Sliding off the fiscal cliff may be the only answer in fiscal crisis…

December 22, 2012

And perhaps the best way to resolve the fiscal cliff dilemma is to tumble over it and see what happens. The deadline for action is Jan. 1.

If automatic spending cuts go into place, cuts neither Republicans nor Democrats will like, not to mention the general public, and virtually everyone’s taxes are raised, then maybe there will be some public pressure to do something. So far, I have not really noticed any public pressure.

The problem is that both sides are wrong. You can’t on the one hand just keep spending and spending and even at an ever higher rate while revenues diminish. And you can’t climb out of a financial hole without raising revenue.

I think most economic experts say that simply cutting alone won’t work.

President Obama’s decisive re-election (although Romney did get 47 percent) seems to indicate that the majority of the electorate does not want to scrap public spending, probably in particular on things like Social Security and Medicare.

Meanwhile, a story teaser in the Wall Street Journal (I don’t subscribe so sometimes I just get the headline or first paragraphs) said that the Republicans can’t come to an agreement on fiscal cliff talks because much of their membership refuses to do anything that would lead to increasing taxes on the rich (“the rich” I think has a flexible definition, but really in this country if you make more than $100,000 per year, you are at least approaching rich, even though others make millions and billions).

And I personally think the refusal to hike taxes on the rich is senseless, but maybe no more senseless than refusing to hike taxes on the middle class.

Let’s simplify the tax code first, reducing  the myriad of loopholes and gimmicks, and then maybe we won’t have to raise the rates as much as we might have to otherwise, and maybe, just maybe, there might be more equity in the tax codes and hopefully more support of the whole system.

And let’s restore manufacturing as our base. The service economy and living on housing bubbles just didn’t work.


Probably there will be a last-minute stop-gap action. That of course will not solve the problem. Then again, it will not hurt, I wouldn’t think. It just all seems so pointless, or futile.


P.s. P.s.

Oh, and that thing about taxing the rich sometimes hits small businesses unfairly because they file their taxes as individuals is confusing to me. I mean maybe small businesses that do that need a better accountant. There must be some advantage to them by incorporating or going to some other such measure. But then again, what do I know. Nothing.


How do you pay off the debt by cutting taxes?

July 10, 2012

How do you solve the federal deficit problem by cutting taxes? President Obama wants to extend the Bush tax cuts for the middle class or those making less than $250,000 per year. While personally that would be fine with me, I don’t see how that helps the economy.

It just means someone else’s taxes have to be raised and the government has to keep on borrowing money and the debt gets bigger.

If taxes can or should be cut then why not cut them across the board?

But if government revenue is cut there will likely be losses in the infrastructure and support mechanism that provides the foundation for the private economy.

There is waste in government that is always ripe for cutting, but not everyone agrees on what amounts to waste, although various forms of obvious waste are often pointed out in news stories.

The uncomfortable truth is that taxes probably have to remain as they are or, actually, the Bush tax cuts should be allowed to expire, while efficiencies in government have to be increased, and like it or not, a goodly portion of that revenue should go to servicing the debt.

(The whole notion that the Bush tax cuts were to be “temporary” was dubious. And is letting a tax cut expire raising taxes? It is all very misleading, and meant to be so in the game of politics.)

Whether by constitutional amendment or a change in policies, congress should not be able to increase spending without first identifying a revenue source and deciding what has to be cut when offering a new program or how much taxes have to be raised to pay for it.

Deficit spending has its perils, look at what is happening to our country and what is happening in Europe.

There is no free money.

What the nation needs is sound fiscal policies and regulations for both government and private business, with an emphasis on production of real things and the providing of valuable services, as opposed rampant speculation in a boom and bust business cycle.

At this time neither President Obama nor his opponent Mitt Romney seem to offer that, although Mr. Obama may in some ways come closer to the mark.

It is hard to know what Mr. Romney really offers because he has spent so much time pandering to whomever he thinks needs pandering to at the time.

Romney we do know, however, wants to make sure the rich have their taxes cut, for they are, he claims, the “job creators”. His record as a rich businessman, however, seems to belie that. He got rich via the private equity firm and hedge fund route, in part, by gutting companies and cutting jobs and/or sending them overseas.

