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Posted: April 19, 2012 9:55 p.m.

Perugino: It’s still the spending

I know I've already used this famous slogan of Bill Clinton from his last presidential campaign a number of times, but holy cow Batman, we are drowning in endless preaching on increasing revenue (secret word for taxes) and totally ignoring spending.

The Buffett Rule - what a masterful misdirection play used to avert attention from the gargantuan spending and to invoke class warfare. Under the Buffett Rule, businesses and families earning $1 million will pay a minimum 30 percent effective tax rate. The president says those Americans aren't paying enough, and as proof he points to billionaire Warren Buffett's secretary who reportedly pays a higher tax rate than her wealthy boss. But right from the get go, the president is distorting the facts.

Many wealthy Americans who have done well like Buffett receive dividends and capital gains, a form of investment income that is subject to multiple levels of tax. First, the investment income results from investment. This capital didn't appear out of thin air. It was earned and taxed previously, often many times over at rates up to 35 percent.

Then, once invested, it generates income that is taxed at the corporate level at a 35 percent rate, and then it's taxed again at the individual level at a 15 percent rate on dividends and capital gains. The combined rate on corporate earnings alone is over 45 percent, and this is all after the first layer of tax.

Conveniently for him, President Obama only talks about the last level of tax, the 15 percent portion, leaving out the rest. He only wants to talk about the last toll paid, not the total, and that's how he makes his disingenuous argument. And all of this leaves out the final tax that many wealthy Americans pay - the death tax, which is set to return to its 55 percent level in 2013.

The solution to the national debt, deficit, decaying economy and unemployment is not the revenue or taxation level but the spending. The taxes are never going to overtake uncontrolled spending.

Two years ago in Las Vegas, the General Services Administration - a federal agency that helps manage other federal agencies - blew through $820,000 in taxpayer funds for a lavish, booze-fueled conference for 300 employees, complete with magic shows, margaritas, and a self-produced rap video making fun of the spending. (It's worth mentioning that in 2009, Senate Majority Leader Harry Reid, D-NV, asked White House Chief of Staff Rahm Emanuel for help in encouraging government meetings to be held in Nevada.) That's just the giant tip of the iceberg for this wasteful behemoth, as reports have emerged of other taxpayer-financed "business trips," including junkets to Hawaii, South Pacific islands, Calif.'s Napa Valley and Palm Springs.

Sadly, government waste, fraud and abuse aren't limited to just one agency. Look no further than the Department of Energy whose Inspector General said that he's overseeing 250 to 300 open criminal investigations into the "entire spectrum of DOE activities," including 100 reviews involving more than $35 billion in stimulus dollars. In addition, it was reported that the investigators are looking into the "use of thousands of outside contractors, federal money being diverted for personal use, false data in grant and loan applications, conflicts of interest and incomplete and inferior work from DOE weatherization grant winners." To date, those investigations have led to eight criminal prosecutions and the recovery of $2.3 million.

Of course, the question must arise - how commonplace is this waste? Given the sheer size and scope of the government, which is set to spend $6.3 trillion this year, it is impossible to say. But just as pernicious as the countless billions that have been squandered is the cancerous attitude that has taken hold in Washington and that is metastasizing across the land. It's one of thoughtless entitlement in which individuals who live off the bureaucratic beast reflexively take and spend more all while doing less, giving no consideration to those who fuel their appetites.

Under the Obama Administration, the situation has gotten worse. The president turns to bigger government and higher taxes as a solution to every problem. On health care, unemployment, education and energy, Obama has reflexively pursued a policy of more is more - more spending paid for with more taxes. This week served up another prime example when the president called for increased regulations and $52 million in spending to combat high gas prices; even though he admitted that the measures wouldn't have any immediate impact on the price at the pump.

As the people lose control over this unrestrained government, those with the most cash are the ones with a voice.

In an interview last week with The New York Times, former Democratic congressman Patrick Kennedy revealed that access to the Obama White House is a "quid pro quo" based on how much money one contributes to the president's campaign. That news, though, likely is not a shock to an American people who have come to expect the worst, not the best, from Washington.

However, that is not how America was built; it is not the government we must have, nor is it the one that the founders envisioned.


William Perugino is active in local and regional politics and can be reached at william.perugino@jacobs.com.

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