We are spoiled brats
It looks like one reason the Congress is having trouble devising a debt limiting strategy is the electorate is a bunch of spoiled brats.
Almost everyone (especially the liberals, progressives and the half of the citizens who pay no income taxes) has adjusted quite well to the nanny state and has become dependent on all the goodies Uncle Sugar passes out.
When Congress and conservatives try to set spending priorities to reign in the unsustainable national debt, there is an uproar from the portion of the freeloading electorate that would lose some of their favorite booty. Every one of those spoiled brats has their hand in the proverbial cookie jar. We are becoming like a Western European country sliding into an abyss.
Can the slide be stopped or have we already passed the point of no return?
Shared Sacrifice (a.k.a. wealth redistribution)
President Obama told the National Governors Association in February 2011 that everybody, not just one group, must be ready to give up something to help push the U.S. economic recovery.
The President has repeated Shared Sacrifice recently in seeking to tax the rich to generate income to offset his wild spending.
Shared Sacrifice is euphemism for wealth distribution, the communist idea of confiscating from the rich.
Real Shared Sacrifice would exist when everyone shared the income tax burden. The Tax Policy Center estimated that
47% of all taxpayers would owe no federal income tax in 2009.
So why is there not a minimum tax rate, maybe 1%, for everyone so everyone has some skin in the game and everyone will care about what the federal government is spending?
Leadership (or lack thereof)
The dictionary defines a leader as “a person who has commanding authority or influence”. Amusingly, another definition is “a blank section at the beginning or end of a reel of film or recorded tape”. Which is President Obama?
Studies have shown that of the five most important traits of leadership, honesty is number one. When the population detects discrepancies between what the President says and does they lose trust in him and his ability to lead is diminished.
There has been absolutely no leadership from the White house on the country’s spending problem. It seems like the White house has an anti-leadership posture preventing anyone else from exerting leadership as well.
What is the President’s problem? Is it an inability or unwillingness to lead us away from the abyss? Maybe the problem is he has never had any leadership experience.
The President tells the members of congress of all political persuasions to get together and solve the problem but contributes nothing to a solution. And when someone stands up to his inadequacy he storms out of the room in a fit. Then it seems all he knows how to do is call another meeting. If the consequences were not so serious, it would be a joke.
And it is not the first time the President has been exposed to a problem and has walked away without marshaling the country’s resources to address the problem.
The President’s lack of leadership results in the country’s march straight to Armageddon.
Where will he be then?
Why not defund Obamacare?
With all the problems of the debt, the debt ceiling and the need to reduce spending, why do the Republicans not move to defund Obamacare?
It is one of the most popular things they can do.
Fiscal Brinkmanship
The President should have seen the mood of the electorate after the 2010 election and prioritized expenditures to rein in spending and get the budget (nonexistent as it is) under control.
Even now, with opposition mounting to his desire to increase the National Debt, he continues his wanton spending, ignores the need to prioritize expenses and takes us to the brink.
He continues to produce long lists of programs that are untouchable and that consume the majority of the spending so there is nothing left to cut as we head to the brink.
His continuing to spend money he does not have pushes the country to the edge of a cliff, and the longer he waits to adjust the messier the solution (if there will be one) will be.
It is almost as if he wants the country to go down in the hope (is that the hope and change he promised in his campaign) that he and his progressive cohorts can take us into full-fledged socialism when the country collapses.
Political Extortion
Politicians (both national and local) are notorious, when facing an income stream insufficient to fund their favorite boondoggles, for threatening their constituents with cuts in necessary services (by cutting teachers, firemen, policemen, librarians, lifeguards, dog catchers, pension checks, etc.) unless these constituents agree to increases in their taxes. These politicians seek to extort additional tax money for their favorite programs. These politicians never talk about cutting a bloated bureaucracy or eliminating or reducing failed and ineffective programs to generate more income for their favorite programs. These politicians are happy to inflict pain on their constituents to feather their nests. The priorities of these politicians are with their favorite expenditures, not the taxpayers who elected them. President will not guarantee Social Security checks will go out
Congressional Budget Office (CBO) data shows expected revenue to the U.S. Treasury for 2011 of $2,228.45 billion and “mandatory” expenses of $2,108.28 billion to give a net income before other expenses of $120.17billion . The CBO lists interest on the debt as $225 billion. This means the “mandatory” expenses have to be reduced by $105 billion to service the debt.
The “mandatory” expenses include funds for Medicare, Medicaid, Social Security, veterans, civilian and military pensions, agriculture, Fannie Mae and Freddie Mac ($11 billion), food stamps ($77 billion), earned income and child tax credits ($77 billion), family support ($27 billion), child nutrition ($18 billion), foster care ($7 billion), and Making Work Pay and other tax credits ($21 billion). The items in parentheses add up to $238 billion, more than enough to service the debt with $133 billion left for welfare and other programs.
