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CHRISTOPHER TAYLOR'S BOOKS

Friday, April 15, 2011

WHAT NEXT?

"In other words, they play and we pay. "

Economic Doom
President Obama recently gave a speech in which he laid down his plan for addressing the national debt. His plan is basically to spend more, tax more, and punt the problem to the next president. Sure, it took him a lot longer to say it than that, but he had a half hour or more to fill.

In 2009, president Obama promised to cut the deficit in half over ten years. Instead it tripled under his watch, due to his personally signing bills he pushed and voting for bills while in congress. When it came time to fight this deficit, Obama had a gentle, kind tone in 2010:
We're not going to be able to do anything about any of these entitlements if what we do is characterize whatever proposals are put out there as, ‘Well, you know, that's -- the other party's being irresponsible. The other party is trying to hurt our senior citizens. That the other party is doing X, Y, Z.
But in this speech, just over a year later, his tone changed a bit:
One vision has been championed by Republicans in the House of Representatives and embraced by several of their party’s presidential candidates…This is a vision that says up to 50 million Americans have to lose their health insurance in order for us to reduce the deficit. And who are those 50 million Americans? Many are someone’s grandparents who wouldn’t be able afford nursing home care without Medicaid. Many are poor children. Some are middle-class families who have children with autism or Down’s syndrome. Some are kids with disabilities so severe that they require 24-hour care. These are the Americans we’d be telling to fend for themselves.
That's courtesy Jake Tapper, one of the few people in the White House press pool who actually seems to view president Obama the same way he viewed President Bush: a politician he couldn't trust.

The problem with President Obama's plan is that's all the left ever offers and its largely how we got to where we are to begin with. The recent effort to pass a federal budget after Democrats cravenly avoided one for two straight years, possibly violating the legal requirement of a budget every year took so long that it cost more in interest on the deficit than it ended up cutting.

And, as others have noted, the amount allegedly cut (almost forty billion dollars) was mostly "DC Cuts" in which you reduce the amount of proposed increase. The actual reduction in total spending was less than a billion dollars in the end. And in the time it took to pass the budget, the debt grew by fifty billion dollars.

Now, obviously this is either something that we as a nation have to simply ignore and pretend doesn't exist (with disastrous consequences) or hit face on and attack savagely or we're facing economic disaster on a scale only the Weimar Republic or Zimbabwe has seen. Personally I don't fancy going to the store with a pickup truck full of dollars to buy a loaf of bread that's price has gone up between my home and the store.

President Obama's plan is to tax more and make the rich "pay their share." Obama claims, like most leftists, that the Bush tax cuts are what caused the debt, rather than tripling the debt in 2009 by the TARP bailouts, trillion dollar "stimulus" package, and Government Health Care Takeover Act. Putting aside several basic economic facts (the rich 1% pay almost 50% of total tax burden, the top 5% pay more than the bottom 90% of taxpayers combined, etc), there's a basic flaw with this "eat the rich" approach. There isn't enough money.

There isn't enough money in the "rich" in America. Period. There isn't enough money. As the Wall Street Journal notes:
According to Internal Revenue Service data, the entire taxable income of everyone earning over $100,000 in 2008 was about $1.582 trillion. Even if all these Americans—most of whom are far from wealthy—were taxed at 100%, it wouldn't cover Mr. Obama's deficit for this year.
A hundred grand a year sounds like a lot if you live in Topeka but in Manhattan its upper middle class. And even if you include that tax bracket, there isn't enough money.

Paul Krugman, NYT columnist and economist, sees this a bit more clearly than President Obama, he calls for the government to raise taxes on the middle class too. The problem is, that's still not enough money.

Bill Whittle illustrates it this way.
If Barack Obama 'Stole all of this money:

1) 100% of the 2010 profits from the Fortune 500 Corporations (391 billion dollars).

AND

2) 100% of the profits from the 2011 Super Bowl (250 million dollars).

AND

3) 100% of the salaries from all Major Sports Athletes (9.4 billion dollars).

AND

4) 100% of the income above 250,000 dollars a Year (1.412 trillion dollars).

AND

5) If Barack Obama stopped the Wars in Iraq and Afghanistan (total of 264 billion dollars).
We do not know yet how much Barack Obama will spend on his 'Personal War' in Libya.

AND

6) If Barack Obama 'Stole' all of the approximately 15,000 homes of the 'Rich' in Beverly Hills and sold them for 2 million dollars each (30 billion dollars).

AND

7) If Barack Obama 'Stole' all of the Money from all of the Billionaires in America (1.29 trillion dollars).

Barack Obama 'Still' could NOT fund his proposed budget
.
The US federal government has gone berserk spending ever more money every decade until they've spent so much there isn't enough money in the country to bail us out of this unless we bankrupt every single man, woman, and child in the confines of the US. Not the rich, not the well off, everyone, everywhere.

