Smoke & Mirrors

Senate OKs $81B for Iraq, Afghanistan
The Guardian
Thursday April 21, 2005 11:16 PM
By LIZ SIDOTI
Associated Press Writer

WASHINGTON (AP) - The Senate on Thursday overwhelmingly approved $81 billion for wars in Iraq and Afghanistan in a spending bill that would push the total cost of combat and reconstruction past $300 billion.

Note: Since there are less than 300 million Americans, that means in less than four years, the US Government has spent more than $1,000 for every man, woman, and child in America on Wars in Afganistan and Iraq. Furthermore, the Federal deficit went from a surplus when Mr. Bush took over, to an estimated deficit of $350B per year during his term.

Clearly then, the deficit did not get where it is now from wars in Afganistan and Iraq; since at most 25% of the deficit shows up in the funding report shown above. Nor is the estimated $300 billion a year trade deficit attributable to the wars in Iraq and Afganistan. The two biggest causes of the budget deficit are the declining revenue from corporate income taxes, and the tax cuts enacted during Mr. Bush's first term. U.S. GNP and GDP figures for the period 2000 - 2004 do not suggest revenue was not available; but rather that the U.S. Treasury did not end up with the funds to meet it's outlays.

It is clear the ratio of corporate income tax paid to individual income tax revenue paid to the Government has declined significantly. In 1962 the ratio was about $1 corporate for each $2 individual. By 2004 it was $1 corporate for $5 individual. By 2004, corporate income taxes comprised just 10% of total federal revenue, where they had been 20% in 1962.

The much ballyhooed estate tax was approximately 2% of total revenues in 1962, yet only 1.3% in 2004.

Which probably just goes to show that corporations and estates have done an effective job of shielding their assets from taxation. Unfortunately this shifts the burden of financing our democracy squarely on the shoulders of wage-earners.