Wednesday, July 6, 2011

Politics - and a balanced budget.

What to do, what to do? How do we balance the budget? Cut spending? Cut taxes? Increase taxes?

When I meet such dilemma's I try to "go small", in other words what do I do in my own budget situation?

Well now, all of a sudden it becomes easy - well as easy as balancing a budget can become.

We have an income, and we spend it, some for necessities like housing, food, transportation, etc (For the USA that would be taking care of the poor and disabled, agriculture, infrastructure of roads, airports, rails, etc.)

Then there is entertainment, an occasional dinner out and a movie, a vacation, a sports event, visiting friends etc. (For the USA that would be NASA space exploration, the Arts, public radio and TV, the National Parks and Wilderness areas, Wars etc.)

Then there is charitable donations, volunteer work, putting something into savings, etc. (For the USA that would be foreign aid - which is one tenth of one percent of the USA's GNP! Much, much less than we give personally. And also the lowest of the 22richest countries in the world, some of who give one percent, or more, of their GNP, ten times as much as we give! So cutting that would make no difference to us at all. Not to mention that most of it is not really foreign aid as most countries would define it, most of our "Foreign Aid" goes to Israel, Egypt, Pakistan etc in the form of military aid - so even what we give them is actually charity to our own weapons manufacturers! Yet we call it "Foreign Aid", which I used to think was food etc for poor countries! We do give money to starving countries for food, but with the proviso that they must use it to buy food from the USA! So it is no help to their farmers who cannot compete by growing food for their own people, as their government must use the money to buy the food from the USA! So they are even worse off! It turns out that the "Aid" is charity for our own farmers who sell their surplus food to the Aid countries! Where was I? Oh yes, volunteer work, that would be the Peace Corps, Doctors Without Borders, Mercy Ships etc, And Savings, well of course the USA doesn't have any savings for a rainy day? Shame on us.

If we have something come up that is not in the budget, where we need a little more money we take it from our savings, or we borrow it from a bank. (For the USA that means as they have no savings they have to borrow it.)

We then pay back the 'loan' to our savings account or to the bank where we borrowed the money. Here, we and the USA differ. We pay back the money and we do it as quickly as possible to minimize any interest payments, which is a total loss to us. You could say that interest is of no interest to us at all! We would rather have that money for our use than give it to the bankers. But the USA continues to borrow and to accrue interest payments. Why? At first I was going to say "That is easy to explain." but of course it is not easy, but I will attempt to give my reasoning's. It all comes back to Politics, Politicians and Greed. Quite simply they, the Politicians, think we, the people, are stupid and that they, the Pile of Shitens, can fool us, the people, all the time. Even if they can't fool us all the time they can throw us a bone - they can use the old war cry "Cut Taxes" as a sure fire way to get elected. Having cut taxes, all they have to do then is borrow more money to fill the hole left by having less income from taxes.

This obviously does not work. Here the ability to compare my "Small" budget with the budget of the USA becomes impossible because they, the USA or more accurately the Politicians, do not act intelligently or even reasonably. Whereas I can talk to my partner and come up with a plan, the two political parties, who are in no way partners, cannot talk. Like partners in a divorce they can only fight. And we all know where that leads to in a divorce - disaster - more accurately financial disaster for everyone. (Except the lawyers.)

So the two parties, who should be partners in guiding our country through its trials and tribulations instead fight amongst themselves, completely unaware, or not caring, about what they are doing to their country and their countrymen. It's like fighting while on the edge of a cliff, they will both fall, whereas if they co-operated they could save each other.

What hate. Can you imagine such hate, to hate the "Other side" so much that you would destroy not only them, but yourself, AND 300 million other men, women and children?

Hey, I got away from my comparison between my small budget and the USA's budget. I am almost finished - as will the USA be if our politicians don't straighten up and become, if not friends, at least partners.

So what I was going to say was that if we can't get our budget balanced we negotiate among ourselves - my wife and I - about what to do. And what we do is we cut expenses where we can and if that does not work we increase income. By getting another job. (For the USA that means, cutting expenses, preferably excessive or wasteful spending, and if that doesn't work - which it obviously cannot as we are spending almost DOUBLE our income!!!!!! In other words we could cut ALL of our "Discretionary" spending and still nowhere near balance the budget! We have to get more income, in the form of taxes. Now, one of the options I mentioned right at the beginning of my Blog was to CUT taxes! Anyone with more than an IQ of 50 should realize that will not work! The only thing it would do, which its proposers know, is destroy the country, which is what they want so that they can get back into power and SAVE the country. Now, it should also be obvious that NONE of them are able or even interested in saving the welfare of the USA. They are only interested in getting into, or staying in, power. Why? Why indeed would anyone be interested in being in charge of a sinking ship with no captain, no rudder, that is full of holes and in a storm being driven towards sharp rocks? Who? Why? And neither "Party/Partner has ANY interest in correcting the situation. Or at least they are making no attempt to correct it.

The way I see it is we have to cut expenses, but only excessive and wasteful spending and we have to raise taxes, but only on the rich.

Here's my reasoning, I hear one side say "OK, we need to cut spending and raise taxes. We are prepared to talk about cutting discretionary spending, military spending, and social spending, or 'entitlements', but we also need to raise taxes on the wealthy." The other side says, "We need to cut discretionary spending and cut taxes on the rich."

I have no problem with picking a side here!

The "reasoning" on the cut taxes side is that if you cut spending you will have more money to cut taxes. And if you cut taxes you will have more jobs. That does not work, has never worked and can never work.

