Two guys who should know better are helping to lead the country into bankruptcy -- Tim Geithner and Larry Summers. They act as if the entitlements really aren't a problem. They are either deliberately misleading the public or they truly have no idea what the social security and medicare are all about. I suspect the former. Geithner and Summers are likely only thinking about preserving their relationship with our bizarre President. That means ignoring the fiscal issues that loom far larger than any short term fiscal cliff.
Both of these guys are focused on raising marginal tax rates which generally lead to lower tax revenues at the level rates are now. Thus raising rates expands the deficit and increases the national debt more than leaving rates alone. So, why are Geithner and Summers deliberately promoting policies that raise the national debt? To curry favor with the White House and to expand their own sphere of influence within the White House is the only logical explanation.
Both Geithner and Summers, by their public duplicity, have forfeited their roles as public leaders to wander into the mire of low level political rhetoric. "Soak the rich" is not a new slogan that began with Obama. The same slogan has been available to demagogues the world over and since the beginning of time. Free market capitalism is now being undermined by appeals to revenge, envy, and hatred. This is more of the Obama legacy and is actively promoted by Tim Geithner and Larry Summers. Washington, Jefferson, and Hamilton must be turning over in their graves if they are listening to the modern American political rhetoric.
Friday, December 7, 2012
Thursday, December 6, 2012
Kick the Can and Kick the Economy
The Obama plan is now pretty clear. Do nothing at all about the deficit or the looming national debt disaster and raise tax rates. If you asked what is the worst possible outcome for the American economy, this is it. Meanwhile corporate leaders and even some Republicans are genuflecting over this solution as a great bargain.
If you think the fiscal cliff is a crisis, wait until social security and medicare run out of money which is about a decade away. At that point, the national debt will be 25 or 30 trillion dollars -- unpayable at any tax rates. The outcome? Check out Greece -- civil disorder and political chaos.
As for the economy, we are now in the new normal -- staggeringly high unemployment, virtually zero economic growth and little or no hope for the younger generation in jobs or in future income. Politically, you now face class warfare and you will soon face the war between the young and old over scarce resources.
What is happening at the federal level in the US is compounded by identical policies at the state and local level. Defined benefit pension funds are beginning to run aground with inadequate funding and no hope for ultimately paying beneficiaries. States are unable to fund their share of medicare and medicaid. As for education and infrastructure, there is simply no money left for such things and what little there is wasted by excessive union contracts and political waste. A stagnant, no-growth, economy only makes all of this that much worse.
This is the Obama legacy.
If you think the fiscal cliff is a crisis, wait until social security and medicare run out of money which is about a decade away. At that point, the national debt will be 25 or 30 trillion dollars -- unpayable at any tax rates. The outcome? Check out Greece -- civil disorder and political chaos.
As for the economy, we are now in the new normal -- staggeringly high unemployment, virtually zero economic growth and little or no hope for the younger generation in jobs or in future income. Politically, you now face class warfare and you will soon face the war between the young and old over scarce resources.
What is happening at the federal level in the US is compounded by identical policies at the state and local level. Defined benefit pension funds are beginning to run aground with inadequate funding and no hope for ultimately paying beneficiaries. States are unable to fund their share of medicare and medicaid. As for education and infrastructure, there is simply no money left for such things and what little there is wasted by excessive union contracts and political waste. A stagnant, no-growth, economy only makes all of this that much worse.
This is the Obama legacy.
Wednesday, December 5, 2012
"I Wlll Not Play That Game"
Obama laid down a new gauntlet today. Now he refuses to negotiate over raising the debt limit. "I will not play that game," he says. What Obama is saying is that he has no intention of making any concessions to reducing the national debt or the ongoing deficits. The road to bankruptcy is not going to be blocked by this President.
The only thing the President will consider is raising taxes on everyone above $ 250,000 in income. If he succeeds, revenues will be lower and the deficit will expand; economic growth will turn negative and the US will stagnate further. That's the President's plan. Just remember that when England did exactly this three years ago -- raising taxes on everyone making over $ 1 million, the number of tax payers filing returns over $ 1 million income dropped 60 percent and revenues from this income group collapsed. That's where the tax on "millionaires and billionaires" is headed.
Either Obama is woefully ignorant of economics or something worse is afoot.
