Sunday, December 2, 2012


This average guy is on the record as opposing ANY compromise with progressives on fiscal matters that apply to additional government spending and tax increases. I worry about the nation’s $1.x Trillion deficit which is of course is the amount of money we spend as a nation each year in excess of what is collected in tax revenue. Each year it gets added to the national debt which now stands above $22 Trillion, which is in turn dwarfed by our unfunded liabilities (promises we have made to pay in the future) which now are approaching or exceed $124 Trillion ( I can’t keep up). Additional government spending and taxes simply takes money out of the private sector where it could find its most efficient use and puts it in the hands of government bureaucrats who first take out the government cut and then spend it where THEY think would be best. The list of benefactors always seems to be topped by the “Friends Of The Bureaucrat Benevolent Association”. It’s funny how that seems to work. But back to fiscal compromise.

Fiscal compromise is one reason why the world economy is in the shape it’s in. For many decades the path to success in the U.S. congress was to “go along and get along”. You scratch my back, and I’ll scratch yours. The secret to a long career was to bring home the bacon for your constituents so that when election time rolled around there would be no room for an opponent to criticize, or to promise to do more. This was done by agreeing to help your colleagues take home their own bacon. We’ve all seen “Mr. Smith Goes To Washington”. We all know how it works, but we also know that there isn’t really a crooked politician out there with the sense of decency to put a gun to his or her head in shame.

But what’s the harm. A Billion dollars here a Billion dollars there. The government spends a Billion dollars every two hours and fifteen minutes. Who’s going to miss another Billion? Only they don’t get spent a single billion at a time generally. Generally they get spent by the hundreds of billions and not for one time purchases….. but ongoing, and constantly growing programs require a continuing, and ever increasing source of revenue to fund.

So the spending and debt go up and up and everything’s cool. Everyone seems to be having a good time, and then something unexpected happens: Unexpected, but predictable, AND predicted. A policy of increasingly easy home mortgage financing promoted and then aggressively pushed by the federal government creates the “housing bubble” which finally bursts and crashes the economy of the entire Western world.

And so here we are, trying to put out a fire by throwing buckets of ethanol on it.

One “compromise” and a way to help reduce spending put forward has been to trade four dollars of spending cuts for a measly one dollar of tax increases. How can THAT be a bad deal? Well, here’s how: It’s a charade to start with, because they’re not really going to “cut” anything, they’re just going to reduce the amount that spending would normally increase. And, if you don’t spend four dollars (a spending cut) then you don’t have to take it from someone, or borrow it. In our current situation where we borrow forty cents of every dollar the government spends it means that two dollars and forty cents would be left in the private sector where it could be used to buy capital equipment and produce jobs. But a one dollar tax increase is like a cancer. It’s like a cancer because it never goes away. Once you have a tax there’s no taking it back. There’s no taking it back because once the congress has assured access to it they spend it, not just one time, this year, but far into the future, every year from now on. The government doesn’t buy “things” with fixed costs. No. The government buys programs, and every year those programs grow and require increased funding. So…. over the popular ten year window, a one dollar tax increase will net the government ten dollars and all they had to give up to get it was a measly two dollars and forty cents. That’s over a 400% return on their “compromise”.

But that’s just what an average guy thinks.

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