FT187: “It’s odd how we can never afford a tax cut but we can always afford new spending.” —Old Pithy

Posted by PITHOCRATES - September 13th, 2013

Fundamental Truth

The Democrats’ idea of Bipartisanship is Republican Capitulation

It’s that time of the year again.  Summer is winding down.  The weather is starting to cool.  The harvest is coming in.  The stores are already stocking their shelves with Halloween decorations.  Yes, it’s the end of the government’s fiscal year.  The time the government will run out of money unless Congress passes a new budget.  Or what passes for budgets these days.  Continuing resolutions.

This that magical time of year when Republicans and Democrats come together to negotiate the government’s budget for the upcoming fiscal year.  The give and take process where they sit down and work with each other.  Civilly.  Saying things like, “Yes, that is too costly.  We need to spend less there.”  And, “You’re right, that is important to the people and we should spend more there.”  And the occasional, “I agree.  That program is no longer needed and we can remove it from the budget entirely.”

I am, of course, lying.  These are things that are rarely, if ever, said to each other.  For when it comes to these budget battles it is always the same.  The Republicans try to be responsible and cut spending.  The Democrats then call them greedy corporate toady Nazis.  The Republicans will then suffer a general emasculation and give the Democrats their spending hikes.  And perhaps a tax hike or two.  While asking them to please like them and invite them to the cool parties.  And the Democrats will then commend the Republicans’ bipartisanship.  What others would call capitulation.  Happy that things are once again right in the world.  With the Republicans once again the Democrats’ bitch.

Entitlement Spending creates a Permanent Underclass that keeps the Privileged Class in Power

John Emerich Edward Dalberg-Acton, known more simply as Lord Acton, said, “Power tends to corrupt, and absolute power corrupts absolutely.  Great men are almost always bad men.”  And boy was he on to something there.  For something happens when some good conservatives go to Washington.  They enter a world like no other.  Nothing they could ever have dreamed of.  A world that once belonged only to the nobility and the aristocracy.  Those things Americans fought for their independence from.  And here they are.  After winning an election to rein in the kind of government spending that makes this living possible.  And they say, “What, end all of this?  Are you mad?”

So many cross over to the dark side.  Sell their souls.  Forsake their constituents.   Do great dishonor to our Founding Fathers.  All because they like the money and the power.  Especially the power.  Some resist.  Those from the Tea Party seem more immune than most when it comes to the corrupting influences of Washington.  But these people who stand on principle?  Those who serve their constituents honorably?  The left will fling every invective upon them.  A figuratively flinging of excrement.  To try to beat them down and break them.  To get them, too, to forsake their constituents.  And to join them as they drop trou and defecate on the Constitution.  Figuratively, too, of course.  At least I hope so.

So this is what makes the budget process so adversarial.  You have those who are trying to do the right thing for the people.  And those on the other side who want to corrupt these people.  To get them to quit fighting against them and to join them.  So they can maintain their privileged class.  This is what all that entitlement spending is all about.  It’s nothing but alms.  To keep the people content enough so they don’t rise up.  But not too content that they don’t fear that those greedy corporate toady Nazis may take away their meager alms.  And once they get someone to think like that they have a voter for life.

There comes a Point when Raises in Tax Rates actually Reduce Tax Revenue

The key, then, is keeping people poor.  For the whole privileged class thing those in Washington have doesn’t work unless they have poor people who need them.  Which is why they spend so much time reminding the poor how much they need them.  The Democrats in Congress.  Who are always there fighting for them.  Keeping their alms flowing.  But also keeping them poor.  Which a welfare state does well.  Because if you have enough to subsist lethargy will do the rest and destroy the spirit.  Getting the poor to accept their place as a permanent underclass.  That needs a permanent privileged class taking care of them.

There is only one problem.  This destroys lives.  People in this permanent underclass may have gone on and done great things.  They may have been doctors.  They may have been engineers.  They may have been entrepreneurs.  But they will never be those things because the left sacrificed them to maintain their privileged class.  Forever consigning them to the underclass.  So the privileged class has someone to take care of.  No matter how costly it gets to maintain this entitlement culture.  No matter how great the deficits get.  Or how great the national debt grows.

