Why the Fiscal Cliff Should Happen!

Over the past 12 years federal spending has skyrocketed to out of control levels. Both parties are to blame for that. The Bush administration spent billions more than it brought in on a yearly basis. The Obama administration has, and continues to spend trillions more than it brings in on a yearly basis. These are just statistics. Obama has put us in more debt than any other president. All for a 7.7% unemployment rate after 4 years, which is a horrible judge of the true unemployment rate in the first place. That is just the truth. No way around that. The American people, at least some of them, have been reaping the benefits of this out of control spending for some time now. The fiscal cliff is not something that most conservatives, at least in the form of tax hikes on everybody, would normally advocate. However, from my point of view, IT SHOULD HAPPEN. Let me explain why.

American people, the bill is due. The wars, food stamps, welfare, healthcare, social security, pet projects, etc. The politicians over promised and you let them. The bill is due, and the government is ready to collect. From a political standpoint, taxes must go up on everybody, so the electorate can see the consequences of out of control federal spending. The only way the people change their mindset, and how they vote, is to feel the pain in their wallets. This is the only way the American people will learn. I fault conservative leadership. The problem with our conservative leadership is that they implemented reckless fiscal policies. Fiscal conservatism is two pronged. First, federal taxes must be enough to fund essential, constitutional functions, no more, no less. Of course, there may be variations year to year, $50-$100 billion surpluses or deficits each year.  However, fiscal year deficits of $1+ trillion dollars have been the norm for the past 4 years. Can someone please explain this to me? The $300 billion deficits that President Bush was running were also outrageous. Second, if spending does go up for some reason, the tax code needs to adjust. Meaning that, if government wants to spend more, they have to go to the people that year, right then and there, and demand more money from them. What does this accomplish? Awareness. In a system such as this, the American people would become aware of our tax and spend situation immediately. Politicians would not be able to spend money and just pass the bill down the road to future generations. This is the greatest hope for fiscal conservatism. It would essentially be a pay as you go system. Does this mean, that Congress cannot carry out one of its constitutional functions of borrowing money on the credit of the US Government? No, but what does borrowing money come with? Interest. Somebody has to pay those interest payments. So if the federal government borrows money for funding, taxes should go up. The longer the principal is outstanding, the more interest the American people pay over time. Nobody wants to pay $5 billion for a bridge that only costed $3 billion. A system such as this would drive liberals crazy because it would hold the spendthrifts accountable, immediately. For example, we are about to pass a healthcare plan. It will cost $400 billion in additional revenue over the next five years. That means your taxes are going to go up $2,000 every year for the next 5 years. Now, American people, make a choice using the power of the ballot box.

Simply put, we have spent too much money. We have lived beyond our means. This is what you get when you put a President in office that has spent about $5.3 trillion more in four years than he has brought in over those same four years. Bush does not escape critique, however his spending was not on the same level as Obama’s. Simple math can debunk the myth that simply taxing the rich will fix the problem. Using 2010 IRS statistics proves this. Lets discuss real numbers. In 2010 the top 1% of earners paid $354 billion of the federal individual income tax. Number of federal returns filed by the top 1% of earners, 1.35 million. In 2010, the bottom 50% of income earners paid $22 billion of the federal income tax paid. There were 67.5 million returns filed which fell into the bottom 50% earner category. Now to adjusted gross income on the top 1% for 2010, which is my main point. The top 1% of income earners had AGI of $1.5 trillion. So lets tax them at 50% of adjusted gross income. We would put a $750 billion dent in the budget deficit, annually. Let’s do that for 4 years. That would equal $3 trillion dollars. It still would not equal the $5.3 trillion of spending deficits which President Obama has overseen the past four years. Still do not get it? Read that paragraph again, because it is pivotal. This gives some perspective, and hard numbers, as to why just taxing the rich will not fix the problem. The politicians count on you being uninformed about our spending situation.

