Home Government

Government

Deficit

Deficit

What Is the Government Deficit?


A deficit is the difference between a reference amount and the actual sum of money. In the government, the deficit is difference during a fiscal year between receipts received and the outlays. Receipts can include money received from revenue such as taxes while outlays are things that the government spends money on, which can be on-budget or off budget.
When looking at a government’s deficit, there are two important elements: the structural element and the cyclical element. Together these two elements make up the total observed budget deficit.
Structural deficit: Any debt that is left over during a business cycle when the tax levels are much lower than the general spending level of the government. 
Cyclical deficit: The additional required borrowing during a point in a business cycle where levels of unemployment are high, meaning high expenditures and low revenue.
The government’s deficit can be discussed with or without interest. The total deficit or just the deficit often includes both the debt’s interest as well as the spending itself. Meanwhile, the primary deficient is just the difference between government spending and the total revenue of different taxes.

Solutions for the Deficit
There are different ways to modify the government’s deficit. The most common suggested solution is to either reduce any excess spending by the government or to raise taxes. Structural deficits occur when either the spending is too high or revenue from taxes is too low. Modifying either or both of these things can help reduce the deficit.
When tax raises are considered a possible solution, they can be raised evenly across the board, or with consideration of what groups can better handle a tax increase. For example, those with higher income, longer life expectancies, or those who have previously received larger tax cuts in the past may be targeted. Businesses or government agencies can also be targeted in a specific fashion as well.
Another solution is to make changes to the tax code. Changing the code can result in less tax cuts or increases in tax revenue. For example, allowing for fewer deductions of closing various tax loopholes are possible ways to effectively produce the same result as increasing taxes.
The government may also choose to refinance some of their debt. The government makes annual debt service payments based on their overall public debt, which can include both principle and interest. By refinancing, it allows the government to set us debt service payments that are lower than the original amount, which reduces expenditures by the federal government without actually cutting spending.

The “Fiscal Cliff” will Certainly Affect States’ Budgets

The “Fiscal Cliff” will Certainly Affect States’ Budgets


The fiscal cliff is the expiration of federal tax provisions and implementation of spending cuts scheduled for January 2013.  If the fiscal cliff occurs, states—especially those connected to the federal tax code and federal spending—will see fewer federal deductions.  A recent report by Pew Center on the States, titled The Impact of the Fiscal Cliff on the States, shows how scheduled federal tax changes will affect states.  


The scheduled tax changes include about $393 billion (or 80 percent) of the fiscal cliff’s total amount.  If federal taxes increase, states tied to the federal tax code will see increases in state revenue as well.


Here’s how the fiscal cliff affects states:


•    25 states and D.C. would see higher state tax revenues from lower federal deductions
•    30 states and D.C. would see increases in revenue from tax credits after federal tax credits are reduced
•    23 states would see deductible businesses expenses expire and result in higher taxable corporate income in the coming term
•    33 states can collect more estate tax revenue by 2013
•    6 states allow citizens to deduct federal income taxes from state taxes, which would reduce state tax revenue in the coming term


The scheduled spending cuts equal $98 billion of the fiscal cliff.  $49 billion of the spending cuts are required by the Budget Control Act of 2011.


If the fiscal cliff occurs, the federal deficit is reduced by $491 billion.  Yet, the Congressional Budget Office reports the fiscal cliff would cause significant economic digression in 2013.  


Anne Stauffer, the Pew project director, stated: “Given the uncertainty about whether any or all of the policies in the fiscal cliff will be addressed temporarily or permanently, it is important to understand that the effects of the different components will vary across states.”


Source: Pew Center on the States

Virgin Islands Senator Indicted for Multiple Types of Fraud

Virgin Islands Senator Indicted for Multiple Types of Fraud


On November 8, 2012, the US Attorney’s Office for the District of the Virgin Islands announced that Senator Alvin Williams, Jr. was indicted for working with others to engage in bribery, mail fraud, and wire fraud.  Two legislative members, Garry Sprauve and Kim Blackett, were indicted as well.  


The indictment claims the following:


Williams gave the commissioner of the Virgin Islands Department of Public Works a bribe of $10,000 on September 5, 2009 to grant work by Ace Development Inc in the future.  Williams had interest in the company.  


Williams gave bribes to developers for the Raphune Vista housing project in St. Thomas from February 21, 2007 to November 8, 2011.  He also promoted legislation for the developers so Ace Development Inc could provide rented equipment to the developers.  


