Tag Archives: government

My Thought on the Debt Crisis & Government Shutdown

I am truly scared for the future of the United States. Wasn’t it just a few months ago that we were having another discussion in Congress related to raising the debt limit? That disaster was averted by allowing the sequestration cuts. What I don’t understand is how this is all happening again. It should simply be a matter of not spending more than you make.

Rather than continuing to raise the debt limit, why don’t we decrease spending or at least hold it at the level of inflation. Congress should be forced to pass a balanced budget each year that does not spend more than it takes in in taxes (exceptions could be made for War and other emergencies). The welfare and entitlement system should be overhauled so that only truly qualified people are allowed to be on it as a temporizing measure. Revenue increasing (code word for increasing taxes) is not the way to go about it.

The United States, I think, is not too far gone that we could still save ourselves if the federal government just stepped out of the way. Lower taxes to encourage productivity. Increase the number of green cards available for the talented foreigners that would still love to come to this country. And, we must do this before China grabs them with talks of their version of what has always been called, ‘the American Dream.’

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Atlas Shrugged in Real Life

Right now I’m about 100 pages from finishing Ayn Rand’s Atlas Shrugged. I’m at the section where (spoiler…spoiler) John Galt commandeers a radio station that the entire country is listening and speaks for 70 pages(!!). (This is the only portion of the book that I have found becoming a little repetitive and monotonous…) While Ayn Rand’s philosophy is contained throughout the whole novel, it is here that she lays out her entire philosophy in one long diatribe through the mouth of John Galt.

I’ve also been highlighting interesting quotes throughout the book as I’ve been working my way through it on my Nook. My goal is to write a future blog post in which I list all these quotations and then discuss them in context. More on that later…

Two recent financial news stories draw so much of a parallel to Atlas Shrugged that I had to bring up the comparison here. It is absolutely scary how similar the world that Ayn Rand envisions is becoming like our own. Everyone in Congress and the government, but especially Obama and the democrats, should be required to read Atlas Shrugged.

Financial story #1: A few months ago in Cyprus it was announced that 47.5% of savings held in Cypriot banks above USD$132,000 would be lost taken in order for the country to receive a eurozone rescue package. And, to stop the expected run on banks, restrictions on withdrawals and transfers were imposed.

Financial story #2: Recently it was announced that the government of Poland

would transfer to the state – i.e., confiscate – the bulk of assets owned by the country’s private pension funds (many of them owned by such foreign firms as PIMCO parent Allianz, AXA, Generali, ING and Aviva), without offering any compensation. In effect, the state just nationalized roughly half of the private sector pension fund assets, although it had a more politically correct name for it: pension overhaul.

The Polish finance minister stated that this change would reduce the public debt by 8% of GDP. Poland has restrictions on issuing more debt if the public debt percent of GDP goes past 50% and 55%. By stealing this money Poland can borrow more debt until it once again reaches its threshold.

And then guess what the government can do once again? It can simply confiscate from the private sector once more until there is nothing more left to take.

How long before the US begins a similar path? How long before the government will decide that private citizens who have sacrificed their entire working lives to save for retirement now have more than they need to retire? Why should John retire with $2 million in the bank when Paul down the street has saved little and is reliant on government handouts? Wouldn’t it be for the common good of the United States to distribute retirement money fairly? John surely doesn’t need all of that money to be comfortable.

How long before the US government decides to tax money held in a Roth IRA or 401k? Would anyone that mattered really be that upset? After all, over half the country isn’t paying federal income taxes yet still votes. Couldn’t these citizens simply vote for “equitable” distribution of that wealth?

These questions are exactly what is addressed and happens in Atlas Shrugged. I just hope that we can ward off this same story from playing out in the United States as it has started to throughout Europe.

The GOP’s Alternative Budget

Under the president’s plan, spending will top $4 trillion this year alone, and consume 28.5% of our nation’s economy. His plan would mean a $1 trillion increase to the already unsustainable spending growth of our nation’s entitlement programs — including a “down payment” toward government-controlled health care and education; a $1.5 trillion tax increase to further shackle the small businesses and investors we rely on to create jobs; a massive increase in energy costs for families via cap and trade. Moreover, the Obama plan would result in an exploding deficit, a doubling of the nation’s debt in five years, and an increase of that debt to more than 82% of our nation’s GDP by the last year of the budget. This approach will ultimately debase our currency and reduce the living standards of the American people.

Instead of doubling the debt in five years, and tripling it in 10, the Republican budget curbs the explosion in spending called for by the president and his party. Our plan halts the borrow-and-spend philosophy that brought about today’s economic problems, and puts a stop to heaping ever-growing debt on future generations — and it does so by controlling spending, not by raising taxes. The greatest difference lies in the size of government our budgets achieve over time (see nearby chart).

