The House of Representatives is out of session for the rest of the year. I hope that you find this update helpful and informative:
How Much is the Federal Government’s Debt?: Currently, the Federal Government’s debt is nearly $16 trillion. This is an astounding sum of money. It is increasing at a rate of $3.8 Billion a day. To put it in perspective, it would pay the rent for every renter in the United States for 45 years or it would pay the mortgage of every homeowner in the country for the next 17.5 years. The 2011 deficit of $1.3 Trillion was the same size as the entire federal budget in 1996. According to the Chairman of the Joint Chiefs of Staff, “Our national debt is the greatest threat to our nation’s long term security.” To see the debt clock, go here.
Current Federal Spending: In fiscal year 2011, the federal government spent $3.6 trillion, amounting to 24 percent of the nation’s Gross Domestic Product (GDP). Of that $3.6 trillion, $2.2 trillion was financed by federal tax revenues, and $83 billion by excess profits on assets held by the Federal Reserve. The remaining $1.3 trillion was financed by borrowing; this deficit will ultimately be paid for by future taxpayers. The areas of spending are as follows:
- Defense and International Security Assistance — $718 Billion – 20 percent of budget
- Social Security — $731 Billion – 20 percent of budget
- Medicare, Medicaid, and Children’s Health Insurance Program — $769 Billion – 21 percent of budget
- Safety Net Programs (non-health insurance and social security) – aid to individuals and families — $466 Billion – 13 percent of budget – (This includes food stamps, supplemental security income for elderly or disabled poor, school meals, housing assistance
- Interest on the National Debt — $230 Billion – 6 percent of budget
- Other – $700 Billion – 20 percent – (This includes providing health care and other benefits to veterans and retirement benefits to retired federal employees, Food and Drug Administration, Environmental Protection Agency, Federal Department of Education, scientific and medical research, and basic infrastructure such as roads, bridges, and airports).
Congressional Budget Office (CBO) Report: Last week, the non-partisan Congressional Budget Office (CBO) released its annual report on the federal budget and its corresponding economic forecast. The report provides data on two scenarios: (1) the CBO baseline projection based on current law with tax increases and spending cuts currently planned for January 2013 and (2) the CBO alternative fiscal scenario based on whether lawmakers allow current policies on taxes and spending to remain in effect. My summary is below. To see the full report, go here.
CBO Baseline Projection: Under the baseline projection, changes in taxes and spending are scheduled to take place in January 2013. If those changes come to pass, they will boost tax revenues and cut spending, yielding a deficit in 2013 almost $500 billion less than the $1.1 trillion shortfall projected for 2012. In addition, unemployment will increase. In CBO’s judgment, the sharp increases in federal taxes and reductions in federal spending that, under current law, are scheduled to begin in calendar year 2013 are likely to interrupt the recent economic progress resulting in what will probably be considered a recession in 2013.
CBO Alternative Fiscal Scenario: Under the alternative fiscal scenario, federal lawmakers later this year extend existing tax cuts with no significant reduction in spending. In doing so, the CBO predicts that deficits will be much larger and debt will climb to nearly 90 percent of GDP by 2022. Real GDP would be higher in the first few years of the projection period than in CBO’s baseline economic forecast, and the unemployment rate would be lower. However, the persistence of large budget deficits and rapidly escalating federal debt would hinder national saving and investment, thus reducing GDP and income relative to the levels that would occur with smaller deficits. In the later part of the projection period, the economy would grow more slowly than in CBO’s baseline, and interest rates would be higher. Ultimately, the policies assumed in the alternative fiscal scenario would lead to a level of federal debt that would be unsustainable from both a budgetary and an economic perspective.
CBO Director’s Comments: At the press conference to announce the above, CBO Director Doug Elmendorf says that taxpayers will have to either pay “significantly” more in taxes or accept less in the way of government services, as current deficits are “unsustainable.” He also urged federal lawmakers to find a way to get the government’s long-term debt problems under control noting the current economic issues facing countries in Europe. He said their experiences demonstrate that “waiting to make decisions until action is forced ends badly.”