Williams received a bribe of $10,000 for supporting legislation for the Tutu Park wind turbine project from September 1, 2008 to September 31, 2008.  He is suspected of receiving $25,000 on September 22, 2008 as well.  


From 2006 to December 2011, Williams and other staff members were suspected of taking campaign contributions and using the funds for personal expenditures.  He accepted bribes from September 2010 to July 28, 2011 for increasing the salaries of staff members as well.  


Lastly, Williams and other staff members are suspected of engaging in wire fraud so Williams could pursue online degrees from the University of Phoenix.  The defendants reportedly defrauded the Virgin Islands government to use public funding for the non-legislative education.  


Williams faces up to 20 years in prison and fines up to $250,000.  The indictment is asking for $1,129,365.76 in restitution.  


U.S. Attorney Ronald W. Sharpe stated, “It is a breach of the public trust for public officials to use their office for personal gain.  I encourage anyone with direct knowledge of illegal acts or who has any information concerning corruption in the Virgin Island to call the Public Corruption Task Force at (340) 715-6516.”


Source: Federal Bureau of Investigation
 

Baylor University Medical Center to Pay over $900,000

Baylor University Medical Center to Pay over $900,000


On November 27, 2012, the Department of Justice announced that Baylor University Medical Center, Baylor Health Care System, and HealthTexas Provider Network agreed to pay the federal government $907,355 for submitting false claims to Medicare.


False claims were also submitted to the Federal Employees Health Benefit Program (FEHBP) and Civilian Health and Medical Program of the Uniformed Services (TRICARE) for radiation oncology services.  The radiation is highly sophisticated and uses tools for extreme precision to protect surrounding organs.  


The United States claimed that Baylor University filed the improper claims from 2006 to May 2010. During this time, they doubled their claims to Medicare for radiation treatment plans, billed more expensive services when a less expensive service was needed, billed services without providing documentation of the services or medical records, and more.  


Stuart F. Delery with the Justice Department’s Civil Division stated: “Physicians who participate in Medicare must bill for their services accurately and honestly.  The Department of Justice is committed to ensuring that federal health care funds are spent appropriately.”  


Sarah R. Saldaña, the U.S. Attorney for the Northern District of Texas, stated: “This civil recovery is a testament to the efforts of the Department of Justice to hold all parties, regardless of position, accountable for the submission of improper claims to federal health care programs.”


The Civil Division for the Justice Department, the U.S. Attorney’s Office for the Northern District of Texas, the Department of Health and Human Services’ Office of Inspector General, the FBI, and the Defense Criminal Investigative Services helped during the settlement with Baylor.  


The settlement was possible because of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) that was created by the Justice Department and Department of Health and Human Services in May of 2009.  


Source: Department of Justice
 

Jobless Benefits May be Cut by 10%

Jobless Benefits May be Cut by 10%

 

Forced federal budget cuts initiated by Congress could cost the jobless up to 10% in their unemployment benefits. This proposal would take place March 1st if the budget proposal passes.
 
Aside from unemployment benefits, many other safety net programs, including Medicaid and food stamps, are protected from the $85 billion in forced spending cuts. 
 
The unemployment benefits vulnerable to the budget cuts are those provided by the federal government. These federal benefits kick in when your state benefits, which last up to a maximum of 26 weeks, are exhausted. Eligible workers currently can collect these federal benefits for up to 47 weeks. Federal unemployment benefits, which average roughly $300 a week, act as an emergency measure. Congress has been offering said benefits since 2008 as a stop-gap to protect the millions of Americans struggling to find new employment in a difficult economy.
 
The forced spending cuts are set to take effect next month to trim the program’s funding. If the budget goes through, recipients of unemployment benefits could lose an average of nearly $400 through the end of the fiscal year, which ends on September 30th. 
State benefits would not be impacted by the proposed budget cut. 
 
An estimated 3.8 million Americans are receiving federal unemployment benefits. The reduction in individual employment benefits will vary based on where the individual lives. This variance arises because states are scrambling to adjust their unemployment system if Congress fails to avoid these cuts. The longer a state waits; the next unemployment check a person receives could be very small. 
A number of the proposed federal cuts will not be felt immediately, but the reduction of unemployment benefits will surely ripple through the economy at a fairly rapid pace. 
 
The proposed budget cuts would also slash the resources an unemployed person can utilize at job centers, as funding aimed at assisting disabled workers, disadvantaged youth and low-skilled adult workers is set to be sliced. Veterans’ transition assistance programs, which aid military personnel locate jobs when they return from deployment, would also be negatively affected if the proposal goes through. 
 