Obama get angry, Obama get mad, give those Republicans the biggest lecture they ever had!

September 19, 2011

Obama get angry (to the tune of Johnny Get Angry) at the end of this post:


UPDATE: late in the day 9-19-11

Caught a little of the president’s address on his deficit reduction proposal, but it was confusing because for fun I was listening to it on French radio and I don’t speak French, so I only heard him in bits and pieces between the ongoing translation into French. But I caught his new hard-hitting tone and I have read some more about it since I originally posted all this below. I don’t have to agree with him to agree that finally he is fighting back and dropping the hopeless compromise tactic. Maybe he has just been pacing himself all this time. Now he can sprint to the 2012 finish line and he can also say he gave the Republicans a chance for compromise — they just were not interested. And even though my post below criticizes the confining quality of  ideologies when it comes to critical thinking, maybe it will be nice to have a clear struggle between right and left in the next election and see what the mood of the public is by now or then.


The trouble with political ideologies, such as conservatism and liberalism, is that they are so confining. They force one to think only inside the box, not outside the box.

I mean although I am not a registered Republican and although I do not consider myself a political conservative I wholeheartedly endorse the concept of making one’s own way in life and not depending upon the government or munificence of my fellow taxpayers (and that is not to say I have not ever benefited from that — most of us have or do to some degree). And that is considered quite conservative, that is making one’s own way and all. But at the same time, I would favor socialized medicine (I am not afraid to use that term — I don’t have to hide behind another term, such as single-payer or whatever). But I have come to realize that socialized medicine seems to be something U.S. voters as a whole just can’t get their arms around. Instead it seems we are all in a muddle on the subject and in so being go on supporting our crazy inefficient and highly expensive patchwork system. Yes I know, we now have Obama Care —  it’s still early with various parts to phase in later (unless the GOP wins and abolishes it) — but so far the only result is that I pay the same as I have in the past for less coverage in my job-connected health insurance (the alternative being to pay more for still less coverage than I would have had in the past).

But I did not begin this blog post to talk about healthcare or socialized medicine.

More and more I am convinced that President Obama is heading for defeat in his bid for a second term. He is supposed to, as I understand it, announce details of a proposal to cut the deficit over many years by $3 trillion by closing tax loopholes (probably a good idea, unless it is your loophole) and, according to the headlines, taxing millionaires at a higher rate that they are currently.

The notion that we can simply tax the rich to balance our budget or pay off the national debt is absurd. At least it is my understanding that the reality of the math is that those in the middle income level (whatever that is) have the burden, by their sheer numbers, of  paying the largest percentage of taxes. Taxing the rich sounds nice and even fair, especially if you are not rich or if you are Warren Buffett and have so much money, well you don’t quite know what to do with it all, especially once you’ve wall papered your house. He says he is not taxed enough, but that’s him — other rich folks don’t agree.

A better idea than targeting the rich would be to greatly simplify the tax code and maybe even flatten it out — everyone paying the same percentage. I know that is supposed to be unfair to all of us at the lower income levels since we need a higher percentage of our total income just to get by, but if the percentage was not too high, we could afford it. And of course the high earners could more than afford it — and that is so bad?

I am not so sure but what the income tax should not be replaced or at least augmented by a national sales tax. And I know that is supposed to be particularly regressive since we “poor folk” would end up paying even more for our basic necessities. So maybe actual basic necessities should be exempt from that national sales tax (and there would be a lot of argument as to what constitutes a basic necessity). But at least a national sales tax would have the advantage of gauging the government intake to the health of the economy. That way taxes could not be strictly blamed for hampering the economy.

Obama also proposes to balance the books through projected savings in winding down our war efforts in Iraq and Afghanistan, which only serves to point out the absurdity of our foreign and war policy. I mean if we can afford to simply wind down wars, by what right or reason did we get into them in the first place? War should only be fought for true necessity and only end in complete victory, making it no longer a necessity. But of course we have gotten into hopeless causes that never promise any victory.

But I have to begin preparing for my real job now and can’t quite complete the thought here.

Gosh I wish we could get a viable third-party candidate — the party of open-minded reason.


