Goldman Sachs reported that US monthly tax receipts are sufficient to cover interest on our debt, monthly Social Security checks, Medicare and essential defense costs. Jay Carney, WH press secretary, said, "We lose our borrowing authority and that would be a bad thing."
I beg to differ. Our debt is a bad thing and all this excessive borrowing without the means to pay it back is a bad thing. We need to put a freeze on new spending bills and begin to roll back spending on literally everything else.
Social Security can pay for itself by increasing FICA tax to 10% and eliminating the $106,800 collection ceiling. Unfortunately politicians want to use SS to scare old people, so I don't expect to see any substantial change.
Thursday, July 28, 2011
Saturday, July 16, 2011
America, the Beautiful – what a great idea that was
Elected officials care more about staying in office and maintaining the power structure of their political parties than taking the hard steps to save this country. We have a president and Congress that only want to keep the economy going through the next election. Then what?
I have no doubt, President Obama will be re-elected. He's going to have a billion dollars in his campaign chest to ensure that result and gloves will be coming off. The 2008 election was about Hope and Change, the 2012 election will be about destroying the opposition. Expect a blizzard of attacks against the Republican Party and vice versa. It is going to be ugly.
Will any of this “Sturm und Drang” bring about an “Age of Enlightenment” or a new American Revolution. Not a bit. Nothing will be done by our partisan government and all the horrible things being predicted by both parties will happen. We will eventually default, our debt will outdistance our ability to pay interest and no raising of the debt ceiling will help.
We're not asking the “right” questions and we certainly are not looking for the “right” solutions. Unemployment is a symptom of our economic problems and dumping tax dollars into select businesses isn't going to help anymore than “shovel ready” jobs did.
Work programs are not the answer, just as they were not the answer during the Great Depression. It took the massive government and private sector spending of WWII to truly stimulate the economy. Afterwards we had a world to rebuild and the Soviet Union as a common enemy to stir up our creative juices.
I believe we face another fifteen to twenty years of economic decline taxing and sucking the American Spirit dry, unless we look for solutions that will effectively turn our economy around. What do we really need?
Well, we need more revenue coming in and we need less debt. How do we do this? Are we really so stupid that we can't figure this out? No, we've just tied ourselves to ideologies that are unyielding to compromise and refuse to see anything positive in the opposition.
We need to see real income and revenue figures before deciding on raising or cutting taxes. Loopholes, subsidies, deductions, and exemptions also confuse the tax issue. Warren Buffet says he pays too little in taxes, but if all his loopholes, etc., went away that wouldn't be the case. He probably would end up wanting his taxes cut, along with the rest of us.
Everyone who itemizes deductions does so because it reduces their payment in taxes substantially no matter what their tax rate is. By eliminating all loopholes and deductions, the individual tax rate could be lowered without reducing the revenue generated by the tax.
For example, someone in the 35% tax bracket may actually pay only 17% in taxes after all legal deductions, exemptions, and loopholes are taken. It would be possible to generate more tax revenue from this individual if the tax rate were lowered to 25% and all loopholes abolished. In the case of Warren Buffet, this would generate million of additional taxes, and, what the heck, he says he would welcome it.
There are corporations and individuals that currently pay zero in taxes. I would advocate that we not levy an income tax against the first $25,000 in earnings or capital gains. That would protect lower wage earners and senior citizens. I would like to see a graduated flat tax levied on all other income levels starting at 10% up to 25%. This would necessitate allowing no loopholes, deductions, or exemptions of any kind, including property tax deductions, charitable contributions, personal exemptions, and the like. There would be absolutely no itemized or standard deductions.
Each political party cooks the financials to support their own economic theories. I'm not an economist or accountant, but I am a student of history. We've gotten ourselves into this mess by overspending and not balancing our budget. What happens to individuals will happen to governments eventually.
Congress has been trying to spend our way out of every problem in our path and impress all the neighbors that we have bottomless pockets. If we did, why did we borrow in the first place?
We need to stop borrowing, add no new spending programs, and cut every existing program including the military and social security by ten percent. (We could increase FICA tax to nine or ten percent, which is what I paid for my state retirement program, and eliminate the current ceiling cap of $106,800. This probably would offset the need to reduce SS by 10%.)
After this spending freeze and cuts are in place, we could then begin paying off our smallest debts first and continue paying interest on the rest. This would mean that no new money would be returning back to the States until a significant portion of the national debt is paid off in ten to twelve years.
Unfortunately, greed and self interest will probably reign supreme in Congress and the White House no matter who is in power. America, the Beautiful – what a great idea that was.
O beautiful for spacious skies,
For amber waves of grain,
For purple mountain majesties
Above the fruited plain!
America! America! God shed His grace on thee,
And crown thy good with brotherhood
From sea to shining sea!
O beautiful for pilgrim feet,
Whose stern impassion'd stress
A thoroughfare for freedom beat
Across the wilderness!
America! America! God mend thine ev'ry flaw,
Confirm thy soul in self-control,
Thy liberty in law!
O beautiful for heroes proved In liberating strife,
Who more than self their country loved,
And mercy more than life!
America! America! May God thy gold refine
Till all success be nobleness,
And ev'ry gain divine!
O Beautiful for patriot dream
That sees beyond the years
Thine alabaster cities gleam,
Undimmed by human tears!
America! America! God shed His grace on thee,
And crown thy good with brotherhood
From sea to shining sea!