Moreover, states will also lose a portion of their funding to administer the unemployment benefit program, which could result in slower processing claims and widespread staff layoffs.  
 

Throng of Hundreds of Thousands March in Puerto Rico against Gay Rights

Throng of Hundreds of Thousands March in Puerto Rico against Gay Rights

 

Roughly 200,000 religious Christians marched to voice their anti-gay sentiment in Puerto Rico on Monday afternoon. The march is considered the largest anti-gay demonstration in the commonwealth’s history.
 
Forming around San Juan’s Capitol building, hundreds of thousands religious Puerto Ricans halted traffic while defending the traditional heterosexual marriage concept. Traffic was halted for miles as the throng protested against the premise of granting gay couple’s legal rights. 
 
The mass demonstration, which took over three weeks to organize, attracted protested from all sects of the Christian religion who vehemently oppose same-sex marriage. And while many of these religious individuals simply rallied against the premise of same-sex marriage, a decent percentage were openly opposed to granting any rights to homosexual couples, including protections against violence. 
 
The protest comes in light of efforts by some Puerto Rican lawmakers who are seeking to pass an amendment to the nation’s Domestic Violence Act 54, which would provide protection rights for all couples, gay or straight. 
 
Puerto Rican Senator Luis Vega Ramos claims that the measure is essential because it provides justice and equal access to protection from intimidation, assault or domestic violence. However, in Puerto Rico, massive opposition to the movement could prevent homosexual couples from receiving any sort of protection against acts of violence.
 
The throng of protestors, who blasted gospel music and brandished large posters and signs, alleged that the proposed law would discriminate against the church. 
 
“We are worried that the legislation will discriminate against the church, and we are concerned that public education will be used to damage our children because it presents them with behaviors that their parents don’t support,” said Pastor Cesar Muniz, a spokesman for the nation’s religious group Puerto Rico for the Family. 
 
Monday’s protest marks the largest anti-gathering rally in the history of Puerto Rico. The rally deeply offended members of the gay, lesbian, bisexual and transgender community, as many LGBT members held small counters protests that, unfortunately, went unnoticed. 
 
A number of Puerto Rican legislators have expressed opposition to same-sex marriages while still fighting for violence protections for gay couples. The American commonwealth remains largely divided over the issue, especially among the religious communities. 
 
 

 

German Chancellor Gives-in to Conservatives on the Issue of Gay Rights

German Chancellor Gives-in to Conservatives on the Issue of Gay Rights

 

German chancellor Angela Merkel has decided not to endorse an expansion of gay rights, even as many members of her Christian Democratic party are willing to embrace change. 
 
The chancellor is under pressure to take a stand after the nation’s high court ruled that same-sex couples should be legally permitted to adopt their partner’s adopted children; prior to this ruling, same-sex couples could only adopt their partner’s biological children. The ruling provided to momentum to some in Merkel’s party to introduce new laws that would equalize tax rights for gay couples; however, social conservatives among the Christian Democratic Party halted such efforts. 
 
That said, key members of Merkel’s Christian Democratic Party are pondering a U-turn in policy with regard to policy on gay couples after the court ordered the government to grant them extensive adoption rights. 
 
The nation’s constitutional court rules that homosexuals should be allowed to adopt a child who is already adopted by their partner and that the current ban on gay adoption was unconstitutional because it debased the principle of equal treatment for all. 
Germany’s court gave the German government until July of 2014 to implement the ruling into law. “We will implement the constitutional court’s ruling into law, but at the same time, we will evaluate whether tax amendments are necessary,” said the leader of the party’s parliamentary group. 
 
Last December, the Christian Democratic Party issued a proposal to provide same-sex couples with the same tax perks as heterosexual couples after fervent debate. The apparent change of heart was criticized by the opposing Social Democrats, who accused the Christian Democratic Party of being forced by the court to embrace social change. 
 
The Christian Democratic Party has sought to bolster its urban appeal ahead of the election in September by giving more defined roles to ethnic minorities and women. 
Historically a staunch supporter of traditional family values, the Christian Democratic Party also faced pressure from within to lure homosexual voters; however, such an initiative seemed too ambitious for many at Congress last December. 
 
In Germany, homosexual couples can form civil partnerships but are not allowed to wed. Gay activists and opposition parties accuse Chancellor Merkel’s center-right government of avoiding the issue of gay rights. Civil partnerships in Germany do not provide the same tax privileges awarded to married couples. 
 