Who is rich?

It is often pointed out that many farmers and small business people are millionaires on the books. Several decades ago there was a headline in the Sacramento Bee newspaper about a Red Bluff, Ca. area ranching family that described them as millionaires. But they said they did not feel like millionaires. It seems that because they owned their land free and clear, probably thanks to the efforts  in of their forebears, and land values being what they were then, on the books they were millionaires. Now while I assure you no one need have felt sorry for them — they no doubt having plenty to get by, by all observation they lived a fairly simple, hardworking life. The wife of the rancher told a reporter on the local  newspaper for which I worked at the time that she did not feel like a millionaire, seeing as she had just got done rendering a hog. All I am trying to say is that whether they were wealthy or not, they were labeled by that headline (and it was actually meant to be ironic) as being in the same category as the idle rich (whom many of us envy but love to hate at the same time). Class warfare, as Mr. Obama proposes, does not turn me on. Nonetheless he has the hope that the Republicans will choose one of their crazies, who wallow in their own ignorance and bigotry, to run against him in an election that seems to be otherwise already handed to the GOP on a silver platter.

P.s. P.s.

Just heard a little of President Obama’s address on his proposal — his tone sounded tough; maybe he has taken James’s Carville’s advice and is getting mean. It reminds me of the 1960s Joanie Sommers song “Johnny Get Angry”. In my parody it goes like this:

Barack Obama get angry,

Barack Obama get mad,

Give those Republicans the biggest lecture they ever had,

We want a brave man,

We want a cave man,

Barack Obama show us that you care, really care for us…


In case you did not recall the original tune:

As much as I enjoy political satire, I won’t quit my day (and night) job.

Where were all the conservatives when the debt was being run up?

July 29, 2011

I have a question for all those who say we have to let the government default because that is the only way to keep it from spending more than it takes in.

Where were all these people all these years?

Did they vote? Who did they vote for?

There are very few in Washington with clean hands in the dirty deficit spending scandal — I don’t know, maybe Ron Paul, the libertarian.

I suspect that a lot of the so-called conservatives were content to run up the yearly deficits and the overall debt (what is it? $14 trillion), such as was done under George W. Bush, as long as they could hold onto their tax deductions (tax shifts to someone else) and their tax avoidance schemes. But now that the revenues have dropped so dramatically because of the Great Recession (and didn’t the economists tell us not long ago that it was over? What happened?) the so-called conservatives are born again on fiscal responsibility.

But yes, something drastic needs to take place. The government should not even think about spending more than it takes in, except that right now what reasonable choice is there without wreaking havoc on an entrenched but vital system, our economy and that of the world?

The story in the news today is that if no agreement is raised on the debt ceiling and if the president himself does not take unilateral action to raise it, the government will have to go into triage and decide who gets paid and who does not. There will not be nearly enough money to pay all of its day to day, month to month obligations. The thinking is that Social Security checks will continue to be issued, because that is politically sensitive to the extreme. Even before them the bondholders will be paid, because if they were not the government could never issue bonds again (or at least interest rates would have to be sky high due to risk) to borrow the money it borrows to pay the bills.

After that, who knows?

I think the president should make an executive order to raise the ceiling for now to avoid making Uncle Sam‘s promise to pay worthless, which would seem to destroy our whole economic system.

But really, hard decisions on spending must be made and made soon and nothing should be off the table.

Nothing is really free in this life.

But the strategy of the far right for a long time now has been to starve the beast. If you can’t get the votes or support of the American people to get rid of various things such as social programs and environmental regulations, just cut off the funding somehow. Never vote for new taxes.

We have reached the ultimate starve-the-beast moment or almost, it seems.

The ultra conservatives are wrong when they suppose a government can be run and civilization preserved without sufficient taxation and the liberals are wrong, wrong, wrong, when they just say: “let the rich pay”

All have to pay and we all have to make tough decisions.

Inheritance tax unfair; raise taxes and cut spending, but maybe starve the beast before raising taxes…

December 17, 2010

Maybe I should do more research on this one, but it seems to me that even though you have to be a millionaire or billionaire to worry directly about estate taxes or be the potential heir of one, the whole thing seems unfair.