So there is another problem. As you convert taxpayers into tax-consumers you have to keep raising taxes on those remaining in the tax base.  But as you raise tax rates you put the brakes on economic expansion.  And with reduced economic activity there is reduced tax revenue.  There comes a point when raises in tax rates actually reduce tax revenue.  And we’ve passed that point.  Which is why we have record deficits.  A record national debt.  And the worst economic recovery since that following the Great Depression.  Because we are spending, taxing and regulating too much.  Which is why uncorrupted conservatives want to cut taxes, defund Obamacare, roll back other costly regulations and reduce spending.  Things the left bitterly opposes.  For doing so means we don’t need them as much as they need us to need them.

So as the budget battle commences you will hear the usual refrain from the left.  We can’t afford tax cuts.  As they equate tax cuts with government spending.  But we can always afford new government spending.  So the left will call for bipartisanship.  That is, capitulation.  And eventually make the Republicans their bitch.  Again.  And increase the national debt.  Again.  Putting the nation on the path to bankruptcy.  What the left considers a small price to pay to maintain their privileged class.  As long as that bankruptcy comes after they’re dead and buried.  After they enjoyed their time in the privileged class.  Which is why the left is also less likely to believe in God and life after death.  For it is easier to be bad when there is nothing to fear after a bad life.

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First the Obama Misery Tour, then on to Martha’s Vineyard with the other Millionaires and Billionaires

Posted by PITHOCRATES - August 15th, 2011

Raising Taxes on the ‘Rich’ to Close the Deficit will put the Country into a Depression

Roll up, roll up for the misery tour.  Roll up, roll up for the misery tour.  The Obama Misery Tour is waiting to take you away.  Waiting to take you away (see Obama kicks off Midwest bus tour with harsh words on the economy by Zachary A. Goldfarb posted 8/15/2011 on The Washington Post).

Obama, who kicked off a three-day Midwest bus tour Monday focused on the economy, cited comments made by Republican presidential hopefuls at a GOP debate last week.

“I know it’s not election season yet, but I just have to mention the debate,” where Republicans said they would not increase taxes under virtually any circumstance, Obama said at a town hall. “Think about that. That’s just not common sense.”

Neither did raising the deficit from $455 billion to $1.65 trillion, Mr. President.  In fact this spending was downright irresponsible.  Your administration spent an additional $1.195 trillion we didn’t have.  And you’re planning to spend more.  We have a deficit problem because we have a spending problem.  Not because people aren’t paying enough taxes.

“You’ve got to send a message to Washington that it’s time for the games to stop. It’s time to put country first,” Obama said, his voice rising. “Some folks in Congress … would rather see their opponents lose, than America win.”

Mr. President, you increased the deficit by 263%.  That is not good for the country.  In fact, one could say that you are the ‘some folks’ you refer to who would rather see their opponents lose than America win.

He called on Congress to pass measures to hire construction workers, a trio of trade bills, an overhaul of patent laws and new tax credits to spur new jobs for veterans.

You had supermajorities during your first two years in office.  You could have passed any legislation you wanted to spur new jobs.  Instead, you made your priority the passing of Obamacare.  Something that did not spur any jobs.  And only will increase the deficit. 

And hire construction workers?  Wasn’t your Keynesian stimulus bill supposed to do that?  Create some $800 billion in shovel-ready projects?  Of course that’s hard to do when 88% of that bill was pork and earmarks.  Sort of a Democrat wish list to satisfy some 40 years of wants and desires. 

Speaking about the national debt, Obama called for an overhaul of the tax code that would force the wealthy to pay more taxes and an overhaul of entitlement programs…

“I’d like to see the ultra-rich pay their fair share,” said…a nurse from Rochester. “He’s got to be a politician, but I’d like to see a bit more push.”

“I think he’s doing a good job. He inherited a very big deficit,” said…a financial planner from Rochester. “He and Michelle are the first residents of the White House to be familiar with both organic food and leftovers.”