Continue to read on The Wall Street Journal Opinion Article

This article is written by Mr. Paul Ryan, from Wisconsin, who is the ranking Republican on the House Budget Committee. It talks about the Republican’s alternative plan to Obama’s “European-style big government” that “works to accomplish four main goals: 1) fulfill the mission of health and retirement security; 2) control our nation’s debts; 3) put the economy on a path of growth and leadership in the global economy; and 4) preserve the American legacy of leaving the next generation better off.”

What Stimulus?

They call it “stimulus” legislation, but the economic measures racing through Congress would devote tens of billions of dollars to causes that have little to do with jolting the country out of recession.

Yes, there are many billions of dollars in “ready-to-go” job-creating projects in President Barack Obama’s economic stimulus bill. But there are also plenty of items that are just unfinished business for Congress’ old bulls.

Analysis: Stimulus bill that’s not all stimulating

According to Congressional Budget Office estimates, a mere $26 billion of the House stimulus bill’s $355 billion in new spending would actually be spent in the current fiscal year, and just $110 billion would be spent by the end of 2010. This is highly embarrassing given that Congress’s justification for passing this bill so urgently is to help the economy right now, if not sooner.
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Different Tax Plans, Different Futures

Obama has a bad record when it comes to taxes:


It looks more and more like Joe the Plumber was on to something about taxes, though you wouldn’t know if from most of the polls and media. The Heritage Foundation has the details in our new study: If a President McCain got his way on tax reform, Americans could expect to see jobs, the economy and their own disposable income grow much faster than if a President Obama were to push through his proposals.

As this chart shows, the economy would grow by $320 billion more in 10 years under John McCain’s tax plan than under Barack Obama’s, adjusted for inflation. More than twice as many jobs would be created by the McCain plan — 3.43 million, compared with 1.58 million under the Obama plan…

Continue reading on Cato-at-liberty

2. Transcript of Democratic Debate

MR. GIBSON: And in each instance, when the rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

SENATOR OBAMA: Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness. We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year — $29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That’s not fair. [. . . .]

MR. GIBSON: But history shows that when you drop the capital gains tax, the revenues go up.

SENATOR OBAMA: Well, that might happen or it might not. It depends on what’s happening on Wall Street and how business is going.

Return to Small Government

I’m glad that the Republican party seems to be returning to its roots of small government. The speeches tonight by Romney, Huckabee, and Giuliani all alluded to that fact.

Here’s a great quote that Huckabee brought up (however, he incorrectly attributed it to Lincoln rather than Ford):

“A government big enough to give you everything you want is a government big enough to take from you everything you have.”
President Ford’s Address to a Joint Session of Congress
August 12, 1974

Government’s New Minimalist Mission

IBDeditorials.com has a great article entitled, Government’s New Minimalist Mission: ‘Just Keep Us Safe And Leave Us Alone’, that discusses the need for small government. The funny thing is that the Left preaches the need for government help/intervention in everything. Yet, when showcasing a successful individual, rarely is government help mentioned as the reason for the success. It is always how the individual succeeded in a world stacked against him or her.

The quote below is only a snippet of the entire article. The bolding is mine.

The following set of minimalist guidelines may be useful.
1. The need for government in a society varies inversely to the sophistication and affluence of its people. Despite government’s recent depredations, America is for the most part still an educated, highly civilized and affluent society. At present, therefore, it needs little governance. If these qualities decline among the population (because of immigration or otherwise), more governance will be needed.
2. Government is a high-cost way of doing anything. The reason is it finances itself with taxes, which do more harm to the private economy than they yield in revenues for the government to spend. This damage occurs because taxes function like a pay cut, reducing the reward to work and investment and curtailing the supply of both.
3. The less government does, the better off we are. Because the tax revenues the government has available are always less than the cost of acquiring them, government should spend its resources solely on high-value projects that only it can perform. National defense is the best example.
4. Government cannot spend its way out of the economic hole dug by taxes. When government expands beyond its limited areas of competence and efficiency, the public benefit per dollar of additional spending drops and the marginal cost of more taxes to pay for bigger government rises.
5. Since we need so little and the cost is so high, why do we have so much government? Washington tells voters that a dollar of taxes costs only a dollar (even though experts agree that the cost is at least $2. It then insists that each dollar of spending produces much more than a dollar of public benefit (though the government’s own data show that the benefit is often less than a dollar). Washington also tells voters that the burden of taxes is borne mostly by the rich (though the damage done by taxes harms everyone, especially wage earners).
6. How to make and keep government small? There are three key steps: (a) tell the voters the truth about the high cost of taxes weighed against the often low benefit of spending; (b) force Congress to adhere to a cost-benefit budget procedure, conducted in the open with full public notice and voter participation; and (c) give everyone a “tax cut dividend” when spending reduction targets are met — and send them a bill for additional taxes when spending goes up. Government will shrink, the economy will grow and, with a large base of prosperity, America will always have plenty of money with which to meet any crisis.