A significant portion of the population thinks everyone is subject to the estate tax or inheritance tax or “death tax” as it is often called by its political adversaries. And that is not true, the first $3.5 million is exempt, and if the Obama compromise goes through it will be $5 million (federal tax — some states have estate taxes as well).

But also, a lot of people do not stop to realize, I’m guessing, that farms and family businesses that would seem modest compared to major corporations or businesses can be subject to an estate tax.

I don’t know why this is, lack of planning or what, but I often read that heirs often have to sell off family businesses or farms or liquidate them to pay the estate tax. That can be a tragedy for a family — or maybe a blessing sometimes — and a tragedy for employees who suddenly have no job. I ought to know, the last newspaper job I had I lost because the heir to the chain that owned it had to sell off the estate when the owner and founder died (that is a shorthand version of what happened, but I believe it is essentially accurate).

I buy the argument that taxes were already paid on this money once, usually in the form of income tax before benefactor died.

Of course whoever receives the money now has income, and maybe that should be subject to tax, so we are back to square one.

But you see, just like I blogged recently, maybe the income tax needs to be eliminated.

Government has to have a revenue stream to function, though. So, as I have blogged and as so many have suggested, why not a national sales tax? I understand in Europe the value added tax is used in which taxes are levied on each step of production of a product —  hence a tax on the value added.

And if we are to maintain the income tax, which it seems we are wont to do, then why not a simple flat tax with few to no deductions?

The United States is so deeply mired in debt is seems inconceivable that it could ever dig itself out of the hole. There is always the argument on whether to raise taxes or cut spending.

I have heard some experts suggest we need to do both at the same time. And really that seems logical to me, but I would say we have to begin my either cutting taxes or at least not raising them.

The conservative movement has long sought to get rid of social programs it does not like by voting against taxes — it’s called “starve the beast”. If they can eliminate the revenue they don’t have to come right out and say they don’t want to help the less fortunate.

But in order to eliminate the debt it would seem spending has to be sharply curtailed. But when taxes are raised there is too much incentive to spend the money. When you get more income it’s more fun to go out and spend it than pay off a debt.

Both liberals and conservatives live under some illusion that somehow the economy will come roaring back and we will magically solve the debt problem without having to raise taxes or cut spending. Actually, they may not believe this in their hearts but it plays well to the political base.

It seems to me that the tax system and codes need to be greatly simplified, so much so that everyone is forced to pay his or her fair share rather than the clever and/or  the rich being able to use legal (and illegal) tax dodges.

It may well be that taxes will have to be raised for everyone eventually, but a little starve the beast might be in order and then we can figure out what is just so important that it must cause our taxes to be raised.


In no way should the truly needy suffer in all of this, but a problem in our social programs is that oversight in the way of in-home social workers has been all but eliminated in the name of saving money (it does not) and in the name of political correctness in which you cannot tell people who live off the sweat of others and multiply like rabbits how to live — the truly needy suffer as the result. 

Scrap income tax and current unemployment system…

December 8, 2010



Add 1:

I’m not a big fan of redistributing wealth via the income tax, which is what the progressive tax rates (the more you make the higher rate you pay) do. It’s not that I have any personal concern, having never been in the higher brackets, it’s just that it seems unjust. As for unemployment benefits from the government, no question that if you are out of work you need the help. But I’m of the opinion that the system as it is now amounts to an artificial block in the labor supply, allowing citizens to be unproductive, which in the long run only hurts themselves and society as a whole.


President Barack Obama has cut a deal with his adversaries, the Republican congressional leaders, in which the so-called middle class tax cuts would be maintained, and less whithholding would be taken out of everyone’s paycheck, and unemployment benefits would be extended, and the rich could keep their present tax rates (or tax cuts if you will — it’s all semantics) as well, and estate taxes would be held at bay — something for everyone.

While Obama is being heavily criticized by left-wing Democrats and right wing Republicans, it seems that he must be doing something right.  As I have written before, it’s just lke the journalist — when all sides in a contentious issue take pot shots of your account, you’re probably doing your job correctly.