I have no doubt, President Obama will be re-elected. He's going to have a billion dollars in his campaign chest to ensure that result and gloves will be coming off. The 2008 election was about Hope and Change, the 2012 election will be about destroying the opposition. Expect a blizzard of attacks against the Republican Party and vice versa. It is going to be ugly.
Will any of this “Sturm und Drang” bring about an “Age of Enlightenment” or a new American Revolution. Not a bit. Nothing will be done by our partisan government and all the horrible things being predicted by both parties will happen. We will eventually default, our debt will outdistance our ability to pay interest and no raising of the debt ceiling will help.
We're not asking the “right” questions and we certainly are not looking for the “right” solutions. Unemployment is a symptom of our economic problems and dumping tax dollars into select businesses isn't going to help anymore than “shovel ready” jobs did.
Work programs are not the answer, just as they were not the answer during the Great Depression. It took the massive government and private sector spending of WWII to truly stimulate the economy. Afterwards we had a world to rebuild and the Soviet Union as a common enemy to stir up our creative juices.
I believe we face another fifteen to twenty years of economic decline taxing and sucking the American Spirit dry, unless we look for solutions that will effectively turn our economy around. What do we really need?
Well, we need more revenue coming in and we need less debt. How do we do this? Are we really so stupid that we can't figure this out? No, we've just tied ourselves to ideologies that are unyielding to compromise and refuse to see anything positive in the opposition.
We need to see real income and revenue figures before deciding on raising or cutting taxes. Loopholes, subsidies, deductions, and exemptions also confuse the tax issue. Warren Buffet says he pays too little in taxes, but if all his loopholes, etc., went away that wouldn't be the case. He probably would end up wanting his taxes cut, along with the rest of us.
Everyone who itemizes deductions does so because it reduces their payment in taxes substantially no matter what their tax rate is. By eliminating all loopholes and deductions, the individual tax rate could be lowered without reducing the revenue generated by the tax.
For example, someone in the 35% tax bracket may actually pay only 17% in taxes after all legal deductions, exemptions, and loopholes are taken. It would be possible to generate more tax revenue from this individual if the tax rate were lowered to 25% and all loopholes abolished. In the case of Warren Buffet, this would generate million of additional taxes, and, what the heck, he says he would welcome it.
There are corporations and individuals that currently pay zero in taxes. I would advocate that we not levy an income tax against the first $25,000 in earnings or capital gains. That would protect lower wage earners and senior citizens. I would like to see a graduated flat tax levied on all other income levels starting at 10% up to 25%. This would necessitate allowing no loopholes, deductions, or exemptions of any kind, including property tax deductions, charitable contributions, personal exemptions, and the like. There would be absolutely no itemized or standard deductions.
Each political party cooks the financials to support their own economic theories. I'm not an economist or accountant, but I am a student of history. We've gotten ourselves into this mess by overspending and not balancing our budget. What happens to individuals will happen to governments eventually.
Congress has been trying to spend our way out of every problem in our path and impress all the neighbors that we have bottomless pockets. If we did, why did we borrow in the first place?
We need to stop borrowing, add no new spending programs, and cut every existing program including the military and social security by ten percent. (We could increase FICA tax to nine or ten percent, which is what I paid for my state retirement program, and eliminate the current ceiling cap of $106,800. This probably would offset the need to reduce SS by 10%.)
After this spending freeze and cuts are in place, we could then begin paying off our smallest debts first and continue paying interest on the rest. This would mean that no new money would be returning back to the States until a significant portion of the national debt is paid off in ten to twelve years.
Unfortunately, greed and self interest will probably reign supreme in Congress and the White House no matter who is in power. America, the Beautiful – what a great idea that was.
O beautiful for spacious skies,
For amber waves of grain,
For purple mountain majesties
Above the fruited plain!
America! America! God shed His grace on thee,
And crown thy good with brotherhood
From sea to shining sea!
O beautiful for pilgrim feet,
Whose stern impassion'd stress
A thoroughfare for freedom beat
Across the wilderness!
America! America! God mend thine ev'ry flaw,
Confirm thy soul in self-control,
Thy liberty in law!
O beautiful for heroes proved In liberating strife,
Who more than self their country loved,
And mercy more than life!
America! America! May God thy gold refine
Till all success be nobleness,
And ev'ry gain divine!
O Beautiful for patriot dream
That sees beyond the years
Thine alabaster cities gleam,
Undimmed by human tears!
America! America! God shed His grace on thee,
And crown thy good with brotherhood
From sea to shining sea!
Monday, July 11, 2011
Great depression and Keynesian economics
Keynesian economics says that to improve the economy, government should increase spending AND/OR cut taxes. Taxes should not be increased during times of severe recession or depression. The massive spending effort of WWII is what brought about US economic recovery not Roosevelt's meager Public Works projects.
Times are very different today. Prior to the Great Depression the average income of workers was around $750 a year and all the wealth was in the hands of the top one percent of Americans. We can't even imagine a world such as this, but we should read and learn.
Wealth is distributed very differently than just a short century ago. There's a lot of cash being held by big business. Perhaps the "or cut taxes" approach of Keynesian economics needs to be explored before anymore big government spending.
Times are very different today. Prior to the Great Depression the average income of workers was around $750 a year and all the wealth was in the hands of the top one percent of Americans. We can't even imagine a world such as this, but we should read and learn.
Wealth is distributed very differently than just a short century ago. There's a lot of cash being held by big business. Perhaps the "or cut taxes" approach of Keynesian economics needs to be explored before anymore big government spending.
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