Impact on South Carolina: In view of the above, it is critically important for our state to be prepared for budget cuts in terms of money coming from the Federal Government and for significant constrictions on the ability to borrow money for capital projects. We should have a contingency plan in place for how South Carolina’s state government will deal with the challenges presented by problems with the Federal Government associated with the debt. Therefore, in the coming months, I am working with other state elected officials in these areas. I am also urging our elected federal representatives to act and not delay any longer in addressing the debt.
Planning for the 2013 Legislative Session: The 2013 legislative session begins on the second Tuesday in January. If elected to the State Senate, I appreciate input from constituents on the critical issues facing our state and area including tax reform; spending reform; K-12 education; the costs of higher education; health care; economic development; job growth; and the underfunded liabilities in our state’s retirement systems. Your input is welcome on any issue important to you. Please email me back or contact me by phone or in person at your convenience.
Grass Cutting in the SCDOT Right of Way: Grass is growing in right of ways around our district. DOT has staff cutting the grass. If you are aware of an area where high grass is obstructing vision for drivers as they enter or exit certain roads in our County, please call the SCDOT at 641-7665 or let me know and I will pass on the information.
End of Session Town Meetings: Like the past three years, I plan to hold end of session town meetings around the district. Based on constituent requests, I will hold those after the summer vacation season ends. The dates, times, and locations will be provided in future updates.
Aiken Senior Extravaganza 2012: The City of Aiken will have its annual Aiken Senior Extravaganza again on Wednesday, September 19 at the H. Odell Weeks Center from 8:00 a.m. until 2:00 p.m. The event offers seniors, and those interested in issues facing seniors, an opportunity to spend a day in educational seminars and to browse the display fair. The educational seminars will be limited to the first 300 people to register including a t-shirt and catered lunch with Keynote speaker. The Health Fair and displays will be open to the public and pre-registration is not required. Age: 50 and over: Cost: FREE : Wednesday, September 19, 8:00 a.m. – 2:00 p.m. For more information, please call 642-7631.
Free Small Business Workshop: The Aiken Small Business Development Center is offering a free tax workshop for prospective and new small business owners. The workshop will be held from 9:00 AM to 4:00 PM on Wednesday, September 5, 2012, in the Business and Education Building, Conference Room 124 at USC Aiken. The Small Business Tax Workshop contains general information about different types of business organizations, record keeping requirements and business tax returns. The employment tax segment provides an overview of Forms 940, 941 & 944, including e-file and EFTPS due dates. There is also a discussion on Employee Classification (Employee vs. Independent Contractor). Classes are taught by instructors who are qualified to practice before the IRS (Enrolled Agents and Certified Public Accountants) and by SCDOR and SCDEW Revenue Agents. To register for the workshop or for more information, please contact the Small Business Development Center via e-mail: SBDC@usca.edu or by telephone: 803-641-3646.
Speaking with Groups Around the District: Several local groups have invited me to attend one of their meetings to provide a legislative update. If you have a group that would like for me to come to a meeting, please let me know.
Report Waste, Fraud and Abuse in State Government: To report waste, fraud and abuse in state government, you can call: 1-855-SC-FRAUD.
Facebook: I have a Facebook page for Representative Tom Young. Please “like” the page to receive updates during the week from me on Facebook.
Tom Young’s Website: My website can be reached at www.tomyoungforsenate.com. There are links to a variety of constituent services; the status of sponsored bills; and roll call votes. Please add my web site as a bookmark on your computer.
State House Tours: Tours are available for the S.C. State House by calling (803) 734-2430. If you set a tour between January and June and it is on a Tuesday, Wednesday, or Thursday, please let me know so I can do my best to see you.
Email Updates: If you know of people in or around District 81 who do not receive my updates but they would like to get them, please email their names and email addresses to me.
Road Issues: If you see a road problem, call the SCDOT at 641-7665 or Aiken County at 642-1532 to report the problem. If you do not get a prompt response, please let me know at tom@tomyoungforsenate.com or call me. Generally, most paved roads in the County are maintained by SCDOT and are identified on the road sign poles by a small black and white sign listing the road number, such as S-2-1669. Most unpaved roads in the County are maintained by the County.
Thank you for the opportunity and the honor to represent you. Please let me know if I can help you in any way or if you have questions about these or other issues. Your feedback is meaningful and appreciated.
Sincerely,
Tom Young
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