But what I’m thinking more and more is that our current income tax system is too cumbersome and costly to maintain and unfair.

And as for unemployment insurance, there should be no question in congress that people need the relief, so the extension should have automatically gone through long ago. But on the other hand I’m wondering if the government should even be in the unemployment insurance business. As it stands now, though, the right of workers to collect unemployment benefits, under certain conditions, is an entrenched part of the system, and unemployment is at record levels, so why is there a hesitation in the congress? Pass the extension and then work on revising the whole system or doing away with it.

But let’s look at both items, the income tax and unemployment insurance.

First income tax:

While I’m not really a conservative, I have to agree that it seems unfair and unproductive to penalize people for earning money (and there is always the question of what constitutes “earning”). Yes, there is a responsibility toward one’s government and fellow citizens, but that is a shared responsibility among all, or at least should be.

Some have proposed a flat tax, which I take it to mean represents everyone paying the same rate, regardless of income. The argument against that is that ten percent of a poor man’s wages is a lot more than 10 percent of a rich man’s portfolio. The poor man needs every penny he earns to put food on the table and to provide shelter and clothing and the other basics, whereas the rich man already has everything he needs with a lot left over for luxuries and finer living, so he can better afford to pay a higher tax rate.

But since when is the mentality in the United States of America that born a poor man one must stay a poor man and that the rich life is only available to those who are to the manor born and bred?

There is supposed to be opportunity for all. But having more income confiscated from you when you manage to earn more money seems counter to the idea of upward mobility.

It is true, however, that many accept this and go ahead and make more money and improve their lifestyle, the threat of government confiscation notwithstanding — and there are always tax dodges and a million quite legal tax tricks.

However, the government spends an inordinate amount of the tax money it collects trying to make sure that people don’t cheat the system, other than legal cheating.

But why not have a relatively low flat tax, one that the poor man can afford and one the rich man sees no need to circumvent?

Better yet, why not scrap the income tax altogether and go to some type of national sales tax or consumption tax?

Of course that old argument rears its ugly head again. A tax on the poor man’s necessitates is harsher than a tax on the rich man’s luxuries (interesting enough, a tax on yachts some time ago hurt somewhat lower class workers who had fewer yachts to build and sell) .

I’m beginning to sound like the late William Buckley, minus the big 25-cent words, sorry.

But it seems to me a national sales tax would garner a lot of revenue but also offer everyone a chance to get out of paying a lot of taxes. If maybe food and some other basics were exempt from the tax, then each individual could decide how much tax he wants to pay by deciding whether he really wanted that doodad or service he (or she) was about to buy.

Sales of consumer goods would not likely come to a halt or even slow. People always want things and with no income tax they would have more disposable income.

I think the real problem is the way our government spends and allocates money. The legislature simply passes laws that almost always result in the spending of more money and does so with little to no regard as to where the revenue is to come from.

The president submits a budget, but has little to no control as to how the money is actually spent, other than a veto — but not a line-item veto.

Perhaps the president ought to have a line-item veto. While I hate to make a straight comparison between government and business (they do have different roles in society), when it comes to economics, I feel compelled to think, what if the CEO of a company had no control over how the company’s money was spent — disaster.

And now to unemployment insurance. I’ve been hearing a lot of discussion on the radio as to whether extending unemployment benefits discourages workers from actually looking for work. Quick answer: of course it does, at least to a degree. The standard line by many is why should I take that job when I can stay at home and collect more in unemployment and not have the overhead of the costs associated with maintaining a job? And there is some merit to that line of thinking. Indeed a rich man who has a knack for understanding money might well ask the same question were that he was in the same position.

But unless we all want to be at the mercy of the government and what it decides to pay us in unemployment benefits, we eventually have to move on or move off of unemployment.

Before there was unemployment insurance there was moving back in with mom and dad or other relatives and there is a lot of that again nowadays.

But our society for decades has substituted government for family.

It’s getting costly. It’s bankrupting us.

Government provides the structure for a civilized society and protection for us and it is vital as such for that role. But it produces nothing and eventually if not enough people are productively involved our own government will go bankrupt and will no longer be able to perform its function.