The wealthy just aren’t wealthy enough to pay down the deficit.  If you crunch the numbers, and define anyone who earns $159,619 or more as wealthy, you’ll have to raise the federal income tax to an effective rate of 87.6% (see You can’t Reduce the Debt $4 Trillion by Raising Taxes, at least not Mathematically).  That means the government would have to take 87.6% of everything they earn.  That includes the billionaires and the millionaires.  And everyone earning $159,619 or more. 

Is this possible?  Well, if you earn $159,619 annually, that’s $13,301.58 gross pay each month.  After your federal income taxes are withheld, that leaves a whopping $1,649.40 to pay your state taxes, your mortgage, your car payment, your groceries, health insurance, car insurance, gasoline for your car, etc.  Of course, they won’t be able to have these things at this high tax rate.  In fact, they won’t have any money left to spend.  Consumer spending over all would nosedive us into a full blown depression.  Making things even worse than they are now. 

So what is Obama going to do next?

Obama is scheduled to go on a 10-day family vacation to Martha’s Vineyard on Thursday after completing the economic tour.

While many Americans can no longer afford to take the family on a vacation, he will be spending 10 days in the very swanky Martha’s Vineyards.  Where billionaires and millionaires like to vacation.  And get away from the rabble.  Us.

Politicians are Whores who sell themselves to the Highest Bidder 

The johns threaten to withhold their money from the prostitutes in Washington (see Starbucks CEO urges halt to U.S. political donations by Lisa Baertlein posted 8/15/2011 on Reuters).

In his letter on Monday, Schultz [Starbucks Corp. CEO] invited executives to join him in a “pledge to withhold any further campaign contributions to the President and all members of Congress until a fair, bipartisan deal is reached that sets our nation on stronger long-term fiscal footing.”

Men are interested in one thing.  According to all the stereotypes.  And when women want something, they can simply withhold this one thing.  Again, according to the stereotypes.  Eventually the man caves because he can’t live without that one thing.  What a great analogy.  Because all politicians are whores who sell themselves to the highest bidder.  And those buying political favors can simply withhold their money to get what they want.  Which is how government works.  Sadly.

Schultz also urged fellow CEOs to invest in projects or new products that will perk up the economy at a time when fear and uncertainty have made businesses unwilling to invest, consumers unwilling to spend and banks unwilling to lend.

Expand supply in the face of a shrinking demand?  Not a good idea.  Austrian economists call this malinvestment.  This kind of thinking didn’t help ward off the Great Depression.  And it won’t work here.  You create real demand by cutting taxes.  Giving people more money to spend now.  Next week.  Next month.  And next year.  This creates confidence.  Not a one-time stimulus that provides consumers with money to spend one time.  A tax cut will increase demand.  And once consumers are demanding more business will start hiring more. 

I guess a guy who has convinced people to buy over-priced coffee just assumes businesses can make consumers do anything.  But would he open a new Starbucks next to an existing one?  No.  Why?  Because what would probably happen is that each store will have half the business of the first store.  While doubling the overall costs for that business.  So that would be a malinvestment.  So he wouldn’t do it.  Yet he is asking his fellow CEOs to do just that.

Obamanomics has Failed so let’s Return to the Successful Policies of Reaganomics

It’s been about three years.  Record government spending hasn’t done anything but increased the deficit.  And get U.S. credit downgraded.  You can make all the excuses you want.  But eventually you have to answer for your policies.  Obama’s policies have failed.  And left us worse off than we were.

The Keynesian way has once again failed.  Perhaps we should give the Austrian way another try.  Because when Reagan did, those policies worked. 

We tried Obamanomics.  It failed.  So let’s go back to Reaganomics.  At least it has a track record of success.

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Bush Tax Cuts, the Omnibus Spending Bill and a Little Egomania

Posted by PITHOCRATES - December 17th, 2010

A Tax Cut!  A Tax Cut!  My Kingdom for a Tax Cut!

Obama begs for help in passing his deal with the GOP to extend the Bush tax cuts (see Obama tells lawmakers not passing tax deal could end presidency, Dem says by Jordan Fabian posted 12/15/2010 on The Hill).

