Red White and Blue Traditional

Happy New Year!  About That Fiscal Cliff....

While I'm eager for the festivities to begin and party dresses and good wishes to abound I'm having a moment of foreboding as I think about elected government leadership whose approval rating is in the teens and in secret, behind closed doors, is playing politics with the amount of money that will be taken from you and from me starting tomorrow.  And the president has just signed an executive order giving this same leadership a raise (for excellent performance?).

I'll briefly share my thoughts and then it is off to ring in the New Year and pray for God's blessings.

Thought # 1:

There are NO tax cuts for anyone on the table.  The federal income tax discussion is about keeping rates where they are now or raising rates.  NO tax cuts. Only around 50% of Americans even pay federal taxes.

Thought # 2:

How did we get “into this mess?”

The genesis was failed government policies that forced lending institutions to sell mortgages to people who could not afford a mortgage.  We were told that this was done because everyone is entitled to the American Dream of home ownership.  Problem  is that home ownership isn’t the American Dream everyone is entitled to.  Everyone is entitled to freedom and the pursuit of the American Dream as each person defines it.

This one failed policy led to foreclosures, property values plummeting, financial institutions failing, corruption, collapse of the stock market, recession,  unemployment,  and unsustainable bailouts, stimulus and spending, all funded with tax payer dollars. 

Thought # 3:

What is the government doing since this spending is unsustainable?  

The government is borrowing $4.8 million each day, 48 cents out of every dollar spent. Republicans will likely give in today on the tax hikes they were elected to oppose for the promise to get "spending cuts later."  Ronald Reagan learned his lesson when he allowed tax increases for this promise that never came about.  He then cut taxes and prosperity ruled the day.

Thought # 4:

The amount in additional taxes collected from top earners would run the government for a few days.  This is not an answer.  

Thought # 5:

Where is the discussion among lawmakers about cutting spending?

Question: What do we responsible American families do when we have debt and spending is higher than revenue?  We cut spending.  What we cut varies from household to household depending upon a number of factors including level of wealth.  For example,

• We cut out vacations, down size cars and lifestyle, eliminate luxury spending.
• The children leave private school for public school and boarding summer camp is eliminated in favor of local camps.
• We eliminate dinners out, movies at the theater, cable TV, new clothes.
• We put off projects around the house, we sell the house and move to an apartment, lower the thermostat in the winter, make cost conscience decisions at the grocery store.
• Perhaps it motivates some of us to eliminate tobacco and alcoholic beverages.
• And for some of us we sell the car and use public transportation, cut off the thermostat except on the coldest days, and cut back meals to one or two a day.

We rarely go to our employers and successfully demand a raise.

Next question: What does the government do when it has debt and spending is higher than revenue?

• Borrow more....
• Insult our intelligence by telling us that they are making budget cuts when in reality they have only raised spending 5% instead of the baseline 8%.
• Talk about the need to close “loopholes” such as mortgage interest deduction as if this legitimate deduction is a tax cheat ploy instead of the economic incentive it was meant to be. Eliminate the charitable deduction so we can have less freedom to give our money to worthwhile charities and instead pay that money in taxes so the government can decide the "winners" and the "losers."
• Extol the unemployment rate at 7.7% hoping most Americans are not informed enough to know that the rate came down because unprecedented numbers of Americans left the work force because they couldn’t find jobs.  Therefore these Americans no longer “count” in unemployment figures.

Thought # 6:

What happens when someone loses a job in this weak economy with businesses closing daily? 

Unemployment rarely covers the out of work person’s expenses. It doesn’t take long until paying expenses depletes the savings account, foreclosure proceedings begin, self esteem plummets and the unemployed person looks to the very source of the problem for help – the government, funded with tax payer money.  Government policies lead to impoverishment, dependence on government, and eventually a system that cannot be sustained.

Thought # 7:

We are told that the tax rates for large corporations should go down but at the same time small business rates, employers of the majority of Americans, should go up (for families making $250,000 a year and above.  These income brackets represents the small businesses who file as individuals).

Small businesses can’t invest in new equipment, expansion and employees.  Employees' hours are reduced and in many cases let go.  New employees aren’t hired.

Thought # 8:

How does taxing “the rich” more help everyone else?  

Well it runs the government for a few days and in no way positively changes the lives of the rest of the country.  My “rich” neighbor paying more does nothing positive whatsoever for me. My income doesn’t go up.  In fact “the rich” paying more is devastating.  Income tax is an obstacle to most Americans acquiring wealth.  I am actually hearing people I know say they are relived that they don’t make $250,000 or their taxes would be going up.  Our government is implementing policies that discourage ambition and success.  This tax policy won’t affect the mega rich – maybe punish them for success and let them bear the burden for running the government for a few hours.

Time's up!  Let the festivities begin! Five hours and counting until 2013.  Wishing God's blessings for us all.