To sum up my theory to conservatives. If the Democrats will not compromise on spending, let the fiscal cliff happen. Let taxes go up on the middle class, the rich, everybody. Will it hurt the economy? Maybe. However, from a political standpoint, maybe, just maybe, you will be able to show the American people that this is what you get when you have out of control spending.  The bill will eventually come due, and the American people will always be on the hook. All of them. When the Democrats start blaming the Republicans for allowing taxes to go up on the middle class. Just respond by saying, we just thought it was time to pay our past due bills, and not pass this generations’ debt burden onto the next. If you do not want it to happen again, then cut spending. If you dot not cut spending, taxes will have to be raised again, and those voting for the outrageous spending increases, will again, be to blame. The ball needs to be put back in their court, and this is something we have not tried.

Obama’s Plan Will Cost US Economy 200,000 Jobs According To Liberal Leaning Yahoo News!

Okay so America is slowly crawling out of the recession and we have had some positive jobs numbers in the past few months, even though the government uses the U3 numbers rather than U6 numbers when calculating unemployment, which is misleading in itself. This is why the liberal media outlets were jumping for joy last week when the jobs report was released and the U3 rate was 7.7%. Oh crap, our unemployment rate is 7.7%, that is amazing. That is disgusting. It is like settling for 10th place, in a contest with 11 contestants.

(What is the U3 Unemployment Rate: U3 conveniently excludes the unemployed once they have been unemployed for one year. These very long term unemployed just magically disappear. U3 also counts those forced to settle for part time jobs as being fully employed. Estimates of “discouraged” job seekers unemployed for less than one year are also excluded from the U3 statistic. U3 is an artifically low manufactured number that tells you nothing about the true employment rate.)

(What is the U6 Unemployment Rate: Basically, U6 is a broader measure of unemployment. It includes all of the unemployed regardless of how long they have been unemployed. It includes those seeking full time positions who have had to settle for part time positions. U6 is the unemployment statistic that was cited by the US Department of Labor until about 16 years ago when U3 was quietly substituted. CURRENT U6 RATE FOR THE US IN NOV 2012 IS 14.4%.)

Now to the point of the article. It is no secret that Yahoo News is super liberal. Almost to MSNBC level liberal. Today they have an article which basically says that Obama’s proposal to tax the rich at higher rates is going to cost the US economy 200,000 jobs. This is because many businesses that are taxed at the individual income tax level, because they are not organized as corporations, LLCs, partnerships, etc. will not be hiring and may even have to let some workers go. Here is the excerpt from the article:

“The Congressional Budget Office estimated last month that Obama’s plan to increase taxes only on top earners would reduce economic growth by 0.1 percent of Gross Domestic Product next year, or about $16 billion. That translates into about 200,000 fewer jobs…’It’s a very tiny portion of the cliff impact and it very much raises revenues and it does so in a fair way,’ Rep. Sander Levin of Michigan, senior Democrat on the tax-writing House Ways and Means Committee, said of Obama’s proposal. ‘It will not stifle economic growth in any significant way.’

So let me get this straight. We created 146,000 jobs last month. Over 350,000 actually dropped out the workforce which is what led to the U3 unemployment rate (the one the federal government uses) dropping to 7.7%. It was not because we added jobs that the rate dropped, people dropped out of the calculation. Now, democrats are saying that losing 200,000 jobs is no big deal. If Democrats actually cared about the middle class and the poor, they would realize that most middle class people and poor people actually work for wealthy individuals, or wealthy corporations. Increasing the rates on these wealthy individuals or corporations will only trickle down to the  middle class and poor, because they will be the ones who will not have jobs. Why? Because the rich will instead have to pay what used to be that worker’s salary in federal individual income tax to the government. But hey, maybe the democrats secretly want more middle class and poor to be unemployed so they can get on the government dole. This would effectively solidify democrat power in Congress and the White House for years to come. The best way to allow socialism to creep in is to eliminate the middle class. By eliminating the middle class you make more people dependent on the government, who are then more willing to give up their economic freedom to succeed or fail. If the government is writing your free check, you will most definitely fail.  In the good words of Rahm Emanuel “never waste a good crisis.” Meaning when the people are freaking out is when we can get more stuff done we have always wanted to get done in the false promise of government is here to take care of you. No different than the Patriot Act. Politicians jumped and in the name of national security they sacrificed our personal freedoms by passing the Patriot Act. The epitome of what never waste a good crisis means. Just now, Obama and his democrat thugs are sacrificing our economic freedoms, which I believe is much worse.

