Category Archives: Financial

Time for Some Economic Truth Telling

I have something to say to the politicians and the buffoons in the media. “Enough with the lies and the spin and the mis-information! The fraud you are perpetrating on the American people is (or should be) criminal.” For years now, we’ve been told that Reagan ran massive deficits unnecessarily; that Bill Clinton created a surplus; that the Bush tax cuts of 2003 caused the current debt crisis; and my least favorite, that all we need today is tax increases to get out of our current fiscal mess. Using the chart above, and in only 800 words, I will completely disprove each of these idiotic opinions. They are progressive myths perpetrated in an attempt to justify an ever larger U.S. government. So in order:

The deficits of the Reagan years aren’t pretty, but they pale in comparison to the sheer madness of today and more importantly, they had a purpose. When Mr. Reagan took office the Country was in a quagmire financially and militarily and the policies of his administration brought us out of both and to new heights never seen before in America. During his entire Presidency, Democrats held a death grip on Congress and its purse-strings. They could have stopped all that ‘horrible spending’ any time they wanted to – they didn’t. Trust me when I say, I hate deficits, but as deficits go, these had a usefulness at least. Things were accomplished. For the debt incurred, the country gained peace with its greatest-ever threat, the Soviet Union as well as new-found economic prosperity.

Bill Clinton is the luckiest President in U.S. history. He was a philanderer in the only moment in history when one might get away with it – that is after the country gave up its morals and before blogs, twitter, facebook etc. which might have led to a very different outcome (look at Anthony Weiner – his actions were nothing compared to Mr. Clinton’s and he was ridden out of town on a rail). On the financial front, he rode an economic boom driven by the internet to government financial nirvana and he and his progressive friends continue to take credit for something they had virtually nothing to do with. Look at the chart; it’s right there in red and blue. From 1984 to 2000 Federal revenue more than doubled. Tax cuts from the 80’s and the resulting economic crescendo capped by the tech-boom drove federal tax receipts through the roof. Did he pay down the debt? Nope. Instead, Washington spent more money than ever before in the nation’s history. Though they tried very hard, Mr. Clinton’s administration couldn’t spend it all and a small surplus was left over.

Along comes President Bush. He campaigns on returning the American people’s money (remember now, despite the progressives’ slight of hand tactics to make you forget this fact, it is our money)  to them via tax cuts. Coupled with the tech bubble bursting and 9/11, this leads to a drop in Federal revenue and a return to annual deficits. But, wait; look what happens next. Revenues explode upward starting in 2004 and reach the highest in our nation’s history in 2007. How can this be? I’ve been told repeatedly that the Bush tax cuts ruined this country. I’m sure it must be true; I mean, MSNBC says so. Sorry, liberals, wrong again. Mr. Bush is not blameless however. He presided over a federal spending bonanza that out-paced all the income gains created by the tax cuts. But, Progressives don’t argue against the ‘Bush spending’ however. That wouldn’t work with their agenda of always spending more; so they say the tax cuts are to blame. Think what they are actually saying – “We wanted to spend all the money we did spend, PLUS all the money Bush gave back in tax cuts”. Incredible!

Last lie, “Tax increases will get us out of this”. What?!?! The current tax code is virtually identical to that of 2007. That means we have a tax system in place today that produced the largest single year Federal revenue in American history. That isn’t enough for them? They need more? Look at the chart again. In the imaginary years to come, Mr. Obama is counting on Federal income reaching all new highs. And even if it does, he still expects to run $500 and $600 BILLION deficits EVERY YEAR!  He wants to increase taxes in the hopes of increasing revenue (despite all the evidence that it doesn’t work that way), not to get our budget balanced and pay down some debt. No, that would be far too sensible for Washington. These morons want to increase spending even more. They want to go to all-new record levels of spending. I guess they’ve never heard of the idea of cutting back when times are tough.

There you have it; four lies of the left debunked. Where does that leave us? I’ll leave that for another time, but there are some lessons here for those willing to see. How does 2007 revenues with 1999’s spending sound? The result is a $900 billion annual surplus. $450 billion per year of that could go to debt reduction and $450 billion to replacing the money Washington has robbed from Social Security. That sounds like a good place to start.

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They Are For It, After They Were Against It?

To hear Democrats, and particularly the President, tell it, we must raise the debt ceiling immediately and to do anything other than raise it $2.4 trillion no questions asked, is “dangerous”, “irresponsible”, “risky”, “playing with fire”, etc. Mr. Obama went so far as to pull out the old liberal stand-by, i.e., scare the old people,  telling them Social Security checks may not go out if this isn’t done immediately.

