How long can we keep this up?

All of us should be absolutely terrified by this graph below.  Why?  Because it so clearly illustrates what kind of crazy mess we are already in, and what horrific magnification of this mess we will see in the next four years if President Obama and the rest of the Keynesian redistributionists get their way.

The most pressing question for Americans in 2013 is: are we a nation of free enterprise or of government intervention?  Case in point - almost 75% of the recovery jobs in the past 2 years are with the government or government funded entities (hint: propped up "green energy" companies don't count as private enterprise). We are looking at record levels of revenues but exponentially higher levels of government spending. Obama and most of the democrats are perfectly happy to continue on with this strategy, thinking that they will be able to tax "the rich" into submission, not really caring that even forcibly taking every cent of income from the rich will barely make a dent in the deficit spending and that we are mortgaging away our children's future to China. Ultimately, Obama would like as many people as possible dependent on the government, because that's what makes his redistribution plan possible, but the balance is tipping and soon private sector people won't be able to support everyone in made up government jobs.

How long can we keep going at this rate before there are not enough people to redistribute from?  If the current course is not changed, at some point we'll reach a point where no productive people will work in this country. It will become either Animal Farm or Atlas Shrugged.

And frankly the Republicans are little better than Democrats when it comes to spending.  Fortunately Tea Party Republicans are forcing the conversation in both houses, and now all Republicans are at least giving lip service to reducing spending.  It remains to be seen if they will actually follow through.  The debt ceiling discussions will be the perfect opportunity for Republicans to demonstrate that they are actually serious about massive cuts to spending and aren't just all talk.  They have already been embarrassingly willing to give in to Obama's "I won the election, so we'll do what I want" posturing.  Let's see if they are able to man up and grow a pair.  If not, then in 2014 it will be the rest of us that will be to blame if we don't elect representatives actually willing to stand up for the future of this country.  In the meanwhile, since all our elected representatives have shown themselves incapable of closing the checkbook (with the notable exception of Newt Gingrich's Contract with America congress under Clinton), American's need to actively lobby for a balanced budget amendment.  

You STILL didn't build that

Obama is still holding steadfast to his demand that tax rates be raised on the "rich" (and again I point out that "rich" in his mind means families earning $250K).  Why?  Republicans have given in and are open to raising the same level of revenue through the closing of loopholes rather than straight up changes in rates.  Because he wants to punish success.  Obama wants to clearly label successful people as evil and not deserving of their wealth - they didn't build that! 

This is a fundamental difference in philosophy from the country our founding fathers envisioned.  It is the same view that enabled the administration to portray Mitt Romney as explicitly morally inferior, and implicitly guilty of some crime or wrongdoing, because he is a successful man. This has been accepted and embraced by the Democratic congress in stark contrast to how John Kerry was received as the party's nominee for President, and his net worth was significantly higher.  Of course John Kerry wasn't guilty of earning his money, he married into it.  Maybe that's a forgivable sin. 

And the liberal guilt for making money must not be assuaged by voluntary charitable works, as the pitiable philanthropic efforts of the Obamas and Bidens can attest, they prefer to take wealth by force.

Are Republicans seeing the light?

You know you're in trouble when Nancy Pelosi says you now "see the light", as she said of Republicans in an interview Thursday.  

Asked if the GOP would buckle, Pelosi said, “I wouldn’t say buckle. See the light might be a better term.”

Yikes!  And to add insult to injury, the Democrats not only expect Republicans to cave on taxes in the Fiscal Cliff negotiations, they are demanding a massive new stimulus package!  The fact that Republicans have not just walked away from the table on this is outrageous.  

Democrats feel emboldened by Obama's win, the increase in Republican Governors and a strong Republican hold on the house, being cleverly ignored.  There has been a lot of discussion on blogs and Twitter about the ramifications in the next election cycle if Republicans don't hold firm on taxes and spending cuts.  If only that were true.  When have Republicans ever really had their feet held to the fire when they have voted against conservative fiscal principles?  We keep electing the same wishy-washy bunch over and over again.  We should be demanding accountability for the decisions they make in the name of "bipartisanship".  

Grover Norquist was on the right track with the tax pledge, but he did not go far enough - we need a similar pledge on spending - and we need to follow up at the fundraising dinners and voting booth to hold responsible those who choose to renege.

Should we just let the sequestration happen?

Watching the Sunday morning new shows over the weekend, I was stunned to see that while there was much discussion about whether taxes on millionaires, that now includes families making over $250,000 by the way, but none on what spending to cut.  Not one of the members of the House or Senate, or even the pundits for that matter, were calling on the President and Congress to cut spending.  