The only thing the President will consider is raising taxes on everyone above $ 250,000 in income. If he succeeds, revenues will be lower and the deficit will expand; economic growth will turn negative and the US will stagnate further. That's the President's plan. Just remember that when England did exactly this three years ago -- raising taxes on everyone making over $ 1 million, the number of tax payers filing returns over $ 1 million income dropped 60 percent and revenues from this income group collapsed. That's where the tax on "millionaires and billionaires" is headed.
Either Obama is woefully ignorant of economics or something worse is afoot.
Monday, December 3, 2012
Taxes Won't Matter
At the end of the day, it really doesn't matter what happens to taxes. There is no tax policy that can catch up with the entitlement promises. The only reason that taxes matter is the impact on economic growth and the answer to that is pretty simple. Higher taxes mean lower economic growth.
We are headed for bankruptcy as a nation, regardless of what happens to the Bush tax cuts. Double all current tax rates and revenues and even that doesn't help. We have a $ 66 Trillion unfunded medicare deficit. A trillion here or a trillion there in tax revenues is completely irrelectant.
So, why is the media so focused upon whether or not Republicans will agree to an increase in tax rates. Whether or not the Republicans cave only matters for economic growth. It is completely irrelevant to the issue of looming fiscal bankruptcy. If Republicans cave, we get lower economic growth, but no tax rate policy solves the nation's future bankruptcy.
The Obama folks are bound and determined to lead the US into bankruptcy. That's why taxes are the only subject up for discussion for them. The media is their Greek chorus. They know, and anyone remotely familiar with the numbers knows, that revenues are irrelevant.
Here's one policy that I would support. Let's take everyone with net wealth in excess of $30 billion and tax half of their wealth. That would catch Buffett and Soros and all of the left wingers who know they have nothing to fear from an income tax. You wonder if Buffett and Soros would be so sanguine about taxes if they knew they might have to pay some themselves.
We are headed for bankruptcy as a nation, regardless of what happens to the Bush tax cuts. Double all current tax rates and revenues and even that doesn't help. We have a $ 66 Trillion unfunded medicare deficit. A trillion here or a trillion there in tax revenues is completely irrelectant.
So, why is the media so focused upon whether or not Republicans will agree to an increase in tax rates. Whether or not the Republicans cave only matters for economic growth. It is completely irrelevant to the issue of looming fiscal bankruptcy. If Republicans cave, we get lower economic growth, but no tax rate policy solves the nation's future bankruptcy.
The Obama folks are bound and determined to lead the US into bankruptcy. That's why taxes are the only subject up for discussion for them. The media is their Greek chorus. They know, and anyone remotely familiar with the numbers knows, that revenues are irrelevant.
Here's one policy that I would support. Let's take everyone with net wealth in excess of $30 billion and tax half of their wealth. That would catch Buffett and Soros and all of the left wingers who know they have nothing to fear from an income tax. You wonder if Buffett and Soros would be so sanguine about taxes if they knew they might have to pay some themselves.
Phony versus Real
Taxing millionaires and billionaires is a slogan. There is an interesting story in today's WSJ about the results of England's recent experience of taxing the rich. They raised the tax on taxpayers making more than $ 1 million annually from 40 % to 50 %. Guess what? Tax revenues collapsed, while the number of tax returns reporting $ 1 million or more in income fell by more than 50 %? That is a preview of our future if Obama gets his way. Obama's soak the rich scheme will lead to lower revenues, a higher deficit, and a weakening economy.
Meanwhile, the entitlements march on. National debt, now at $ 16.3 Trillion will be $ 22 Trillion by the time Obama leaves office, if we are lucky. It could be $ 25 Trillion if the economy falls apart because of Obama policies. Taxing rich folks brings in $.08 Trillion per year, assuming you believe Obama's assumptions. That means the national debt will be only $ 24 Trillion by 2016, not $ 25 Trillion.. Big deal! Taxing the rich is a phony issue of no substance.
Meanwhile, the entitlements march on. National debt, now at $ 16.3 Trillion will be $ 22 Trillion by the time Obama leaves office, if we are lucky. It could be $ 25 Trillion if the economy falls apart because of Obama policies. Taxing rich folks brings in $.08 Trillion per year, assuming you believe Obama's assumptions. That means the national debt will be only $ 24 Trillion by 2016, not $ 25 Trillion.. Big deal! Taxing the rich is a phony issue of no substance.