Whoa, hold on a minute. Did the President of the United States just threaten citizens with taking away their own money? Haven’t we been told our whole lives that Social Security is a trust fund? You mean they can just not give our money back to us if they don’t want to? Hmmm, no conservative has ever warned you about that have they? Don’t worry, seniors, this is an idle threat. Social Security wouldn’t be the first, tenth or probably fiftieth thing cut if/when the government runs out of money. But the fact that he said it ought to really give America pause. That is if we were listening.

Back to the pending doom of not raising the debt ceiling. Interestingly, in 2006, all 45 Democratic Senators, including then Senator Obama, voted against raising the debt ceiling. The increase being discussed then was a paltry $780 billion, but today when raising it more than 3 times that amount is on the table, they would have you believe it is a mere formality and conservatives are being silly to hold it up. Heck, the President has gone so far as to say not raising it would be irresponsible. Really, Mr. President? Then what the hell were you and your cronies up to in 2006?

According to Democratic Senate Leader Harry Reid in 2006:

“Any objective analysis of our country’s fiscal history would have to conclude this administration and this rubber-stamping Republican Congress are the most fiscally irresponsible in the history of our country. In fact, no other president or Congress even comes close.”

Here’s more of his rhetoric from way back… ooops, just five years ago:

Oh Harry, what’s that expression about the pot calling the kettle black? So, in 2006 Republicans were being irresponsible for raising the debt ceiling $800 billion, and today they are being irresponsible for not raising it TWO point FOUR TRILLION! I guess Democrats got their John Kerry impersonation mixed up and they are for it after they were against it.

The country is fiscally doomed and this kind of “leadership” is exactly why.

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What Do NBC News and Barack Obama Have in Common? Neither One Understands the Deficit

Last night I watched in utter disbelief as a news report on NBC Nightly News claimed the President was going to shave $4 trillion from the $14 trillion deficit over the next ten years. Why is this shocking? Because the $14 trillion isn’t a deficit (an annual shortfall in revenues compared to spending) but rather the nation’s debt (outstanding monies owed). Furthermore, the President’s campaign speech – I mean detail deficient “plan” – doesn’t cut one penny from the $14 trillion national debt. Instead it merely cuts $4 trillion from planned future spending over the next 12 years.

[Side note: this is the first time any Washington nitwit has gone out 12 years with a budget (it’s normally ten) and, of course, was done to pretty-up a very ugly picture.]

I can hear you now, “$4 trillion is nothing to sneeze at”. Well, look at it this way – that’s only $340 billion per year and when you’re going backwards $1.5 trillion per year as we are now, that’s not going to even make a dent in this crisis. Politician’s talk in these big numbers over many years because it obscures the truth and they know it. They do silly things like tell you they’ll fix this massive crisis by raising taxes on the rich as the President did yesterday.

Newsflash, Mr. Obama – According to the IRS, the entire income of all Americans earning over $100,000 in 2008 was about $1.58 trillion. Even if  we taxed them all at 100%, it wouldn’t fix the problem. And, of course, taxing them at 100%, even 50% isn’t feasible as it will kill investment, economic growth and job creation; so please, I know it makes good campaign fodder, but can we drop that charade already? I’m begging you!

So, whether you’re NBC and are going to claim to be a national news service, or you are Barack Obama and claim to be qualified to be President, it would perhaps be good if you had ANY idea what you were talking about when it comes to the fiscal matters of this country. Feel free to call me if you need some help!

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BofA Cuts Off Bankrupt Illinois

 

Don’t think government debt and insane continued spending in the face of huge un-payable deficits have consequences? Think conservatives are just scare-mongers exaggerating all this stuff so they can take entitlements away from poor people? Well, time to face facts. Here’s an email from an Illinois government employee discussing the impact of the state being cut off by Bank of America. That’s right, cut off! You see, BofA is sick and tired of not getting paid by a state  that is in arrears more than NINE months to most of its creditors. Why are they letting their bills go 270 days past due? It’s not just the normal government ineptitude. That would only result in 90 days past due. No, this is because they are flat dead broke people! (Please note the typos and poor spelling are this state worker’s, not mine).

Folks:

Not to send panic, but just a heads up to each of you as to what’s happening.

