From an article at Power Line by Steven Hayward:
Even new math won’t make this work!
From an article at Power Line by Steven Hayward:
Even new math won’t make this work!
Sorry for the lack of optimism in the new year, but the basically the average American was not the winner in the budget deal passed by Congress this week. Yes, we avoided the fiscal cliff, but we continued the direction of more government spending and bigger government.
Bloomberg reported yesterday that the bill the Senate passed would raise taxes on 77 percent of American households. The Hill reported yesterday that the bill the Senate passed will add roughly $4 trillion to the deficit when compared to current law, according to new numbers from the Congressional Budget Office (CBO).
On December 31st, Breitbart.com reported that the Congressional Budget Office has determined that the last-minute fiscal cliff deal reached by congressional leaders and President Barack Obama cuts only $15 billion in spending while increasing tax revenues by $620 billion—a 41:1 ratio of tax increases to spending cuts.
So where do we go from here? I guess it depends on what America wants to be. When you look at the history of America, you realize that America was settled by people who were not content to stay where they were in their social or religious situations. The Pilgrims came here to find a place to practice their religion without government interference, the Irish fled the potato famine and the harsh conditions imposed by their British lords, and many Jews fled the pogroms of Russia and European countries. All of these people (particularly early in our history) took risks in coming here. Americans later left the comfort of their eastern homes to settle the western frontier. Historically, we have been a people with a work ethic who expect to be rewarded for our efforts. If government spending and programs continue at their current rate of growth, will we be able to maintain that spirit of adventure, risk taking and achievement or will it be wiped out by government programs? Recently I was talking to a friend who is a retired teacher, and she shared a story with me about an experience she had while working on her graduate degree. One of the students in the graduate program was the third generation of his family to be on welfare. Obviously, one of his goals in getting an education was to break that cycle. That is wonderful. However, it was less wonderful when he stated that if he couldn’t get the job he wanted after completing the program, he would simply go back on welfare because that paid pretty well. That is the danger we face with an ever-expanding government.
With the current President and current Congress, our chances of changing our current direction toward bigger government and increased taxes is very small. Conservatives are a very small part of Congress, and frankly, the Republican establishment is not a whole lot different from the Democrats when it comes to big government. The only real hope to turn this country around is the mid-term elections in 2014. Otherwise, we can expect to become Greece very soon.
One (very unpopular) solution to our current fiscal problem would be to make sure that every person in America pays taxes. Right now approximately 50 percent of Americans pay no income tax. If all Americans paid income taxes, they might be more inclined to elect people who were not likely to increase them!
Just one other note on the general state of affairs. As the third Quantitative Easing (QE3) begins to take effect, expect gasoline prices to rise. The current price for gasoline that we are paying at the pump is more related to the sinking value of the U. S. dollar than it is the price of oil. Unfortunately, unless economic policy in Washington changes, that will continue to be the case.
The problem with arithmetic is that if you always use the same numbers you always get the same answers. You can’t change the answer (solution) without changing the numbers. It’s just too rigid! Unfortunately, America is about to fall victim to the rigidness of arithmetic. It won’t be obvious until after it happens, but it is coming.
John Hinderaker at Power Line posted an article yesterday about the arithmetic involved in solving America’s financial problems. He points out that what is happening in America is also happening around the world.
The article states:
American voters accepted Obama’s claim that no change is necessary, that $16 trillion of debt is nothing to worry about. In France, voters put socialists into office, vowing not to give an inch on government benefits, ever. In Spain, Greece, and elsewhere around the world, politicians promise their constituents that nothing has to change, more money can be found somewhere. They are all lying.
The article cites an article by Janet Daley that appeared in the U.K. Telegraph on Saturday. The opening paragraph of the article asks:
Was 2012 the year when the democratic world lost its grip on reality? Must we assume now that no party that speaks the truth about the economic future has a chance of winning power in a national election? With the results of presidential contests in the United States and France as evidence, this would seem to be the only possible conclusion. Any political leader prepared to deceive the electorate into believing that government spending, and the vast system of services that it provides, can go on as before – or that they will be able to resume as soon as this momentary emergency is over – was propelled into office virtually by acclamation.
After France raised the taxes on millionaires, the millionaires began leaving the country. As California continues to raise its taxes on ‘the rich,’ the exodus of the wealthy from that state continues. After Maryland raised taxes on millionaires, the number of millionaires in the state declined, and state tax revenue declined. There is a lesson here, and America needs to learn it.
The article in the Telegraph points out:
Barack Obama knows that a tax rise of those proportions in the US would be politically suicidal, so he proposes a much more modest increase – an income tax rate of around 40 per cent on the highest earners sounds very modest indeed to British ears. But that is precisely the problem. If a tax rise is modest enough to be politically acceptable to much of the electorate, it will not produce anything like enough to finance the universal American entitlement programmes, social security and Medicare, into a future with an ageing population. There is no way that “taxing the rich” – that irresistibly glib Left-wing solution to everything – can make present and projected levels of government spending affordable. That is why Britain and almost all the countries of the EU have redefined the word “rich” to mean those who are earning scarcely twice the average wage, and pulled more and more middle-income people into high tax bands. Not only are there vastly more of them but they are far more likely to stand still and be fleeced, because they do not have the mobility of the truly rich.
As the debate on the fiscal cliff continues, we need to keep our perspective on exactly what is going on.
Friday’s Wall Street Journal posted some of the details of the negotiations between President Obama and House Speaker Boehner.
The article reports:
Mr. Obama repeatedly lost patience with the speaker as negotiations faltered. In an Oval Office meeting last week, he told Mr. Boehner that if the sides didn’t reach agreement, he would use his inaugural address and his State of the Union speech to tell the country the Republicans were at fault.
Blaming may work politically up to a point, but I honestly don’t see it as a way to move the discussion forward.
The article cites some of the actual negotiations:
At one point, according to notes taken by a participant, Mr. Boehner told the president, “I put $800 billion [in tax revenue] on the table. What do I get for that?”
“You get nothing,” the president said. “I get that for free.”
John Hinderaker at Power Line posted an article on Friday about the negotiations on the fiscal cliff. In the article he quoted Senator Jeff Sessions:
President Obama today gave yet another speech about the fiscal cliff. No plan, nothing that can be scored or analyzed, just another speech. If President Obama wishes to avoid the fiscal cliff then he, with all the power and influence he holds as the leader of this nation, must submit to Congress – in legislative form – a plan that he believes can pass both chambers of Congress with bipartisan support. No more secret meetings and pointless press conferences. Certainly this is not too much to ask. So we await his action: will he move from an unscorable speech to scorable legislation? If he is unwilling to submit such a plan then we may be left with only one persuasive conclusion: that he has used two years of secret meetings with Republican leaders not as an opportunity to achieve fiscal reform, but as a political exercise to defeat his opposition and preserve the expansion of federal spending.
There are a number of ideas as to what President Obama is doing. Two of them are very interesting. Rush Limbaugh believes that this exercise is an attempt to divide and destroy the Republican Party by getting them to admit that tax hikes on the rich are necessary. Dick Morris believes that the current negotiations are an effort to change to discussion from excessive spending to the idea that we need more revenue. Each is plausible. Meanwhile, the American economy sits in limbo waiting to see what happens next. We need some grown-ups in Washington. Let’s elect some in 2014.