Emperor's Rants and Observations

Our spending problem is the bloated Military Budget, Corporate Subsidies, tax advantages for the rich, and preferential treatment of some types of income over income earned by labor.

We also have an income problem. We have the lowest federal tax rates since 1950. Tax cuts made the rich richer, the poor poorer, and the middle class in insurmountable debt. Lower taxes didn’t create jobs or strengthen the economy, at least not in the U.S. We need new tax brackets for each millionaires and billionaires.

The rabid right is willing to destroy the economy, push us into default on our debt in order to further their political goal of preventing election of Obama to a second term. That has been their sole goal from day one, at any cost to America or Americans.

Cutting government spending now will be disastrous for the private sector. “Why cutting government spending now would be disastrous.” http://bit.ly/bvTEuS

There are other alternatives as well: Budget of the Congressional Progressive Caucus: Fiscal Year 2012: Read the People’s Budget http://bit.ly/g7aep8 and my own 2 cents Nobody asked me, but here’s my solutions. http://bit.ly/bvTEuS

The best way to solve our debit and deficit problems is to revitalize the economy and create good living wage jobs. What has this congress done to improve the economy or create private sector jobs? Nothing, because that’s not in GOP’s best political interest. Our unemployment is high because the rabid right wants it that way.

There are two generally accepted tenets of the conservative’s view of government economic policy.

1) Lower taxes encourage private sector investment and economic growth.
2) Government spending are resources that are taking what would otherwise be left to the private economy.

First let me address the obvious; both of these beliefs definitely favor the rich over the poor. The rich benefit more from lower taxes and they rely less on government spending in general. Particularly when it comes to retirement and health care.

Taxes have been cut to the lowest level since 1950 which has failed to stimulate the economy for the last decade. In addition a plethora of tax incentives have been offered to encourage private investment, job creation and economic growth. As near as I can tell, that worked only to ship American jobs off shore.

So now we are told that tax cuts aren’t enough, we need to cut government spending too. That’s why the tax cuts didn’t work they say, because we didn’t cut spending at the same time. Perhaps I’m just too dense to grasp complicated math, but I don’t see how the government not spending a dollar makes that dollar suddenly and magically appear in the private sector where it will be spent better.

But we’ll leave that alone for now and tackle the task at hand, cutting government spending and it’s affect on the economy in general.

Government cuts in spending come in three areas, jobs, purchases and benefits. That’s it, now it’s just a decision about what jobs, purchases or benefits should be cut. For the purposes of this discussion it really doesn’t matter what is going to be cut as far as the budget is concerned.

When the government pays an employee, that employee takes the money and spends it in the private sector economy. They make house and car payments. They buy groceries, perhaps eat out, go to the movie or donate to the local little league. When that job is cut, we’ve added to the number of unemployed. Perhaps they lose their house in foreclosure, driving prices down further. Maybe they can’t afford their car anymore, so it goes back to the dealer or maybe sell it themselves if they can get what they owe on it. The little league and local restaurant will have to do without their support.

Maybe this is a job we could really do without, working in a department that shouldn’t even exist, getting paid more than they would in the private sector and with better benefits. There’s approximately 2.15 million federal employees, so to make any kind of significant spending cuts we’d have to get rid of 200,000 jobs to make any kind of serious impact on spending. What is the effect of losing 200,000 jobs on the economy? 200,000 more people competing for jobs where there are five applicants for every job opening. How many more foreclosures, bankruptcies, repossessions would there be? Not just those whose jobs got cut, but the small businesses they help support with their government payroll checks. But hey,they’re just government employees right. They don’t actually add anything to the economy, so they won’t be missed.

The government doesn’t actually build, produce or create anything. They do however buy a lot of things though. From paper clips to Aircraft Carriers. They pay for new roads, bridges, airports, ports and all kinds of other products and services. Billions of dollars paid to private companies and contractors, who employ hundreds of thousands of people. So how many private sector jobs will be loss when we cut government spending on any of these products and services? When a company like Boeing has to lay people off because a government contract was cut or cancelled, what are the down river consequences of that? How many small businesses are put at risk of closing, foreclosures, and bankruptcies. Then you have the impacts on the local, county and state governments who are also receiving less income because of the cutbacks and employee layoffs. They have to layoff public safety employees and teachers. Perhaps cut back on services like libraries and health clinics.

Then there is the target du jour – Entitlements. Yes, those horrible socialistic entitlements. As an aside, the reason they are called entitlements is because people have EARNED them. They worked for them, they contributed financially to them. These aren’t freebies given away to everyone. But I digress, what happens when we cut benefits and entitlements? Again, this is money that is put back into the economy purchasing goods and services, paying local taxes, supporting the community.

With the exception of foreign aid those are our choices for making government spending cuts. There are other factors to be considered with foreign aid other than the economic impact here at home. We may need to consider trade agreements that depend on providing aid.

At this point I’m sure there are many that think I’m just a big government liberal that never saw a government program I didn’t like. That’s not the case at all. I want the least amount of government we can have, with the lowest possible tax rates from top to bottom of the economic totem pole. I know people are concerned about the deficit, but I think it’s important to understand where these deficits came from. The largest amount is due to tax cuts, the next largest part are the waging of two wars. The Health Care Reform bill will help cut the deficit over time, but not nearly enough, fast enough. We can make additional progress by continuing to find and eliminate fraud, waste and abuse. But the best and surest way is by expanding our economy. Get more people back to work building things. Promote new industries, new technologies and new products. Do what America does best, innovate.

What we can’t do is anything that will increase unemployment, foreclosures, bankruptcies or business closures, which is exactly what cutting government spending would do. It would be disastrous.