Bank of America is cancelling the contract with the State of Illinois effective April 22, 2011. They will not do another contract extension for the State of Illinos. So what does that mean? On April 23, 2011 at 12:01 a.m., the cards currently held by IDPH employees will no longer be valid. The State has been trying to finda new vendor, encourage BoA to give us a few more months, but as of this writing has been unsuccessful on all fronts. So what does this mean to our travelers? Most establishments will not direct bill especially conferences, prior approval needed by travel office for this process so persons required to travel will have to put charges on their personal charge cards or set aside personal funds on prepaid travel card, or pay cash out of pocket. For those who are non-GRF [General Revenue Fund] this should be not big deal, but to those traveling on GRF, this could have an impact.

One additional details are received. I will share that information with you so that you can share with our travelers.

Unti then . . . this is just a heads up!!!!

I have to laugh at the idea that state workers are supposed to start using their own credit cards and submitting for reimbursement. Would you run an expense report for an employer that couldn’t pay its bank (or anyone else) in less than 9 months?

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22 Million Americans Work for Government!

22,500,000 of our fellow countrymen work for the government, ie. the taxpayers. That’s more than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined! And, it’s 3 times as many government employees as there were 50 years ago.

How can a system sustain itself that keeps expanding the public sector work force?  Don’t think too hard, it’s a rhetorical question – IT CAN’T! But here’s an even scarier thought… What if these folks were allowed to form unions and collectively bargain, ie. hold the rest of us over a barrel? Thank goodness we aren’t stupid enough to allow that. Oh, wait…

 

Link to full story in Wall Street Journal

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What Happens When the Government Teat Runs Dry?

Things like this…

and this…

What are these violent protests about? The Greek government is bankrupt, and the European Union and the International Monetary Fund are going to bail them out to the tune of $968 billion (your welcome). As a stipulation to that bailout, those organizations are demanding that the Greek government cut its out of control expenditures – namely exorbitant pay to government workers (half of all people employed in Greece are employed by the government!) This makes perfect sense; after all, it is the current level of spending that got Greece into this mess, so why would anyone loan them money if they planned to keep spending at these levels? But the government workers and their unions don’t want to hear it. They expect the mother’s milk of government dollars to keep flowing forever. Socialism has trained them to look to their government for their survival rather than to themselves, and they are terrified at the prospect of even the slightest reduction in their allotted handouts.

This scene is coming to America, and it’s coming soon! Margaret Thatcher famously said, “The problem with socialism is that eventually you run out of other people’s money.” That has happened in Greece, and it will happen here. Moody’s Investor Service has recently said that U.S. could lose its AAA credit rating as soon as 2013 if current trends continue. The welfare spending, cushy government pensions, union protected government jobs with exorbitant benefits, bailouts for homeowners who make stupid buying decisions, unemployment benefit extensions to two years and beyond… it’s all going away when the Government teat runs dry. When that happens we will have tens of millions of American citizens with no idea how to care for themselves or function in a real world, and they will quite literally go bezerk like their government dependent cousins in Greece.

The next time someone tells you that conservatives are mean or don’t have compassion for their fellow man, remember Greece. It is not compassionate to create dependent citizens who know no other way to survive but to suckle at the government teat. That is perhaps the least compassionate thing a government can do, for it is a virtual certainty that eventually that teat will run dry.

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Another $10.6 billion for Freddie Mac

Update: A week after Freddie announces their loss of $8 billion sister Fannie Mae comes out with a 1st quarter loss of more than $13 billion! These two companies that Barney Frank swore were financially sound have burned through another $21 billion of your money in  just 3 months folks!

Its operations having lost another $8 billion in the first quarter of 2010, Freddie Mac is back at the TARP trough for more of our tax dollars. This time the tab will be $10.6 billion, but they’re bound to lose money in Q2 and for the foreseeable future, so expect them to come begging for even more very soon.

Overall this will put the federal government’s total bailout of Freddie Mac at $60 billion. Tack on another $76 billion to date for Fannie Mae’s bailout, and that’s $136 billion and counting to rescue these two organizations. Barney Frank (D-MA) must be absolutely stunned because here he is in 2003, when the Bush Administration was asking for stronger regulations, saying Fannie and Freddie would never fail, and if they did, THE GOVERNMENT WOULD NEVER BAIL THEM OUT!

Wrong again Barney!

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Representation Without Taxation Doesn’t Work Either

Today being tax day, it seems a good time to remind ourselves of some key figures. Most Americans give at least a cursory look at their household budget monthly as they pay their bills or perhaps weekly if they’re in the tough position of living paycheck-to-paycheck. But, few stop to review their country’s financial state even once a year. Perhaps that should become a tradition on tax day. After all, Americans would call their cell phone provider and dispute a $10 unexplained charge; so why do they continue to pay thousands each year without asking why or where it’s going?