If servicing the debt is given the top priority over welfare programs and other expenses, the debt is easily serviced but the expansive government would have to be reigned in.
Corporations do not pay taxes, they collect them
When liberals add new taxes on corporations they often say they are taxing the “evil rich” corporations to avoid putting the burden of supporting the government on the backs of the citizens. This is happening today as federal spending advocates seek to produce more federal income to support their flagrant spending habits.
Corporations set the prices for the goods and services they produce so that the money they collect exceeds the cost of those goods and services. In this way the corporations are able to make a profit and stay in business. Unlike the government, if corporate revenue did not exceed expenses and they made no profit they would soon disappear.
So when a corporation has increased expenses from an added tax it necessarily raises its prices to maintain its profitability. Since all corporations are equally taxed, their compensating price adjustments do not put any of them at a competitive disadvantage with their peers. However, if other countries do not raise corporate taxes, local corporations could be at a competitive disadvantage in the world marketplace. The U.S. corporate tax rate of 35% is the highest in the developed world.
The corporation thus becomes the tax collector. The effect on the citizens is the same; they just pay the corporation instead of the Internal Revenue Service. The corporate tax does give the citizens some added flexibility. They can choose not to buy the taxed products or services.
It is similar to the local sales tax. The state levies a sales tax on restaurants requiring them to pay a percentage of their sales, and the restaurants add the sales tax to the patrons’ bills. The restaurant becomes the tax collection entity. Since all restaurants do the same thing none are at a competitive disadvantage with the others. But if a nearby state has no or a lower sales tax, the restaurants could lose business to establishments in the nearby state.
The people who tell you they are sparing you the burden of paying for your government by instituting a corporate tax instead of an individual income tax are either naïve or dishonest.
The numbers behind the debt limit problem
Congressional Budget Office (CBO) data shows expected revenue to the U.S. Treasury for 2011 of $2,228.45 billion and “mandatory” expenses of $2,108.28 billion to give a net income before other expenses of $120.17billion. The CBO lists interest on the debt as $225 billion. This means the “mandatory” expenses have to be reduced by $105 billion to service the debt.
The “mandatory” expenses include funds for Medicare, Medicaid, Social Security, veterans, civilian and military pensions, agriculture, Fannie Mae and Freddie Mac ($11 billion), food stamps ($77 billion), earned income and child tax credits ($77 billion), family support ($27 billion), child nutrition ($18 billion), foster care ($7 billion), and Making Work Pay and other tax credits ($21 billion). The items in parentheses add up to $238 billion, more than enough to service the debt with $133 billion left for welfare and other programs. If servicing the debt is given the top priority over welfare programs and other expenses, the debt is easily serviced but the expansive government would have to be reigned in.
Kill Obamacare in the debt talks
The politicians trying to decide what to do about a national debt that has exceeded the statutory debt limit should quickly agree to two items supported by a large majority of the American people
1. Kill Obamacare
2. Kill all talk of any tax increases
Eliminating Obamacare will eliminate the many bureaucracies that have been established to write the new regulations that will enable the government to swallow up one-sixth of our economy. It will also eliminate the legions of people who were hired to write those regulations
Eliminating talk of tax increases will help protect our fragile economy from the deleterious effects of the federal government extracting additional financial resources in a time of recession.
While the politicians worry and debate about how to reduce unaffordable so-called “mandatory” expenditures like food stamps and Fannie Mae, there should be no hesitancy about tossing out Obamacare and tax increases.
A balanced budget amendment with teeth
Congressmen have been stating recently that they would not vote to raise the debt ceiling unless Congress agrees to pass a balanced budget Constitutional amendment.
Why do they need a new Constitutional amendment when there is a law that requires a balanced budget?
The US Congress passed and the President signed (on August 5, 1997) The Balance Budget Act (Public Law 105-33) requiring a balanced budget be passed by 2002. More Information. So when have we had a balanced budget? This year the Senate has refused to even discuss it.
The scofflaw Congress has had no problem ignoring the statutory mandate, so why should anyone believe they would obey a Constitutional mandate?
What is needed is a Constitutional amendment (rather than a law that can be voided by Congress) that states there shall be no remuneration for Congress, the Congressional staff, the President and the Executive Office of the President for any day in any fiscal year for which there is no balanced budget. And there shall be no retroactive remuneration later if such a balanced budget is eventually passed and signed into law. They should not be paid for any day they fail to do their job.
