Friday, May 18, 2012
We all know that our country is staring at a $16 trillion deficit and that the federal government is looking for way to raise taxes. Being direct about raising taxes is not the way a politician continues their career, so the tactic in Washington is to slide new taxes or tax increases into various bills so that they are hidden from view and the political fallout is limited. Another way to raise taxes is to curtail or eliminate deductions that many taxpayers use to limit their tax liability. Although this is a tax increase, it allows politicians to say that they didn't vote for a tax "increase", even though the elimination of a deduction in effect increases taxes. Why mention all this? Quietly, the House Ways and Means Committee has commissioned a study group to examine the $18 trillion sitting in 401(K) plans and personal IRA's. Under current rules, the total allowable contributions into a 401(K) by an employee and employer is $50,000. The Committee is considering lowering the contribution limit to $20,000 or 20% of total compensation, whichever is less. This exposes more of an worker's income to taxation by lowering the contribution limits. There is another proposal being considered that would totally eliminate the tax savings for contributions to 401(K) and IRA plans, treating all contributions as taxable income. Contributors to these plans would instead get an 18% "credit" for any contribution placed into a retirement account. Pay close attention to the progress of these discussions. Washington has a voracious appetite for our money, and it was inevitable that they would start going after retirement accounts. Even if it means that it will lower your standard of living in retirement.
People say that 60 is the new 40. The policeman that pulled me over this morning disagreed.
The classic definition of insanity is doing the same thing over and over again, but expecting different results each time. Look at what is happening in Washington, with our government, and ask yourself if this isn't the epicenter of insanity. Why? Consider these facts. We have an entitlement system that is bankrupting (actually has bankrupted) the country. Yet instead of undertaking meaningful reforms, entitlements continue to drain resources, continue unabated, and are expanding. Or consider our monetary policy. Rather than create sound money, we continue to print more dollars and debase our currency. Right now, we do not feel the effect of the monetary stupidity that the Federal Reserve has foisted upon us. We will, eventually. You can blame the real estate bubble and before that the dot com bubble on inept monetary policy. Our economy has been ravaged by our excessive printing of dollars, and we are doing it again. Don't forget our system of government education. Our public education system continually turns out graduates that are ill prepared to function in a rapidly changing global economy, yet we persist in perpetuating the same ineffective educational programs and resist any changes to improve the system. Both parties are guilty of perpetuating this insanity. This election is about taking the first step in stopping this stupidity and beginning the painful steps to move our country toward a more sane approach to addressing our multitude of challenges. It will be up to the voters to do this. Politicians and bureaucrats in Washington will not.
Now when anyone tells me "Good morning" I am asking them to prove it.
Fiscal responsibility, like personal responsibility, is not always fun and is sometimes painful. Too painful for some countries. France recently took a dramatic turn to the left as the voters there rejected the fiscal austerity that had been implemented under President Sarkozy and elected Socialist leader Francois Hollande. Hollande has promised a return to the fiscal policies that had created the debt crisis that nearly wrecked the French economy. Voters were promised a "new hope" and a change from necessary fiscal discipline by Hollande. Hollande promise to raise taxes on businesses and wealthy individuals, increase public spending, and raise the minimum wage. Sound familiar? If you said it sounds like Democrats in the U.S. led by President Obama, you are perceptive. All of these promises, whether made by Hollande, Obama, or any other socialist around the world, all sound good and make the voters feel good. The trouble with these promises is that sooner or later, the money runs out. Yet the promises persist. Sounds like insanity to me.
If I could be any person, living or dead, I would certainly want to be the living one.
And that, my friends, is my view.