Michigan Court Delays Decision on Gay Marriage Ban

Michigan Court Delays Decision on Gay Marriage Ban

 

A federal judge decided on Thursday that he will wait for the U.S. Supreme Court to rule on two landmark gay marriage cases before deciding on whether Michigan’s ban on gay marriage is constitutional. 
 
“I think we must wait,” said U.S. District Judge Bernard Friedman in a hearing brought by two women who are requesting joint custody of their three children. “I choose not to make a decision until I know what the Supreme Court is going to do.” 
 
The delay disappointed Jayne Rowse and April DeBoer of Hazel Park who were involved in a custody case that prompted the hearing to question the gay marriage ban that Michigan voters approved in the 2004 election.
 
“We were hopeful that Judge Friedman would make a decision today, but it was cautious optimism,” DeBoer said. “We are still confident that he will rule in favor of us, and we will just have to wait until the end of June to see if that is what he is going to do.”
 
Rowse expressed shock when Friedman said the Supreme Court would not consider his opinion when deciding one of the country’s most widely debated social issues. “I believe his opinion would have carried significant weight,” said Rowse after the hearing. 
 
Friedman; however did acknowledge that the lawyers representing the women presented a “compelling case” in claiming they were denied equal protection rights. That said Friedman also stated that the state attorney’s office argued the law efficiently as they relied on precedents that could be upheld or overturned by the United States Supreme Court. 
 
Friedman expects to be ready to rule on the state law in late June. “Hopefully the U.S. Supreme Court will provide us with some direction, and I believe they will,” Friedman opined. 
 
The delay came after an hour of arguments from assistant attorney general, Joseph Potchen who represented the state and Carole Stanyar, who defended the women. Potchen began his statement by complimenting the couple on their parenting skills, but then shifted course by saying the women’s right were not violated based on the Constitution. “There is no right to marry someone of the same sex; it is our position that the public of Michigan should decide this issue, and not the federal court system,” Potchen stated. 
 
Potchen believes that social policy decisions such as same-sex marriage are more accepted if they come from the will of the general public rather than the courts. Staynar countered this claim by saying marriage is a fundamental right and cannot be infringed upon, even with a vote from the public. “Fundamental rights should not be subjected to popular votes,” she claimed. “This is the prominent civil rights issue of our generation; this is the last remaining group in American society that is denied equal protection under the law.”
 
Currently, 37 states in the U.S. have constitutional provisions or laws defining marriage as only taking place between one woman and one man. 
 
 
Source: Associated Press

China’s Government Looking to Fight Inequality

China’s Government Looking to Fight Inequality

 

Last month, a report issued by the China National Bureau of Statistics revealed that inequality in the nation is slowly narrowing. Although good news, public outrage concerning unearned privilege is still growing as China’s online public is growing furious over the parade of corrupt public officials partaking in the illegal procurement of properties. Gong Aiai, one of the latest officials in a long-line of corruption was a former bank official who was arrested this week on suspicion of procuring 41 homes in Beijing with improper identity papers. Ms. Aiai; however, appears to be an amateur when compared to Zhao Haibin, a former police chief, accused of owning 192 properties throughout the Guangdong province.

Given the obscene amount of corruption taking place in the nation as of late, this week marked an opportune time for China’s cabinet to pass a plan to fight inequality. The plan however, is broad in scope and thin in details.

Supported by the National Development and Reform Commission, the nation’s planning body, the plan points to 35 goals, including some direct remedies to combat inequality, such as increasing taxes on the rich and transferring said funds to the poor. The goals also encompass subtle measures, such as liberalizing the nation’s artificially low interest rates, which diverts income from savings to investment.

A number of governments throughout the world redistribute income after it is earned; however, China’s plan aims to intervene far earlier in the process. China wants a higher proportion of income to be a pain on wages as oppose to profits. To this end, the minimum wage will increase by at least 40% by 2015. Moreover, the plan demands more respect for fairer compensation when land owners sell their properties.

Many of these initiatives keep with existing trends as the nation has increased spending on social security, education, health care and public housing from 30% to 36%. These percentages should continue to rise over the next three years according to the initiative.

The plan shows the government is aware of the nation’s disturbing divisions; however, execution and respect for the imposed regulations remain a question.

Officials close to the government expressed doubts concerning the practicalities of expanding pilot property taxes on luxury homes and other measures that would distribute income. Corrupt officials in the nation’s government holding scores of potentially taxable properties will invariably hope that such delay and doubt continues.