National debt rises to over $40 trillion

America’s national debt has risen to over $40 trillion. That works out to more than $160,000 per citizen, and more than $360,000 per taxpayer. The federal government is spending more than $7.4 trillion per year, resulting in a budget deficit of over $1.8 trillion.

Trump repeatedly promised to cut the national debt while on the campaign trail. But he has increased it instead. The national debt has risen from $36 trillion to $40 trillion in Trump’s second term in office, and rose from $20 trillion to $27.8 trillion in his first term in office. During Biden’s one term, the national debt rose from $27.8 trillion to $36 trillion.

Trump ordered the Navy to tear out an improved jet-launch system, at a cost of billions of dollars, because he didn’t like the new technology. Congress should stop that from happening.

Congress should cut the budget deficit by getting rid of the Low-Income Housing Tax Credit, which “inflates construction costs, crowds out market-based development, and funnels most of its benefits to investors and developers instead of renters….Due to unnecessary rules, fees, and bureaucratic delays, LIHTC-financed projects often cost 20 to 40 percent more per unit than comparable market-rate developments.”

Congress should abolish “the multibillion-dollar Universal Service Fund,” which “pays for what often amounts to slow internet access for customers who actually no longer use it.” Under that program, “Taxpayers pay $340,000 annually for unused internet on deserted island.”

Congress should get rid of “1031 exchanges,” which “allow a real estate developer to defer and possibly avoid paying the capital gains tax on the profitable sale of a building.”

Congress should get rid of the Qualified Business Income deduction, which costs about $65 billion per year. It is generally viewed by economists as economically inefficient and unsound. As a source on the web notes,

Congress should end funding for lawsuits by federal agencies like the Equal Employment Opportunity Commission. If people have valid discrimination complaints, they can bring a lawsuit on their own, under federal laws allowing people to sue for damages and attorneys fees when they are discriminated against. Government agencies do not need to sue on their behalf. That just stacks the deck in favor of plaintiffs and against defendants.

When Congress first set up agencies like the EEOC, people’s ability to sue on their own was quite limited, covering only backpay and injunctive relief. But the 1991 Civil Rights Act and other laws radically expanded workers’ right to sue for discrimination, allowing discrimination victims to seek compensatory and punitive damages. And the Supreme Court interpreted the civil rights laws as allowing plaintiffs — but not defendants — to recover attorneys fees if they win, tilting the playing field in favor of plaintiffs. So there is no longer a need for agencies like the EEOC to bring lawsuits. That just stacks the deck in favor of plaintiffs.

Letting agencies like the EEOC sue employers is also a bad idea, given the fact that they often are left-wing and are hostile to free speech. The EEOC improperly ruled that a single, non-threatening email was “religious harassment” that would poison the work environment for a “reasonable person.” As a result, it ordered the Labor Department to pay $20,980 in taxpayer money, $10,000 of it to the Labor Department employee who complained about the email, and $10,980 to her lawyer.

And the EEOC triggered public outcry and criticism from law professors in 2016 when it revived a racial harassment complaint over a co-worker’s wearing a harmless cap with the Gadsden flag, the yellow flag with the words “Don’t Tread on Me” below a coiled rattlesnake. That EEOC ruling ignored both the non-racial nature and origins of the flag, and the Supreme Court’s requirement that a harassment plaintiff show that conduct is “severe or pervasive,” not just one display, to constitute harassment. It ignored court rulings limiting liability for “second-hand” exposure to speech, both in that ruling, and an earlier EEOC ruling criticized by a constitutional law professor.

Civil rights agencies often discriminate against their own employees. The EEOC has a history of systemically discriminating against employees, and systemically violating the rights of its own employees under the Fair Labor Standards Act. For example, the Washington Post reported in 2009 that the “Equal Employment Opportunity Commission, responsible for ensuring that the nation’s workers are treated fairly, has itself willfully violated the Fair Labor Standards Act on a nationwide basis with its own employees, an arbitrator has ruled.”

Similarly, the EEOC was found guilty by a court of systematic, illegal, discrimination against white males in Jurgens v. Thomas, 29 Fair Empl. Prac. Cas. (BNA) 1561, 1982 WL 409 (N.D.Tex.1982). The EEOC has a much worse record of labor and civil-rights violations than most corporations and agencies with a similar-size workforce.

In short, according to journalist John Berlau, the EEOC was like “the fox guarding the henhouse.” (See John Berlau, “Discrimination at the Opportunity Commission,” Insight, May 19, 1997).

Congress should get rid of tax-exemptions for tips and overtime. There is no reason to give special tax breaks to people with tip income. Doing so increases the budget deficit by at least $8 billion annually.

Exempting tip income biases the tax code in favor of the service sector and against manufacturing, which is at odds with the goal of expanding American manufacturing. Exempting tips from taxes makes as little sense as exempting money earned on Wednesday from taxes.

As Jared Walczak of the Tax Foundation, who supports cutting wasteful spending, explains:

“No Tax on Tips” may sound good, but it’s poor policy.

Most low-income workers don’t receive tips, and not all tipped workers are low income. Among workers in the bottom half of hourly wages, only 4% are in tipped occupations. Why should certain categories of low-income workers receive a tax preference not available to others at similar income levels?

(In fact, many lower-income tipped workers are already exempt from federal income tax. Thirty-seven percent of tipped workers have no federal income tax liability, so the exemption would be targeted at those who already have relatively higher incomes. If your mental image is of a diner employee who makes relatively little, that may be the wrong image of the beneficiaries of this policy.)

Exempting tips, moreover, creates an incentive to convert more compensation to tips to avoid income tax. It’s not at all clear that a further expansion of tipping culture is desirable, especially if it’s in realms where it would only happen because of the tax preference.

And even assuming no increase in tipping, exempting tips will cost an estimated $118 billion over 10 years at the federal level, and meaningful amounts in any states that follow suit, while creating largely unhelpful incentives rather than prioritizing economic growth and/or delivering targeted relief. If you want to provide tax relief, is this really the best way to do it?

Does it make sense to exempt tips from income taxes? No, explains Catherine Rampbell in the Washington Post:

Congress should increase funding for the IRS to catch tax cheats. That would cut the budget deficit by billions of dollars. As a news story notes, “Forecasters generally agree that beefing up tax enforcement is a money maker for the Treasury because auditors bring in far more cash than it costs to employ them.” The Congressional Budget Office has estimated that tax collections would rise by at least $207 billion if $80 billion more were spent over a decade in expanding the IRS’s enforcement staff. Others have estimated that tax collections would rise by $560 billion if $80 billion more were spent on tax enforcement over a ten-year period.