So here it is, the federal budget for the next ten years, as laid out by President Obama. Be sure to note, it is displayed in billions of dollars.

Allow me to round some figures off in summation: This year, the federal government will take in $2.2 trillion while spending $3.7 trillion (a $1.5 trillion deficit on top of the existing $11 trillion federal debt). Notice they expect the best year in the next ten, 2014, to still be a net loss of $706 billion, even if some wild optimism on Washington’s part comes to fruition.

This is the equivalent of an American family that earns $100,000 per year spending $168,000 while carrying $600,000 in debt; writing IOUs for the $68,000, and planning to do the same thing each of the next ten years and beyond. None of us would do that, so I can’t believe there’s a person in this country dumb enough to think the government’s numbers work, but there is. In fact, there are millions of them. A few of these work in the Lame Stream Media and will go on TV tonight and deride their fellow citizens who are at rallies all over the country today protesting this very spending lunacy, even though it seems the protesters are the only ones paying attention.

But how can millions of people who think the government’s budgetary suicide is ok? Well, that’s easy – 47% of all Americans pay NO FEDERAL INCOME TAX! Put simply, these people have no skin in the game. They are too short-sighted to realize that at the very least, their kids might some day have to pay this bill; or much worse, that a financial default by this country will mean financial pain for all – especially those who currently live off the taxpayer’s largess. Still, come election day, they have the same voting power as those footing the bill, and therein lies the problem. As Ben Franklin so accurately said, “When the people find that they can vote themselves money, that will herald the end of the republic.”

Taxation without representation was cause for a Declaration and War of Independence. Turns out representation without taxation doesn’t work so well either.

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Isn’t It Ironic?

Oh the irony! In the same week that Democrats cram through their Health Care takeover legislation, yet another government entity admits it is losing money hand-over-fist and has no idea how to stem the tide of red ink. Postmaster General John Potter admitted to the Senate committee responsible for oversight of the Post Office that they are expecting to lose $238 billion over the next ten years.

Mr. Potter wants to eliminate Saturday delivery to save $3 billion a year, but the Senators don’t like that idea. He discussed the need to cut some of the 36,500 post offices around the country (more locations than McDonald’s or Starbucks), many of which see far too little traffic to be financially justified. The Senators weren’t crazy about that idea  either. He pointed out that his organization is heavily burdened by far too many employees with benefits that are far too generous including retirement plans that exist nowhere other than in government jobs. Shockingly the Senators weren’t keen on the idea of reducing the bloated USPS workforce either. In other words, Mr. Potter was arguing that the Post Office needs to be allowed to run like a private company – as a matter of fact, he said exactly that.

If the Postal Service were provided with the flexibilities used by businesses in the marketplace to streamline their operations and reduce costs, we would become a more efficient and effective organization. Such a change would also allow us to more quickly adapt to meet the evolving needs, demands, and activities of our customers, now and in the future.

So, in the same week that Democrats took a giant step towards their end-goal of a government run U.S. health care industry, the Postmaster General went to the Senate and admitted that the government can’t even manage to effectively run the Post Office. What do you think, is it harder to deliver the mail or heal the sick?

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More Debt Anyone?

The federal debt limit is going up faster than my credit limit with Visa during the economic boom of the last decade. The difference being, just because Visa kept upping my limit, didn’t mean I was stupid enough to spend it! But Washington is. Yesterday Senate Democrats voted yet again to raise the federal debt limit – this time by $1.9 Trillion to a staggering $14.3 Trillion. That’s up from the previous limit of $12.4 Trillion which they’ve borrowed and spent all of. That’s right, your elected representatives have maxed out your country’s credit cards again and they’re back for more. Does anyone else find it incongruous that few if any Americans would put up with their teenager running up a big cell phone bill or a few hundred dollars in credit card debt, but these same Americans have no problem with their employees in Washington borrowing trillions in our name without the slightest inclination as to how to pay it back?

In this case, one might be tempted to ask ‘Why so much of an increase at one time’? The answer is simple – it’s politics, of course. You see, the government is on track, according to the CBO, to run another $1.4 Trillion in the red this year, matching 2009’s record setting deficit (that’s a record that was TRIPLE the previous high mark by the way). With this in mind, the Democrats wanted to raise the debt limit enough to prevent another such vote prior to November’s elections. They don’t want to have to bring you the credit card bill a month before asking for your vote. Quick math says they’ve given themselves a $500 billion margin for error. I wonder if that will be enough?

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