See the Yahoo News article here: http://news.yahoo.com/obama-tax-plan-no-small-deal-small-businessmen-201241565.html

Why the Bush Tax Cuts Are Really to Blame And Why They Have Been Good For Uncle Same Too!

Over the past few years President Obama has, almost to the point of nausea, preached that the rich need to pay more. He says that if the tax rates rise on the rich that the federal government will be able to use that money to pay down on our debt, and it will automatically mean more revenue will be coming into the federal government. So to challenge this argument I have done some research. I am not going to just use bumper sticker slogans and class warfare to get my point across, as the well versed politician Obama does. Rather I will use the facts to show:

1) THE RICH ARE ACTUALLY PAYING MORE AS A PERCENTAGE OF THE FEDERAL INDIVIDUAL INCOME TAX THAN THEY DID WHEN THE BUSH TAX CUTS WERE NOT IN EFFECT, NAMELY THE CLINTON YEARS, H.W. BUSH YEARS, AND REAGAN YEARS. The point is that, yes, the Bush tax cuts are to blame for our mess. But not for putting less of the tax burden on the tope 50% of earners, but for putting more of the burden on the top 50% of earners, and furthering the cradle to grave state for the bottom 50%.

2) That the individual income tax receipts of the Bush tax cut years were significantly higher than the Clinton years, therefore giving significant weight to my argument that in order to increase tax revenues, the labor participation rate needs to be increased and the tax base needs to be broadened rather than the brunt of the burden being placed on the rich as I am about to show you.

Point 1:

Between the years of 1980 and 2001, the bottom 50% of wage earners, paid on average, 5.6% of all federal income taxes. After the implementation of the Bush tax cuts in 2001, this is what happened to the percentage for the bottom 50%. Between the years of 2002 and 2010, the bottom 50% of wage earners paid on average, only 3.38% of all federal income taxes paid to the federal government. In 2010, the bottom 50% of wage earners only paid 2.36% of all federal income taxes collected. The top 50% of wage earners share of total federal income taxes collected in 1980 was 92.95%. In 2010 that number had ballooned to 97.64%. Any individual that is arguing that the cuts actually helped the rich more than the middle class or the poor is highly mistaken. Relatively speaking the middle class and poor have benefited more from the Bush tax cuts than the rich. As a percentage of their incomes, they have more take home pay than the rich. The bottom 50% of income earners actually paid $21 billion less in 2010 than they did in 2001, while the top 50% paid $85 billion more, and the top 1% paid $61 billion more, all during the same period 2001-2010. Between the years of 2000-2007, the top 1% of earners individual income tax rate increased 23%. So liberals explain to me again how the rich are paying less today than they did pre-Bush tax cuts. Now to my point, the Bush tax cuts did nothing more than allow the poor and lower middle class to receive tremendous amounts of benefits without having skin in the game. Everybody should pay some form of individual income tax, unless you do not work at all. The fact is that many people in this bottom 50% of earners group actually pay negative net income taxes. Meaning they receive more back in refunds than they pay. The Bush tax cuts are to blame for many of the freeloaders in our system today. If we are all in this together as Obama keeps spreading that socialist jargon, then if one persons rate go up, all rates should go up.

Source: http://taxfoundation.org/sites/taxfoundation.org/files/docs/ff343.pdf

Point 2:

The individual income tax is the largest source of revenue for the federal government. The federal individual income tax has been the largest source of revenue for the federal government since 1950. Based on 2010 numbers, the federal government generated 42% of its revenue from the individual income tax. Now to the Clinton years. During the Clinton administration, the highest amount of federal individual income taxes collected by the IRS was $981 billion dollars. Now to the Bush years and the Bush tax cuts which should have effectively made government revenues decrease tremendously, right? Wrong! In fact, the federal government brought in over $1 trillion dollars in individual federal income tax revenue for the first time in our history. Not only did the federal government bring in $1 trillion dollars in federal individual income tax revenue, but they did it 3 years in a row (2006-$1.02 trillion, 2007-$1.112 trillion, and 2008-1.029 trillion). So when the Bush tax cuts were in full force, the revenue to the federal government (reminding you in good economic times, anything after 2008 will be affected by the great recession) was the highest it had been in the history of our country. I thought higher rates always meant higher revenues to the federal government. Seems not to be the case. Keeping tax rates where they are for everybody, or as a matter of fact lowering them for everybody would free up capital for job creators, and those that want to start a businesses. This would therefore increase the labor force participation rate back up into the 65%-66% range, rather than the abysmal 63% we are at now. More people working, means more people paying taxes and therefore more money to the federal government. Obama’s actions of providing more federal benefits is not doing anything to bring the job market back. It is doing nothing more than trapping lazy and once hard working people that would rather just get free food, healthcare, and livelihood, than go get a job. Putting more people on government benefits is not going to increase revenue to the government, therefore helping pay down our national debt, because less people are paying taxes.