Obama is telling members of Congress that failure to pass the tax-cut legislation could result in the end of his presidency, Rep. Peter DeFazio (Ore.) said.

“The White House is putting on tremendous pressure, making phone calls, the president is making phone calls saying this is the end of his presidency if he doesn’t get this bad deal,” he told CNN’s Eliot Spitzer.

Which the White House denies.

“The president hasn’t said anything remotely like that and has never spoken with Mr. DeFazio about the issue,” said White House spokesman Tommy Vietor.

Besides, would the president ever sink to that level?

During the end of the healthcare debate, Obama reportedly told Democrats upset that the bill did not contain a public healthcare option that not passing it could put his presidency on the line and stall the liberal agenda for decades.

Actually, the president uses this maneuver so often that we just call it the ‘Obama’ now. 

Liberals and Alice Cooper both Love the Dead

The liberals were listening to Obama.  And with the leader of their party in a vulnerable position, they pounced.  A little tit for tat.  If he was going to screw his liberal colleagues by extending the Bush tax cuts, then the liberals wanted to get in a little screwing themselves (see Congress Moves Toward Approving Tax Cut Legislation by David M. Herszenhorn posted 12/16/2010 on the New York Times).

As the House began to take up the tax deal, it hit a procedural snag. Liberal Democrats skirmished with party leaders over a proposed vote on an amendment to tax more wealthy estates and at a higher rate than was included in a provision agreed to by the Obama administration.

The Obama presidency is saved.  It appears liberal Democrats will sign off on the compromise if they can screw rich dead people.  Figuratively, of course.  So Obama may get to put this one into the ‘win’ column thanks to a little legislative necrophilia.

Porking it up in an Omnibus Spending Bill

Knowing that no one really wanted their agenda, the Democrats did little to rock the boat before the 2010 midterm elections.  They didn’t talk about Obamacare (unless they voted against it and were proud of it).  They didn’t talk about the Obama stimulus package that ended the recession and kicked off the Summer of Recovery (back when the unemployment rate was lower than it is now).  And they sure as hell didn’t write a budget. 

With their out of control spending, the less the American people saw it in print, the better it was for them.  So with government about to shut down again, they threw together a quick 2,000ish page omnibus spending bill.  But elections have consequences.  Apparently.  And some Senators chose to represent their constituents (see Senate Dem leader drops nearly $1.3T spending bill by Andrew Taylor, The Associated Press, posted 12/16/2010 on The Washington Post).

Democrats controlling the Senate abandoned on Thursday a huge catchall spending measure combining nearly $1.3 trillion worth of unfinished budget work, including another $158 billion for military operations in Iraq and Afghanistan.

The 1,924-page bill collapsed of its own weight after an outcry from conservatives who complained it was stuffed with more than $8 billion in homestate pet projects known as earmarks.

And after we said no more earmarks at the 2010 midterm elections.  Instead of losing graciously, they’re speeding up at a yellow light before it changes.  Unfortunately for them, though, the car ahead of them didn’t.

GOP leader Mitch McConnell of Kentucky threw his weight against the bill in recent days, saying it was “unbelievable” that Democrats would try to muscle through in the days before Christmas legislation that usually takes months to debate.

“Just a few weeks after the voters told us they don’t want us rushing major pieces of complicated, costly, far-reaching legislation through Congress, we get this,” McConnell said. “This is no way to legislate.”

Unbelievable?  Why wouldn’t they want to rush this 1,924 bill through Congress?  They want it passed.  And that won’t happen if they take the time to read it.  Or debate it.  I mean, if they had done that with Obamacare Congress wouldn’t have passed it.  Nancy Pelosi said we had to pass Obamacare to find out what was in Obamacare.  And we did.  And the regret and angry debate followed after it became law.  That’s how liberal Democrats pass bills.  Sneakily.  Like the devious little bastards they are.

And how will this affect the Obama presidency?

The sinking of the bill was a setback for President Barack Obama, who supported it despite provisions to block the Pentagon from transferring Guantanamo Bay prisoners to the United States and fund a program to develop a second engine for the F-35 Joint Strike Fighter, which the administration says is a waste of money.