We cannot tax our way out of this, not now, not ever, no matter who we tax or how much. Period. There isn't enough money.

That doesn't daunt an academic leftist radical like President Obama though. Not only is he surrounded by people who, like Michael Moore, think there's not a problem because we can just soak the rich, but he has a cunning plan. Dan Mitchell explains:
Called a “debt failsafe trigger,” Obama’s scheme would automatically raise taxes if politicians spend too much. According to the talking points distributed by the White House, the automatic tax increase would take effect “if, by 2014, the projected ratio of debt-to-GDP is not stabilized and declining toward the end of the decade.”
If congress can't balance the budget, the president's idea is to just automatically raise taxes. Every year. On everyone. No votes, no going on record to support higher taxes, it just automatically takes place. If you're dumb enough to think congress will see this as any sort of incentive to rein in their spending, I doubt you can even think hard enough to breathe regularly.

And the economic horizon is chilling enough without uncontrolled federal spending and tax increases. Dennis Cauchon at USA Today reports:
Only 45.4% of Americans had jobs in 2010, the lowest rate since 1983 and down from a peak of 49.3% in 2000. Last year, just 66.8% of men had jobs, the lowest on record.
And now that inflation is hitting us in the places that hurt poor people the worst, how is that going to get any better? As I've been saying on this blog since back in 2006 under great economic times; when I get into debt my answer is to spend less. That's what congress has to do too, spend less. They have to.

The Libyan bombfest appears to have been a miserable failure; they can't get Khadaffi to leave and the rebels are not just pathetic and unarmed, but small in number, disorganized, and apparently made up of terrorists and Muslim radicals. Its likely that we'll Somalia that effort and just quietly leave without even an apology. The Libyan military action is already out of the news. So that expense may be reduced, and that's a help.

With the present congress we cannot hope for real action to cut the budget. Democrats who want no cuts still control the Senate and there aren't enough votes to overrule an Obama veto which would 100% absolutely take place if there were any real cuts.

The only way we can hope to get any real action is to each election put more and more people in who'll do the tough job that has to be done, and to throw out the ones who fight that. We need folks in congress who are for cuts and for fiscal responsibility, right now. The problem is, at this rate by the time we actually get enough in place to do the job, it will be too late. I've always voted for the more fiscally conservative candidate, but in Oregon that's a pretty futile gesture.

Here's what congress has to do, immediately:
-Start at home with their own salaries, benefits, and staff size. They have to show they personally will sacrifice, no matter how small and symbolic it is, before they ask anyone else to. Slash your own budget and that of both houses of congress. Cut it to the bone, worse than everywhere else. Do the same with the executive and judicial branches.

-Agree to a freeze of no new spending. That means no new high speed rail budget, no gradually implemented health insurance bill, nothing. As of today, congress has to draw a line and say "From here on out, we do not spend on anything new, not even bills that were passed before and take effect in the future. Nothing, until we get this under control."

-Abandon any sacred cows, nothing is immune to cuts, nothing. Military, Social Security, it doesn't matter, it all has to face cuts and reduction because we absolutely cannot keep spending like this.

-Cut everything, deeply in many areas, but something in all areas. Cut personnel, cut the size of departments, cut redundancy and duplication, eliminate waste and fraud, cut out government programs that aren't producing tangible results.

-Eliminate all that spending that is "optional" or something you add in when times are great and you have plenty of money coming in. Stuff like public radio, planned parenthood, "faith based" initiatives, Radio America, The National Endowment for the Arts, and so on. Times aren't great. They have to go.

-Realize that you're out of a job at the end of your term. Congressmen have to work with the assumption that what they're going to have to do will enrage many voters, but it has to be done and once its over, then someone else can take the job. In America, "politician" isn't supposed to be a career anyway, just a temporary service to the citizens of the United States.
Once these things are done, once real cuts are put in place and real reduction in spending happens, not just one year, but permanently, then and only then can congress consider tax increases. Because if they're done in reverse, then the cuts will just never, ever happen. Just ask President Reagan who made a deal with Tip O'Neill to do just that and the Democrats lied through their grinning teeth.

The alternative is economic collapse, and likely out of that a new regime that is less interested in liberty than giving people what they say they want. That didn't work out so well for the Germans. Honestly I don't have any confidence that we'll get there, not here, not in Portugal, not in Greece, not anywhere. We had a nice run, but greed, selfishness, and demanding everyone else give me things I don't have to work for can only go on so long. Imagine how poor, minorities, and women will fare in the neo dark ages, lefties.

But hey, you meant well, so that makes up for it. Sure it does.

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