Sunday, December 2, 2012
The President Owns 2013
Whatever happens to the economy in 2013 belongs to the President. There is no way out of that regardless of how the media attempts to blame the President's critics. Congress has never been blamed for a recession. Hoover was in the first year of his first term as President when the Great Depression began. While Hoover had nothing whatsoever to do with causing the Great Depression, his name will forever be associated, in a negative way, with the Great Depression.
One suspects that 2013 is going to be a disaster quite independent of what resolution there may or may not be to the fiscal cliff. But, the President's proposals have the potential to make the situation far, far worse. One virtue of going over the cliff is that everyone will get a small taste of our future. Sooner or later the national debt, now over $ 16.3 Trillion and growing by ten percent per year, will simply overwhelm any realistic effort to bring it under control. Social security and medicare will default in part or in whole and the entire American government financial pyramid will collapse.
Avoiding this spectacle will not be easy. But the first step is simply to ignore the White House and proceed over the fiscal cliff. The next step will be to refuse to extend the debt limit and let nature take it's course. If these two steps are taken, the country's financial house would have a chance of being put back in order. Yes, it would be painful for a while, but at least the country would have a future. Now, the country only has a past.
So, who will be blamed? The first response is: who cares? If it takes steps one and two to save the country, then why not take them regardless of blame. But, the second response is that the President will be blamed. He presided over this entire fiasco. He came into office with sweeping majorities in the House and Senate. His policies prohibited any real economic recovery and his current proposals all but guarantee a renewed recession and higher unemployment.
Strap on your seat belts. Fiscal cliff -- here we come!
One suspects that 2013 is going to be a disaster quite independent of what resolution there may or may not be to the fiscal cliff. But, the President's proposals have the potential to make the situation far, far worse. One virtue of going over the cliff is that everyone will get a small taste of our future. Sooner or later the national debt, now over $ 16.3 Trillion and growing by ten percent per year, will simply overwhelm any realistic effort to bring it under control. Social security and medicare will default in part or in whole and the entire American government financial pyramid will collapse.
Avoiding this spectacle will not be easy. But the first step is simply to ignore the White House and proceed over the fiscal cliff. The next step will be to refuse to extend the debt limit and let nature take it's course. If these two steps are taken, the country's financial house would have a chance of being put back in order. Yes, it would be painful for a while, but at least the country would have a future. Now, the country only has a past.
So, who will be blamed? The first response is: who cares? If it takes steps one and two to save the country, then why not take them regardless of blame. But, the second response is that the President will be blamed. He presided over this entire fiasco. He came into office with sweeping majorities in the House and Senate. His policies prohibited any real economic recovery and his current proposals all but guarantee a renewed recession and higher unemployment.
Strap on your seat belts. Fiscal cliff -- here we come!
The Christmas Buying Surge
Is the surge in Christmas buying a good thing? Figures were released this week that American households have a lower net worth (corrected for inflation) on average than forty years ago. So, let's spend more and save less? That's good news?
American families are collapsing under their own sea of debt while the future of their children and grandchildren have already been sacrificed for the welfare needs of current generations. This is good?
It is a sign of the times that things that increase our level of debt and reduce our attention to thrift and responsible spending are now seen as good things? Look at CNBC news. They trumpet the "Rise Above" slogan, encouraging politicians to kick the can down the road by coming to any agreement, no matter how absurd, to avoid the fiscal cliff. "Rise above" means rise above sanity, one supposes.
President Obama is almost a caricature of how absurd our politics have become. What does he advocate? More spending, higher tax rates, and more regulation ... this for an economy that appears to be staggering back into recession territory.
Americans need to be saving and investing. That is what made America the wealthiest nation in the world in the first place. Both the private and public sector need to be saving, not running higher and higher deficits.
Americans should cool it on Christmas shopping.
American families are collapsing under their own sea of debt while the future of their children and grandchildren have already been sacrificed for the welfare needs of current generations. This is good?
It is a sign of the times that things that increase our level of debt and reduce our attention to thrift and responsible spending are now seen as good things? Look at CNBC news. They trumpet the "Rise Above" slogan, encouraging politicians to kick the can down the road by coming to any agreement, no matter how absurd, to avoid the fiscal cliff. "Rise above" means rise above sanity, one supposes.
President Obama is almost a caricature of how absurd our politics have become. What does he advocate? More spending, higher tax rates, and more regulation ... this for an economy that appears to be staggering back into recession territory.
Americans need to be saving and investing. That is what made America the wealthiest nation in the world in the first place. Both the private and public sector need to be saving, not running higher and higher deficits.
Americans should cool it on Christmas shopping.
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