Poor Obama.  That’s another one for the ‘lost’ column.  There’s a word for people like him.  What is it?  Begins with an ‘L’?  It was just on the tip of my tongue.  Oh well, perhaps I’ll remember later.

Go Ahead.  Make my Day.  Shut Down the Government. 

So, what happens now?  Will government shut down (see McConnell: Dems Using “Christmas Break As An Inducement” To Pass Omnibus posted 12/16/2010 on Real Clear Politics).

Sen. Mitch McConnell (R-KY) touts his one-page continuing resolution that would “simply continue the government through February 18th.”

“I would hope that it would make sense on a bipartisan basis, this one-page continuing resolution on Feb 18th as an alternative to this 2,000-page monstrosity that spends a half a billion dollars a page,” McConnell said on the Senate floor.

Guess that’ll keep the Social Security checks going into the mail.  Not bad for a single piece of paper.  You see?  Congress can govern without raping and pillaging the American people.

Obama the Great.  His Majesty.  His Pomposity.

Win some.  Lose some.  Looking at Obama’s record, you can see that he is a man who cares deeply for what he loves most.  Obama (see When it comes to politics, Obama’s ego keeps getting in the way by Michael Gerson posted on 12/17/2010 on The Washington Post).

The tax deal is reasonable policy, supported by majorities of Republicans, Democrats and independents – an easy sell by presidential standards. And still President Obama managed to blow the politics of the thing.

Rather than explaining the economic benefits of the bill and taking quiet credit for a moment of bipartisanship, Obama launched into an assault on partners and opponents. Republicans are “hostage-takers” who worship the “Holy Grail” of trickle-down economics. Liberal opponents are “sanctimonious,” preferring their own purity to the interests of the poor. The president did not just attack the policy positions of nearly everyone in the political class. He publicly questioned their motives.

The Left and Right alike are just too stupid to know what’s best for them.  If only we would listen to Obama.  Because he’s so smart.  I mean, he won the election while being the most unqualified candidate ever to run for the presidency.  You gotta be smart to pull that off.  Or at least sound smart.

Obama is professorial, cold, condescending and just plain mean.

It is the president’s favorite rhetorical pose: the hectorer in chief. He is alternately defiant, defensive, exasperated, resentful, harsh, scolding, prickly. He is both the smartest kid in class and the schoolyard bully.

There are many problems with this mode of presidential communication, but mainly its supreme self-regard. The tax deal, in Obama’s presentation, was not about the economy or the country. It was about him. It was about the absurd concessions he was forced to make, the absurd opposition he was forced to endure, the universally insufficient deference to his wisdom.

And he’s got a great big ego.  He’s pompous and conceited.  A narcissist.  A legend in his own mind.  He thinks he’s got the Midas touch.  Anything he touches, he thinks he makes better.  Well, let’s look at some of what he’s been touching.

At this point in the Obama presidency, even Democrats must be asking: Is he really this bad at politics? The list of miscalculations grows longer. To pass the stimulus package, the administration predicts 8 percent unemployment – a prediction that became an indictment. It pledges the closing of the Guantanamo Bay prison – without a realistic plan to do so. It sends the president to secure the Chicago Olympics – and comes away empty-handed. It announces a “summer of recovery” – which becomes a source of ridicule. It unveils a Manhattan trial for Khalid Sheik Mohammed – which nearly every New York official promptly turns against. Press secretary Robert Gibbs picks fights with both conservative talk radio hosts and the “professional left” – which uniformly backfire. The president seems to endorse the Ground Zero mosque – before retreating 24 hours later. He suggests that Republicans are “enemies” of Latinos – apparently unable to distinguish between hardball and trash talk.

Genius?  Or incompetent boob?  You tell me.

I especially like the joke, “summer of recovery.”  That reminds me of the The Summer of George from Seinfeld.  They were both silly.  Come to think of it, President Obama reminds me of George Costanza.  They have a lot in common.  But I think history will be kinder to George Costanza.