It seems that all the concern around the Fiscal Cliff negotiations is extended only to taxes, not the out of control spending that is driving the country toward bankruptcy.  All of the participants, regardless of party, spent their time lamenting how this tax rate increase or removing that loophole would increase revenues.  I heard plenty of Republican's willing to dishonor the Norquist pledge saying it doesn't matter in this time of trillion dollar deficits, but I did not hear Democrats pledging to play their part and reduce entitlements. This is the story we've heard from big government for far too long -- no matter how much revenue the Federal Government is able to collect, they will be able to easily spend it all.  Keynesian Democrats have been convinced they can spend their way out of the recession, and see where that's gotten us.  And no matter what lip-service we've heard over the years from Republicans on big spending, both parties are complicit, but we are in WAY over our heads with no end in sight.

1947-2012 Federal Government Tax Revenues vs. Spending

Federal Government Tax Revenues vs. Expenditures

Federal Reserve Bank of St. Louis

October 4, 2012

We need to take a serious look at ALL spending, and right off the bat, begin means testing for Social Security and Medicare.  Is it theft to exclude payments to rich seniors who have paid into the system their whole working lives?  Yes, but it has to be done.  Frankly, social security is a drop in the bucket for wealthy people who can afford their retirement without it, and those same people should not be partaking of government sponsored healthcare.  I know they have paid into it, but they are screwing their grandchildren out of a lot more by expecting to receive it.  The current senior population is not "the Greatest Generation" for nothing; they would do what's right and accept the means testing.  Baby Boomers, on the other hand, are selfish enough to not care what kind of legacy they are leaving and would fight it, but again, it must be done as part of comprehensive cuts in all spending.

And what of the "sequestration" that is no longer generating discussion?  Let it happen. We are currently spending about $3.6T a year and bringing in $2.5T.  Sequestration is an idea that has been around for decades, but his statements in the 2nd presidential debate notwithstanding, was promoted by the Obama administration in order to serve as a "stick" during budget negotiations.  It will enforce an automatic, $1.2T cut to spending to both defense and non-defense spending in order to meet a balanced budget.  

However we do it, the people of this country need to fight for cuts, to force Congress to turn from the path we've been traveling and give back the promise of a strong America for our children, not a bankrupt one.

Walking the Obamacare plank

With Obama's re-election and a split Congress, Obamacare is now the law of the land and there is no chance of repeal.  Companies like Papa John's have already courted criticism for announcing they will lay off workers and/or cut workers' hours in response to the tax increases Obamacare will bring in 2013.  Many other business are or will be following suit.  

According to a list of of new 2013 taxes compiled by Americans for Tax Reform, the new taxes will include:

Investment Surcharge - What this has to do with healthcare has not been explained, but it will apply a 3.8% increase to capital gains and dividends for households making over $250,000.  This hits small business disproportionately hard as many small business owners fall in this category, and I'm not talking about Donald Trump. 

"Special Needs" Tax - Caps the amount that can be saved in Flexible Spending Accounts at $2500 per year.  It is called the "Special Needs" tax because it particularly hurts families with special needs children as they spend proportionally more on health care and tuition for special education.  

Medical Device Manufacturers Tax - A 2.3% excise tax on medical devices worth more than $100.  An excise tax is one that is imposed on a manufacture of goods rather than on the consumption of that item.  It is a "hidden" tax as most people don't see the tax, only an increase in costs.  This has already hit the devices industry hard and multiple employers have announced layoffs. 

Medical Spending Deductions Cap - The new tax increases the threshold for the amount of medical spending above which the spending can be deducted from 7.5% of their income to 10% of their income.  People with ongoing medical expenses that fall under the threshold can no longer file for the deduction, and people with higher expenses lose out on 2.5% of what they had previously been able to deduct.  

Medicare Payroll Tax - Employers already pay an existing payroll tax for each employee.  The rate employers must pay will increase.  With raises and bonuses already squeezed by the stagnant economy, employers will be even less able to offer raises when the cost of affected employee goes up. 

How is the economy supposed to recover when the cost of doing business increases like this?  Small businesses employing 49 people or fewer will be incentivized NOT to hire that 50th person as they will then fall under the Obamacare provisions.  And keep in mind penalty calculations for lack of compliance for companies with more than 50 employees are made using the number of full-time staff; part-time employees are not included.  This effectively incentivizes companies to maximize the number of employees working 30 hrs a week or fewer.  Underemployment is already a significant problem right now and Obamacare disincentives will make the situation even worse.  We've just seen the tip of the iceberg. 

These taxes will go into effect no matter what the results of the "Fiscal Cliff" negotiations are, as they are not part of the Bush era tax cuts, and the ones I've discussed above are only those slated to go into effect in 2013.  There is another set that will take effect in 2014 and 2015.  It appears that the last nail has ben driven into the coffin holding any hopes we may have had of reversing the economic downturn any time soon.