If Congress fails to act- and they probably will not- taxes are set to increase sharply beginning January 1, 2013, when the current tax rates are set to expire. If- and when- that happens, the effect on our economy will be brutal. According to a report released this week by the Congressional Budget Office (CBO), the tax increase on January 1 will be the largest in the history of our nation, and the effect of this increase will be to not only negate any growth, but to actually SHRINK our economy. The CBO estimates that our economy will shrink by .5 percent. That doesn't sound like much, but the CBO says that a contraction of this level will cost our economy another 1.2 million jobs and spike the nominal unemployment rate to 9.1%. The additional lost jobs will be in addition to the 12.8 million jobs that have been lost since Obama became President. The CBO report emphasizes the importance of Congress taking action to prevent our economy from falling deeper into this economic funk we have endured for the past three and a half years. More importantly, it is time for Congress to set aside their partisan bickering and begin to work for the good of our country. If they fail to do so, you and I will pay a high price for their continued ineptitude.
I live in a two story house. One of them is, "It's all your fault" and the other is "Because I said so."
Remember during his Presidential campaign when then candidate Obama said that if he was elected President that anyone making less than $250,000 "will not see their taxes go up one dime." You know what? He was exactly right. Instead, if you make less than $250,000, you are going to see your taxes go up a whole lot of dimes. The Obama administration is already hinting at what is to come if he is re-elected. On ABC's "This Week" news show, Treasury Secretary Tim Geithner said, "We have to bring these deficits down very dramatically. And it is going to require some hard choices." Liberal mouthpiece The New York Times, ran an article this past weekend with the headline "The Rich Can't Pay For Everything". The article quoted Leonard Burman, who runs the Brookings Tax Policy Center and was an official in the Clinton Treasury Department, who said, "This idea that everything new the government provides out to be paid for by the top 5%, that's a basically unstable way of governing." Why the change of pace? Even raising taxes on January 1 will not provide enough revenue to keep pace with the out of control government spending. Raising taxes on the wealthy will not even come close to closing the spending gap. So where will the money come from? You guessed it. The middle class. Why? Because that is where the money is. The tax increase will not be an income tax, though. That is so politically unpopular as to be career suicide for a politician. No, what is being readied is a European style value added tax. This tax is easier to hide and therefore easier to implement and to raise at some point in the future. The VAT that is being considered by the administration is 10% on all goods and services as proposed by Ezekiel Emmanuel, a senior White House aide. If this tax is implemented, that money is coming out of your pocket, because the price of all goods and services will be taxed at every level of production or delivery. The fact is that many in our government want a European style welfare and entitlement state, and you can't have that without European style taxes. Pay attention to this, as Washington is going to try to slide this massive tax increase in under the radar.
The world would be a much better place if instead of a dog eat dog reality it was a man eat chocolate cake life.
Watch the discussion about taxes closely. To cure our financial woes, we must raise revenue, and a lot of focus in Washington is on how to raise revenue (read: taxes). But there are two components to curing our financial troubles, and the one that is getting short shrift is cutting expenditures. Admittedly, this is problematic, because so much of our spending is tied to social programs such as Medicare, Medicaid, and Social Security. For many, these programs are considered to be untouchable. There are promises that have been made to current and future recipients, and those promises should be kept. However, doing nothing to change the way these programs are run dooms them to failure. If we were honest and accounted for the present and future liabilities the way businesses have to account for their liabilities, we would see that they are insolvent. Continuing with a "business as usual" approach is foolish and just deepens the financial hole that each of these programs faces. Rather than demagogue proposed solutions, no matter how radical, we should have an honest discussion about how to make them solvent and viable. If we do nothing, we will see these programs fail in our lifetime. It is time for us a citizens and taxpayers to engage in this process and demand that Washington put all options on the table to cut spending and make these programs fiscally sound.
Maybe the government should change its motto to, "Hi, I'm the federal government. If you think our problems are bad, you should see our solutions."
And that, my friends, is my view.
"Rather than demagogue proposed solutions, no matter how radical, we should have an honest discussion about how to make them solvent and viable."
ReplyDeleteWell, if you had written an honest piece, perhaps we could have an honest discussion.
First, you cut defense. Any reasonable discussion must start with reduction in spending for the defense budget.
There are more private sector jobs, now, than when Obama took office. The net loss comes from more workers in the workforce not being able to find jobs, combined with the 500,000 or so less government workers.
If the Republicans would have pledged allegiance to the US, instead of Grover Norquist, they wouldn't be afraid to do the right thing, which is raise taxes on individuals making over $250K a year. So Congress isn't stalling or passing the buck, the Republicans are refusing to do the right thing, as they have for this entire session of Congress. Much as people fail to recognize the previous president as a cog in this machine of debt and mismanagement. What Bush did, for much of his administration, was basically write checks and forget, conveniently, to write the amount in the ledger. Then one day down the road, 'When did I write this $1 trillion dollar check? Guess that will need to be paid, too.'
The VAT is being considered by A PERSON IN the administration, which isn't the same as being considered BY the administration. In fact, WH spokesman Kenneth Baer has said that it is not being considered.
You are right about a promise that has been made for Social Security and Medicare, those promises should be kept. They don't need much to change for that to happen, including removing the payroll tax exemption. Don't forget, even the twenty-year-old worker has had a promise made by Social Security. They take taxes out and send us all a sheet of paper that says this is how much money we will get back when we retire at 65. I'm holding you to that, a promise to allow me to retire at 65.
You wrote "we should have an honest discussion". Yes, we should. When are you going to start that?
Perhaps I should have commented before, but I just let your ramblings go, choosing to come back for your Preds stuff. Now, I have to keep you honest.
Ken Sharp
Preds fan, truth seeker.
Thanks for reading, Ken. I appreciate your point of view, and you should know that I am a heat seeking missle for the truth. So here ya go:
ReplyDeleteThere are not more private sector jobs than when Obama took office. Obama is fond of saying "he" created 4.5MM new jobs. That number only works if you look at the jobs created from the nadir of the recession. The fact is that there is a net job loss since he took office. The reasons for that do not reside solely with his administration, but it is with a doubt that his policies have contributed to the high unemployment rate. When you have an unemployment rate that was just over 4% when he took office to a rate today that is (nominally) over 8%, there is no way to stretch reality far enough to say that he has created jobs or that the net job loss is only 500K.
Notice what the administration is saying about taxes. "Hard choices" is setting the stage for tax increases, and when a senior administration official is advocating a VAT, I would think that it is at least getting a hearing by others in that administration and would be incredibly naive to think that it wasn't. We will have to disagree about the veracity of Baer's statement that "it is not being considered" as I think this administration has strained the limits of truthfulness. As I said, Democrats want a European style welfare state, and the only way to get to that point is through broad tax schemes like a VAT.
Cutting defense is part of a strategic view of America's role in the world, and I would respectfully disagree with that position. Given that angry Mullahs of questionable sanity are nearly (or more frighteningly are) nuclear capable, the last thing I would want to see is the ability of the U.S. to defend itself and its allies diminished. Like it or not, America is the world's sheriff and through its projected and actual military prowess has brought and preserved freedom around around the world.
The fundamental disagreement that I have with this administration and with most liberals is the power and scope of government. For years Washington- and I include Republicans in this indictment- has greatly expanded its power to the detriment of the individual and their rights. My belief is that the individuals should be free to live their lives and have the ability to succeed or fail without interference from the nanny state.
Again, I appreciate your read of the blog and your viewpoint. And your support of the Preds.