which are known as deductions, and put them all on the table for cutting them out, and with every cut of those having a [corresponding] cut in the rate of your taxation.”
Point Five – Regulatory Reform. Senator Isakson noted that “[T]he regulatory environment in Washington is entirely too pervasive.” Senator Isakson recalled a recent encounter with an old friend and business owner. “[H]e put his index finger on my nose and said ‘I just fired a salesman so I could hire two compliance officers because of the current financial reregulation bill known as Dodd-Frank’. And I think most people in business will tell you that is what’s happening right now, if you’re in agriculture on the regulatory provisions being circulated, if you’re in the automobile industry if you look at the compliance regulations there, if you’re in public utilities you look at compliance regulations, if you run a real estate business or any other company that’s in sales and marketing, the compliance regulations are becoming overwhelming. We need to make sure that we mitigate risk for all Americans but you cannot regulate no risk.” “Too many people in Washington who think we can regulate ourselves into prosperity.”
by Mark Murphy
I agree that these five points are a start in the right direct, but they are no nearly enough. Healthcare is the major area of revision – it must become single payer oriented. We need to begin funding individuals [e.g. education, mental health, etc.] not institutions so that institutions that provide the services become consumer [market] oriented.
Get rid of the EPA, Fannie May, Freddie Mac, take the lid off of the Oil Industry, and go to a flat tax. That will be a good start!
Fair-Tax is the answer to spending problems, collections, job creation and fully funding SSAN fully. This is the most fully investigated, fully vetted system of TAX reform available. It eliminates the ability of the Fed from imposing any income tax by amending the Constitution. A flat tax is what started what we now have and is just a temporary band aid until Congress once again starts screwing with it. The Fair-Tax would take tax matters out of the hands of Congress which is why they oppose it. No longer would they get the “K” Street attention or perks. A simple consumption tax that eliminates Corporate taxes (10 to 26% on each product), Personal income taxes (15% to 38% depending on your income) and eliminating payroll taxes (10.3% out of each check for everyone) and replaces all of these with a 23% consumption tax levied on all NEW only products and all services for everyone. Each person or family would receive a prebate from the Fed for the 23% taxes on the necessities of life up to the poverty level. The federal government spending would become transparent and everyone would pay in proportion to their spending.
I have had this discussion so many time with different folks in my accounting career that I can’t even count ‘em all. Every time I talk with people about this, I am amazed that so few of us “regular people” understand the mechanics surrounding the federal budget, and, moreso, by the startled and angry reactions people have when they learn the real facts. This is a bit complicated but I will try to be as concise as I possibly can to expose the FRAUD that DC has been perpetrating on the American citizenry for years and years…and the ongoing FRAUD concerning the Super-Committee’s job to cut the federal deficit by $1.2 trillion. Most readers will, I believe, be appalled.
Unlike normal people, the federal government (for shortness, FG, below) uses a budgeting technique known as baseline budgeting. In simplest terms, this results in a budget process that says…”okay, we’re budgeting and spending $100 on this item in this year. We know we’ll need to spend say 5% more next year, and then the year after that and so on.” In US history, the FG has always adopted a federal budget (at least until 2007 which is the last budget that the Nation had…Thanks Dem majority and especially Dingy Harry Reid) that included the current year budget PLUS an additional ten year forecast (these “extra” years are known as the “out years”).
For simplicity, I’m going to skim over some details about how the sausage is made so I can more quickly get to the important lesson .
Under the current situation at the FG, the current projected FY 2012 deficit is around $1.6 TRILLION with $2.3 trillion in government revenues and $3.9 trillion in FG expenditures. Hence the FG will spend $1.6 trillion more than it takes in forcing us to borrow another $1.6 trillion to pile on top of the currently outstanding national debt of (as of this morning) over $15 TRILLION. But, wait, despite that devastating figure, that’s not even close to the point of this writing. Again, using today’s situation, the accumulating additional deficits forecast through the nine “out years” is a combined additional $9 TRILLION in national debt!
