Will the American standard of living ever rebound? For some American citizens, nothing has changed.
It seems that there have been two paths that people took over the last fifteen years or so, and the paths are wildly diverging now. On one path, people lived way beyond their means, built up credit card debt and bought cars and homes and other big ticket items with creative financing.
On another path, people bought homes and cars, too, but they used sensible financing and worked to pay off debt as soon as possible. In this second group, people didn’t carry credit card debt unless it was for a specific business purpose.
People of all income levels took both of these paths. One path was long-sighted and restrained, the other short-sighted and undisciplined.
Now, the people of vision are being asked to take care of the willfully blind.
The problem with this equation is that the bad economy is affecting everyone. Talking to a Michigan business owner who owns an excavation company that hadn’t had one job yet this year, he said that he’ll have no money to send to the government because he’ll have no income to tax. However, he can survive. His equipment is paid off. His house is paid off. His cars are paid off. He can scrape, but he’ll survive.
The government would like him to pay taxes, of course. They need revenue to help care for people who are out of work, out of money, out of homes, and out of hope. Problem is, they can’t bleed this stone. The hard fact is that when business comes to a screeching halt, the haves can’t help the have nots. They are struggling and surviving.
I predict that things will get worse. No, I’m not an economist. I am, however, a business owner. Business owners have been hanging on and keeping critical employees. Soon, as income dries up, even the valuable employees won’t be worth keeping. Or even if the valuable employee is worth being kept, he won’t be kept because the boss won’t be able to afford to keep him.
What then? As state and federal revenues continue to decline, more Americans will need more help.
The Cap-and-Trade fiasco is hardly about the environment. It is everything about increasing government revenue, spending more money, and control. Of course, those things go hand in hand. From the Foundry:
The CBO estimates the spending increases in the bill add up to $863.8 billion. Wow! It didn’t take long to spend that money. The outlays amount to 98.9 percent of the expected revenue. More startling, perhaps, is that the bill authorizes expenditures of $875.2 billion. That is, they have authorized spending 100.3 percent of the amount taken in. Some of that spending is delayed, perhaps, so that there is no increase in the deficit up to 2019 from Waxman-Markey, but maybe later.
Do the middle class and the working poor realize what the Democrats are doing to them right now? Check out this Cap-n-Trade calculator that shows how the new taxes will affect people based on income. This policy is a regressive tax aimed straight through the heart of the middle class [more here]. It will destroy job creation and limit business growth.
MaxedOutMama, an economist, is horrified:
It's the inane nature of this bill that astounds me. We just cannot do it. Growing the food necessary to feed even our own population would emit more carbon than the final goals in the bill, even if every household in the USA was burning candles for light and had returned to the lifestyle that Paul Ehrlich used to recommend.
Okay, so in pursuit of a goal that's nonsensical, for a problem that is international and that will not be addressed internationally (India and China, for example, are refusing to starve their people to death), we adopt legislation that either sets up an iron wall of tariffs or drives half the nation into poverty in about 15 years. This is the most bizarre thing I have ever seen in my lifetime.
Let's hope it can be stopped in the Senate. Even if it is, our nation has lost something here, and that something is the principal legislative body's grasp on reality. It is as if the House of Representatives suddenly passed a vote to reduce gravity by 10 percent in order to lessen the costs of obesity to putatively cut Medicare costs in the future. Truly amazing.
Cap-and-Trade is just the beginning. The Democrats would also like to tax health care benefits. The Democrats would like to tax anyone who is productive and give to those who are not productive.
Since people aren't working and income tax revenue has declined, the solution, obviously, is to tax people for existing.
This all seems like a giant house of cards. Someone has to make money in order to be taxed on it. Someone has to make money to pay for social programs like a single-payer health care system. Someone has to make money so it can be redistributed into programs suiting the Left.
Soon, though, no one will be making money. What then?
Some are saying that the problem is that there needs to be more spending. The Washington Times writers David Burton and Caesar Conda predict stagflation:
The demand for money is relatively stable and generally increases in proportion with economic activity (although precautionary motives play a role). Given the huge increases in the money supply and credit, future inflation is virtually ensured. Money supply will outstrip money demand, and the excess money will cause prices to be bid up.
The prices of gold and other commodities provide real-time indicators of future inflation. They have been rising substantially for the past three to six months, depending on the commodity.
It is not certain, however, whether this price inflation will manifest in consumer prices or the asset markets (the stock and real estate markets) or both.
Equally alarming, fiscal 2009 federal outlays were $3,938 billion compared to $2,983 billion in fiscal 2008 - a 34 percent increase in one year. Federal spending has grown from 21 percent to 28.1 percent of gross domestic product in only one year. Only during the last three years of World War II has federal spending been a larger share of the economy.
These figures understate the degree to which federal spending and credit creation have increased because various federal entities have guaranteed something on the order of $10 trillion to $12 trillion in private debt.
Inflating asset prices in support of Wall Street, the banks and consumers who are upside-down on their mortgages is, presumably, a major, if unstated, goal of Fed policy. The Japanese proved in their "lost decade," however, that artificially propping up asset prices with cheap credit and government spending while failing to recognize losses and moving on is a recipe for stagnation.
John Ruberry summarizes, "Stagflation was the type of economy we endured in the mid and late 1970s. It encompasses high inflation, little if any economic growth, and high unemployment."
The government policies being put in place seem to have this desired outcome: everyone suffers. So while some people are surviving because of sensible choices and living within their means, they too are soon to be punished. The Democrats' impulse is to control and dominate and hinder and deprive so all will be equal everywhere.
One last thought: President Obama promised no new taxes on 95 percent of American citizens. Maybe he should have changed the promise to no new taxes on 100 percent of American citizens. When the government gets through, will there be any private money to tax anywhere?
Melissa Clouthier's Bio
Dr. Melissa Clouthier blogs on her own website and RightWingNews.com . She also hosts a new online radio show on RFC Radio . Owning her own medical business means that what happens in Washington is not theoretical to her or her family.
Posted
06-30-2009 12:05 AM
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