With all that being said, the left wing and right wing media outlets are fooling you. They feed us these quick snippets of information because they (and the politicians) think we are too dumb to do our research and find out what is really going on. American voters have effectively become bumper sticker voters, that will faint because a man, such as President Obama utters the word “change.” Most are unfortunately, low information voters. The federal government does not need more money. The record high revenues during the Bush years show that SPENDING is the problem. The federal government was bringing in record setting revenue numbers and it could not even pay its bills then. We were still running fiscal year deficits in the hundreds of billions of dollars during our record setting revenue Bush years. If you do not think that spending is the problem just look to page 411 on the this link. http://www.whitehouse.gov/sites/default/files/microsites/ERP_2012_Complete.pdf.

This is President Obama’s Economic Report. Look at total federal outlays in column 2. Total federal spending under Bush went from an average of $2.7 trillion per FY between the years of 2006-2008, with an average FY deficit of $288 billion. Under Obama total federal spending skyrocketed to an average of $3.6 trillion per FY between 2009-2012, with an average of, get this $1.3 trillion FY deficits. If you do not think that our federal spending is the problem you are an idiot. Also, don’t blame it on the wars, we have been fighting them for quite a while now and have not even ran anything close to the deficits this incompetent President is running. The fact of the matter is that we have reached a threshold, where those receiving but not giving, have grown to a number exceeding the threshold of which the producers can live the American dream and support the takers at the same time. I don’t know about you, but I’ll take my American dream any day in that contest.

I do not like this trend because I expect and aspire to be in that top 50% one day. I still think that America is a land of opportunity. A place where you can be born nothing, and become a great success. Unfortunately, I do not think many of the bottom 50% of wage earners believe in that anymore. Otherwise, why would they be advocating tax plans which could possibly negatively effect them if they were to become part of the top 50% of wage earners?  Either they believe they do not have what it takes to become great, or they believe that America is not that land of opportunity our fathers and grandfathers conquered. Many of them believe that the government can take care of them better than they can take care of themselves.  Honestly, many of them are still children, and never grew up.

The Fiscal Cliff is non-sense and so is Obama’s legacy!