Fist, if you cut spending you will cut work. For every $30,000 to $40,000 that you cut spending you cut one job. Cut the EPA $3 billion, easy, that's 100,000 jobs at $30,000 each. Cut the IRS $4 Billion, that's another 100,000 jobs at $40,000 each. Cut road works, cut NPR, PBS, NASA, it's easy, BUT for everything you cut, you lose jobs. You CANNOT cut money from any area without cutting jobs. I thought the main problem nowadays is jobs. BUT, if you increase taxes, you don't lose any jobs. Someone making $250,000 a year (Which is 5 times as much money as I ever made) or $500,000 or $10 million or whatever, is not going to let his housekeeper go because he has to pay a little more in taxes is he? Can you imagine the situation in the home if he had to tell his wife "We can't afford to have the cleaning woman in any more, we have to clean the house ourselves"? How is making the rich pay their fair share in taxes going to cut jobs? We keep hearing that the rich are going to spend us out of the recession. Bull. We have been in this recession for what, at least 5 years, we have cut taxes several times and we are still in a recession. Do you see any sign of the rich spending us out of it? If they are going to do it then they need to get on and do it.

The top tax rate at present is 35% - the lowest that it has been in at least 60 years - and we have the lowest rate of job creation in 60 years. The top tax rate under Clinton was higher and he created I think it was 22 million jobs, Under Reagan the top tax rate was 50%, no problem with jobs then, under Nixon the top tax rate was 70%, again no problem with jobs. Want to go back even further? Under Eisenhower the top tax rate was 91%, lots of jobs then!

I can remember under Nixon, Ford, Carter, Reagan, Bush 1 and Clinton, trying to hire workers for my small business, it was hard to find people. The unemployment rate was low and we were competing for workers. Some weeks I spent $1,000 advertising for help (We were a small company with only 30 or so employees at our max.) This was when the top tax rate was higher. Now that it is at its lowest the job creation rate is also at it's lowest. Following that path, if we cut taxes on the rich even more, the unemployment rate will go even higher. BUT, the rich will be richer! And who makes these kinds of decisions? Why, the Rich of course! Now in order to cut taxes on the rich - who already pay at a rate half that of the average American - we have to take money from somewhere else to give it to them. And where do we get that money? The only place you can get it, from the poor and the middle class. And you get it by cutting benefits to them, cut their Soc Sec (The rich don't need Soc Sec so that is OK), cut food stamps, welfare, unemployment pay, cut discretionary spending - roads, etc etc, where the workers work, and give it all to the Rich. The Rich then take that money and spend it. And save the country! And if you believe that I have this bridge in Brooklyn that you might like to buy!

How can the Rich spending their money (Your money) solve our problems? For one thing they spend it by going to Paris and buying French perfume, French Gowns, eating in very expensive French restaurants and staying in expensive French Hotels. How does that help us here? They then do it all again in Switzerland while skiing, and again in Australia and on and on. Oh, and lets put our money into a bank in Switzerland or the Cayman Islands, so that the tax man can't get at it.

I have been berating the Rich, but I really don't think all rich people are bad people. I am sure that many of them appreciate that they live in the richest country in the world and it has been good to them. But hey, if the country wants to make it even easier for them by giving them more and more tax breaks, why would they argue with that? I am sure that many of them would step up to the plate and have no problem with paying more taxes if it were asked of them. If I were making a million dollars a year I'd have no problem paying more in taxes and I'm pretty sure you would not either.

Not only is the top tax rate in the USA at the lowest it has been in at least 60 years, but the top tax rate in the USA is also the lowest in the World! With the exception of Japan which is about the same as our top tax rate, every other country in the world has a higher top tax rate than we do. What do they know that we don't ? Apparently they are right and we are wrong because we can't balance our budget. (There are of course some exceptions out there, mostly a few countries that have tried to emulate the USA by borrowing too much.)

Anyway, I was about to say that many of the wealthy realize the problem and I am sure would like to help. Warren Buffet, the second richest man in the USA said "The tax system is the USA is crazy. I pay less tax than my secretary."

What we need to do is give them, the wealthy, the chance to help the country that made them rich.

When you go to a bridal shower or a baby shower you receive a list of things that the happy couple needs. You can then choose a gift from that list according to your wishes and your means. I suggest that the Country get together such a list and encourage the rich to select one, or more, things from the list and use their remarkable powers to solve the problems presented to them.

Here is a few ideas from me to start the list off, I'm sure that you could come up with hundreds more!

One of our biggest problems with our balance of payments is all the money that goes to buy oil from abroad. Any way we can replace oil is money saved from being sent to people who hate us and use it, our money, against us. To that end : -

Develop cheaper and more efficient solar panels.
Develop roof shingles that double as solar panels.
Develop a more efficient, quieter windmill that people could afford to use at their homes.
Develop more efficient insulation.
Pay to insulate the homes of the poor.
Develop a paint that acts like a solar panel. It could be used on cars and homes.
Develop a device to retro-fit in cars to measure the MPG you are achieving NOW - this very second, and also since you installed it and on trips. It could be like a GPS. I drive a Prius and seeing the MPG I am getting as I accelerate hard or drive carefully helps me to reduce my gas use. (When I drive my pick up, which does not have such a device I don't try so hard to cut my gas use!) At present I am getting 53.4 MPG on my Prius. If everyone got an MPG like that we would probably not have to import any oil!
Find ways to produce everyday things in the USA at competitive prices - shoes, clothes etc.
Put together a drive to make "Made in the USA" a source of national pride. Make it so people want to "Buy American". Perhaps we could even waive sales tax on things that are "Made in America." The loss in sales tax would be more than made up for in the taxes paid by people at work and the savings in unemployment pay.

Can you add to this list? I'm sure you can. But will you?

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