The super comittee (arguably unconstitutional in its very existence) has been tasked with reducing the deficit by $1.2 trillion. What the corruptocrats would like for us to believe is that, “hey, cutting $1.2 trillion from a $1.6 trillion deficit is pretty good. A decent start. ” DO NOT DRAW THAT CONCLUSION!!!! To do so would be as dumb as the politicians believe we are. You see, the $1.2 trillion “ordered” reduction doesn’t apply merely to FY 2012. No, Sir! Their task is to reduce the deficit of the current fiscal year PLUS the nine out years by $1.2 trillion. So, the bottom line is that EVEN IF the committee meets their mandate and finds the $1.2 trillion, it will represent nothing more than a $1.2 trillion deficit reduction from a forecast ten year deficit of over $9 TRILLION. So, under that scenario, in 2022, instead of our national debt totaling more than $24 TRILLION, it would stand at a mere $23 TRILLION!!! Please analyze this critical point for yourself. Anytime an entity uses baseline budgeting and they say they are reducing deficits, they are doing NO SUCH THING. All that is being sought is a slowdown in the real rate of spending growth….the thought of actually reducing expenditures on a real dollar basis (even inflation adjusted dollars) is not even on the radar.
To put this into context, you may remember Rep. Paul Ryan developing and announcing a deficit reduction plan back in the Spring of this year. You might also recall that the whole of America seemed to be ready to bash his plan as “requiring way too much sacrifice and being way too austere”. Ryan’s plan, as “austere” as it was would have reduced the deficit by some $4 trillion …OVER TEN YEARS! Think about that if you will. Under his plan, Ryan would have reduced the national debt, TEN YEARS OUT, by some $4 TRILLION. Hence, under his “severe” plan, in 2022, the national debt would have been reduced from the currently forecast $25 TRILLION all the way down to $21 TRILLION. It took America 232 years to accumulate $10 trillion in debt, merely another four years to reach $14 TRILLION, and even under the most drastic plan presented another ten years to eclipse $21 TRILLION! America, Have you lost your cotton-pickin’ mind????
If anyone can draw even a single conclusion from this discussion, I pray it is this. Politicians and bureaucrats make a living out of prentending to know all things that the American public do not. Since the argument is false on its face, these corruptocrats have to devise false and misleading rhetoric in order to preserve their arrogant oipinions. If nothing else, I hope that we, as Americans and people, put the DC beltway out touch, ideological, “do anything for a vote”, incompetant corruptocrats on notice. We are NOT dumb or uninformed and we will no longer be pacified by your disengenuos (in fact they are lies) DC speak that would lead us to believe that you are really interested in CUTTING (not slowing down the growth, but CUTTING, damn it) the federal deficit! If you believe what I’ve tried to present in this, I implore you, PLEASE FORWARD THIS TO EVERYONE YOU KNOW. Driving this great Nation into bankruptcy is not good for Conservatives or Liberals for that matter. The fact is, such an action benefits nobody, although most of DC understands that they are in the “elite” and that as a result of their career politician status, they will survive and thrive without regard to WE THE PEOPLE.
Tim M., CPA (ret)
I certainly agree that the SuperCommittee appears to have no interest in real deficit reduction. It is clear that both political parties are more intent in competing against each other than in doing anything beneficial for citizens. Let’s re-elect nobody. Start over, and make them listen to our message.
I haven’t heard any real uproar regarding the SUPER committee, not being able to reach an agreement. My hope is that the Tea Party IS communicating their members disapproval of the actions by both congress and their solution . . . the super committee. I wish we could fire them all.
Thanks for posting all of this for one of the ‘regular people.’ I may have heard this somewhere during 2011 but I’m not sure. I can’t think of any better time to forward and post this to my friends- two days before the deadline (in and of itself, a joke).
well, it’s a start. personally, as someone who will be retiring in a couple of years, i would not mind working a year longer in order not to leave all this debt to our kids and grandkids. now i realize some people will whine and cry and declare “that’s my money that i paid into the fund”. but, are we not also the ones who kept reelecting the fools that were raiding the trust fund?
Fair tax, Term Limits, and a balanced budget amendment would quickly correct our deficit .
I believe we need to return to the original intent of the Constitution. The powers of the Federal Government are specific and few. The infamous Commerce Clause has been used inappropriately to stretch around the Constitution. Its original purpose was to regulate interstate tariffs, and using the word “commerce” instead of “tariffs” is one of the founders’ biggest mistakes.
Entitlement spending, as in Social Security, Medicare, food stamps, unemployment, etc., is fundamentally unconstitutional. It also, as we have proven, is detrimental. It destroys incentive and creates a nation of dependents.
I’m very concerned when someone says that entitlement spending is unconstitutional. Without Social Security, the majority of retired Americans would starve. Without food stamps, much as we’d rather not have them, many children would starve. Many of my friends have their adult children living with them because they can’t find a job. We certainly do not want half of our country to fall into deep poverty. That would lead to a weak country, class warfare, and anarchy. We can do better than that by making good investments in education for our children and investments that create jobs.
How should one define “fair tax”? Should it be judged by the percentage of earnings or the ability to pay?