The only reason the federal government has not yet gone bankrupt is that unlike ordinary citizens it can actually print more money (the official economic spokesmen for the government deny this, but their explanations are wrapped in semantics. In fact the money being printed today has no underlying value, other than it is the currency of the world’s only superpower (for now) and people are still accepting it (that could change quickly). But the routine of artificially creating money can only go so far. I suspect it is about to run its course.

It might be better if unemployment insurance (that’s what I was writing about before I wandered) was handled more like private insurance or was privatized.

As it stands now, employees don’t even pay for their unemployment insurance directly, employers do.

In real world insurance, the insurance company tends not to pay for things that are not legitimate claims. If you had private unemployment insurance it would be just that, insurance against losing your job, not an option should you decide you no longer want to work at a job or an alternative to actually seeking work, or even an alternative to taking a job you think pays too little or is beneath you (since when is it government‘s role to maintain your preferred lifestyle?).

And then there are the industries that hire seasonal or temporary labor, a labor force only made available by the fact that workers can collect unemployment benefits when they are not at these seasonal or otherwise temporary jobs. In this case, unemployment is a subsidy taxpayers pay to private employers, the same employers probably who rail against government involvement in business. Go figure.

For now, I would think it best that the current tax rates stay in place and unemployment benefits be extended — this way business and workers know where they stand for now.

What the elites, and indeed much of the nation, does not seem to be able to figure out is what our role in the whole scheme of things is other than trying to get something for nothing.

The nation will only be able to deal with the government deficits when it gets back to being fully productive and quits trying to figure out how to rob Peter to pay Paul. 

Corporate tax rate may be high, but take not so high: Middle East struggle led to our Constitution

January 8, 2010

I enjoy this being able to blog out on the road, but I have not had much time to blog, but I guess that means I’m busy and making money (such as it is).

And while I like having instant access to the news, I miss the newspapers because they are easier and more comfortable to read and I don’t have to worry about using up my available computer time on that card thing that plugs into my computer.

Newspapers are getting kind of spendy, though, and so many of them have so little in them these days it’s hardly worth the cost.

…. Anyway, here’s something that has bugged me for a long while: I have a friend who always complains that the U.S. has the highest corporate tax rate and that it discourages economic activity and may be preventing us from pulling out of our economic slump.

I’ve heard that too-high corporate tax rate argument for a long time from the predictable sources, in addition to this friend, but I did not really have a clue.

Still don’t really because I felt too rushed on my quick internet research, but what I did glean was that the U.S. has the second highest rate among the developed countries, with Japan having the highest (this may or may not be the most current info).

But what I also gleaned was, well, rate schmate, I mean we may or may not have the highest rate, but that does not mean we collect the most.

Corporations are clever about hiding assets and we all have read the stories each year that many, some say at least half, of the corporations manage to get by with paying no taxes at all. Many are multinational, and that can make it difficult to collect taxes.

And ,anyway, where is all this money it takes to run the world’s superpower supposed to come from if not from where the money is? Yes, the deep pockets if you will, those who benefit so greatly from the protections super power status offers.

Seems strange that Republicans have fallen in with the far right, weak central government, state’s rights crowd who for some reason also seem to be gung ho on fighting war.

I’m reading an interesting book on the history of U.S. relations in the Middle East (to include North Africa), and the author suggests that a prime motivation in the enactment of our Constitution, which created a much stronger central government and replaced the Articles of Confederation which had given the individual states much more sovereignty, was the need to fight war against the Barbary pirates of North Africa who were raising havoc with our merchant shipping in the Mediterranean and who were capturing U.S. citizens, to include some women, who they put in their harems (some anyway), and who tortured and murdered many of our men and women. The weak government under the Articles of Confederation could not agree on war and could not raise enough money to build a Navy (or Marine Corps — to the shores of Tripoli).

I’ve just begun the book, but I am already moving toward the notion, if I was not already there, that the U.S. has to hang tough in this rough world. But using our forces and our total might unwisely will surely do us in. On the other hand, we cannot be afraid to use it and should use it without apology.

That book, which I mentioned in a previous blog, is: ”Power, Faith, and Fantasy”, by Michael B. Oren, an intellectual with degrees in Middle East History.