Wednesday, August 31, 2011

Imagine . . .

Imagine a company with 1,000 employees, their average wage is about $40,000, which is also the average wage of the average American. So their total annual wage bill is $40 million. Now imagine that this imaginary company has borrowed $40 million, which is also about the amount of the National debt, about $40,000 per person. They borrowed the money and spent it, and have not paid it back.
Now they decide that they need to pay it back, they figure that if they pay back 10% a year they will have it paid back in 10 years. (Not allowing for interest) They decide to lay off 10% of their workers, which gives them the necessary $4 million a year to pay back the loan. Now they have 100 workers unemployed! (unemployment has to be paid!)
Another way to do this might be to cut every ones pay by 10% and put that towards the debt, this way everyone still has a job, the debt is being paid off, there is no unemployment to pay and everyone shares in the hurt, equally. by having their wages cut by 10%.
The problem was that the company borrowed money and used it, with no provision to pay it back. Maybe they gave it to their workers in the form of bonuses, Christmas parties, gifts, trips, an exercise room, etc. In effect the employees were paid too much, and the company borrowed to give these "perks" to their employees.
Now the problem raises it's ugly head, and it has to be dealt with.
This obviously refers to our country, not our imaginary company.
Obviously we cannot cut the pay of our "employees" by 10%, for 10 years. And yet that is exactly what we need to do if we want to pay off our debts!
We have borrowed the money and given that money to our citizens in the form of tax cuts. In other words we have not being paying enough in taxes to pay for our needs. we kept the same, or more, "Toys", and paid for them by borrowing money. Whoever thought this could go on forever must have been insane. Or just didn't care, or thought that they would not be around when it came time to "pay the Piper". They - politicians - collected their bribes, and are sitting pretty with millions in their bank accounts, so what do they care?
The only way we will ever pay off this debt is to collect more taxes, where else can the money come from? And it would need to be a huge tax increase - 10% of Every ones Total income for 10 years would not pay it off!!!! That is how badly "We" have managed our economy.
I personally was always a little suspicious, but thought that it must be OK, these people know more than I do! They must do, right? I mean they are paid more than I am, in many cases thousands of times more than I am, so they must be smart, they must know what they are doing!
I was wrong, they had no more idea what they were doing than I did. Or if they did know, then they were criminally irresponsible.
We are not collecting enough to pay our bills! How easy, or hard, is that to understand? Even for a simpleton. And yet there are still people out there who insist that if we cut our taxes more everything will be alright! Our taxes now are lower than they have ever been in at least 60 years. The lower our taxes, the worse the problem. So "Lower our taxes" say many!
I laid it out in the form of an imaginary company. Lets make it even simpler. You are an average American and make $40,000 a year, you borrow $40,000 - over a period of time. You can't afford to make the payments, so you borrow more money to make the payments! And you continue to borrow, and the payments get higher, and you borrow more to make those bigger paymnets! Get it now? Now if you were a tea bagger, or a Republican you would say, "I can solve this by bringing in LESS money (cut taxes = less money to pay the bills) so I quit one of my jobs - I now have two jobs trying to make ends meet - that should solve the problem right? I now have less money coming in to pay my debt, so everything will now be fine! Isn't that exactly what the tea baggers and the Republicans are saying?
I forecast disaster.