If the Congress would have done their job in the first place we would never have this problem. Last year when we had this debt ceiling problem the deal was we will go ahead and raise it, and extend the Bush tax rates, and at a later time we will deal with the debt ceiling, Bush tax cuts, and automatic (sequestration) cuts again. The idea may be a good motivator to get Congress to do their jobs, and legislate. But again we are dealing with Congress. Granted, I blame much of this on the Democratically run senate. When was the last time the DEMOCRATICALLY controlled senate passed a federal budget. It has been almost 4 years. A duty that is imposed by law on Congress on a annual basis, and they have not passed one in almost 4 years. They keep passing these continuing resolutions, to keep the federal government funded. The President wants guaranteed increases in taxes on the top 2% of earners. Therefore, raising an additional $1.6 trillion in revenue over 10 years. He says also he wants to make a series of cuts in the amount of $600 billion to multiple social programs such as medicare and social security. However, according to the President’s plan, these $600 billion spending cuts are not automatic and are to be agreed upon at a later time. He wants definite revenues, but will not commit on inking what will be guaranteed cuts. Mr. President, what respectable negotiator would accept non-guaranteed cuts in this negotiation. The republicans have caved on raising taxes, it is time to open your social insurance programs to guaranteed cuts. If I were a conservative in the house, I would laugh at him, and say put your money where your mouth is. If it is so important to you that the middle class Bush tax rates (remember it was Bush who implemented these taxes for the middle class also, yeah the guy who Obama is always blaming) are kept in place, I would plainly say to him, for every dollar of new spending you want in this fiscal cliff legislation, I want a dollar of spending cuts to some entitlement program. It does not have to be social security, medicare, or medicaid. It can be the obama phone program, or the food stamp program, or defense for that matter, if we don’t need it. Then for every dollar of new revenue you want, I want another dollar of spending cuts. As to the one dollar of revenue for one dollar of spending cuts, medicare, social security, etc. would be on the chopping block. That would get us out of debt a lot faster than this either of the current plans being offered. This is the only fair way to do it, tit for tat. It is hilarious that a bipartisan commission came together to resolve our debt problem, and Obama is basically throwing what they came up with in their face. Their solution was to lower the top income tax rate to the mid 20s, and stop a number of deductions. Hmm, where I have heard that before, oh that is right Mitt Romney and Paul Ryan. The thing that boggles my mind the most is the ignorance of low information voters in America. The President’s plan keeps us in the red on a FY (fiscal year) basis for the next 10 years. How can we expect to get our total debt down, if our FY debt is in the red for each of the next 10 years? The answer is, it will not. Somebody show me an FY budget that is in the black, and I will listen. He is the only President in our history to have a TRILLION dollar annual (FY) deficit. Better yet, he has done it three years in a row, and will likely continue. He is a joke of a leader. If he does not budge on guaranteed cuts to entitlement programs, let us go over the cliff. Both parties get a little bit of what they want if that happens. Automatic cuts, and automatic tax increases.

One of Obama’s biggest backers going against the grain on capital gains tax increases!

Okay let’s face it, taxes on capital gains will almost certainly be higher come Jan 2, 2013. President Obama has ran on this basically ever since he became President, in addition to raising the individual income tax rates on the highest earners in America. With that said, Costco, one of President Obama’s biggest corporate backers is doing something quite strange. Remember Jim Sinegal, the founder and former CEO (stepped down this past January), who spoke at the Democratic National Convention. He was very outspoken and favored the President. None of this political support for the President is stopping Costco from making smart, conservative business decisions.  Costco is making a last minute dividend payment to its shareholders before the capital gains tax rate will go up. What’s worse, they are going in debt to do it. Going in debt roughly $3 billion. Another example of government affecting the free market in a negative way. Government policy effectively forcing a company to pay a special (not a regularly scheduled) dividend in order to avoid what would likely be an effective loss for shareholders. Costco is going in debt to pay dividends because, if they don’t, shareholders could possibly lose up to 30% on dividend payouts due to capital gains tax increases. This is especially true if the capital gains rate rises to 40+%. My question is, why back President Obama and commit this type of hypocrisy. Costco apparently backs higher taxes on dividends by endorsing the President, yet the company takes revenues that their dear leader could TAKE via the tax code come Jan. 2 in the form of capital gains taxes, and is instead paying it out under the current 15% rate, rather than what will likely be 40+% come Jan. 2, 2013. Kevin Williamson from the National Review says:

“In fact, Costco is set to pay out some $3 billion in a special year-end dividend this year to evade a January tax hike. The biggest single beneficiary will be Mr. Sinegal, the firm’s largest individual shareholder. He stands to gain $14 million. Institutional investors such as Berkshire Hathaway and the Gates Foundation will bring in many millions. That dividend will be made possible in part by a special debt offering. When a firm run by Mitt Romney does this, Democrats call it “vulture capitalists loading up companies with debt in order to write themselves big paychecks.” When companies that make friendly noises about Barack Obama do it, they get a personal visit from the vice president.” (referring to Biden’s trip to a DC Costco opening today.) http://www.nationalreview.com/articles/334460/gaming-fiscal-cliff-kevin-d-williamson?pg=1.

Conclusion is that Costco is making a sound, smart, conservative business decision based on their shareholders value. Remember shareholders are those that provide capital for the company. They are the owners. Jim Sinegal is only the 33rd largest shareholder, but he is the largest individual shareholder. Rankings between 1-32 are all other companies, not individuals. Now my question is this, if President Obama’s plan to raise capital gains taxes is such a great idea, why are you evading it? The only conclusion that I can come to is that President Obama’s plan is apparently not a smart and sound business or economic decision.