Why so many unforced mistakes? The ineffectiveness of Obama’s political and communications staff may be part of the problem – and the administration is now hinting at significant White House personnel changes in the new year. But an alternative explanation was on display this week. Perhaps Democrats did not elect another Franklin Roosevelt or John Kennedy but another Woodrow Wilson – a politician sabotaged by his sense of superiority.

In the tax debate, Obama has proved a quarrelsome ally and a dismissive foe, generally dismayed by the grubby realities of politics. He doesn’t suffer fools gladly. Unfortunately, he seems to put just about everyone who disagrees with him in that category.

Like a true aristocrat, Obama just hates people that aren’t his equals.  And in his mind, he has no equals.  So he hates everyone.  Which explains a lot.  The disunity in his party.  The bitter partisanship.  And the whining.

It makes one yearn for the days when an affable Texan occupied the White House.  George W. Bush may have not spoken as well or was as pretentious as Obama, but he was a nice man.  Is.  And history will remember him kindly.  Probably even more kindly than George Costanza.

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Barack Obama Outspends George W. Bush and Ronald Reagan Combined

Posted by PITHOCRATES - October 20th, 2010

Spend Baby Spend

President Obama is the most liberal president ever to occupy the Oval Office.  Spending records have been set on his watch.  And he’s only been president for about 2 years.  This is quite the testament to his insatiable lust to spend.  The Left bitterly attacked Ronald Reagan for his $200 billion deficits.  Compared to Obama, though, that’s chump change.  He measures his deficits in a different kind of dollars.  He prefers trillions.  For billions are just too small.  See the sobering numbers in the Political Hotsheet blog article National Debt Up $3 Trillion on Obama’s Watch by Mark Knoller on www.cbsnews.com.

New numbers posted today on the Treasury Department website show the National Debt has increased by more than $3 trillion since President Obama took office.

If you divide this by the 2 years in office, that comes to about a $1.5 trillion deficit each year.  Or, to compare with Regan’s $200, billion, that would be $1,500 billion.  That about 8 times the deficit spending of Ronald Reagan.  All you hear from the Left about the Reagan deficits was that they were bankrupting the country.  Now that they are doing the spending, it’s spend baby spend.

Read My Lips – It’s George W. Bush’s Fault

And the numbers just keep getting bigger.

The Debt increased $4.9 trillion during President Bush’s two terms. The Administration has projected the National Debt will soar in Mr. Obama’s fourth year in office to nearly $16.5-trillion in 2012. That’s more than 100 percent of the value of the nation’s economy and $5.9-trillion above what it was his first day on the job.

Dividing Bush’s $4.9 trillion by his 8 years in office comes to about an annual $800 billion deficit.  Dividing Obama’s $16.5 trillion by the 4 years in his term ending in 2012, that comes to about an annual $4,125 billion deficit.  Holy crap!  That’s 5 times the Bush deficit.  And 20 times the Reagan deficit!  If Reagan was reckless and irresponsible with his spending, than so must be Obama.  All the bad the Left said about Reagan, then, must apply to Obama.  For his spending is 20 times worse.  Either that or the Left was wrong about Reagan.  Or lying.

Mr. Obama frequently lays blame for soaring federal deficits on his predecessor.

“By the time I got into office we already had a $1.3 trillion deficit and we had exploded the national debt,” he said last month during one of his backyard chats with Americans.

The blame George W. Bush argument doesn’t work here.  You’d have to be pretty blind, stupid or in denial if you can’t see that Obama will add another $3 trillion (or $3,000 billion) to what he ‘inherited’ from George W. Bush.  Such comments are either insincere.  Or deceitful.

Here Comes the Middle Class Tax Hike

And once again, the Left opposes those ‘unfunded’ tax cuts.  Yes, they look at a tax cut as a government benefit.  As if it wasn’t even our money in the first place.  But it’s our money.  And letting us keep our money is not a benefit.  So they don’t have to fund them.  But that’s the way the Left looks at it.  If they don’t take our money, the deficit will grow.  It’s never their out of control spending that grows the deficit.

The soaring deficit and Debt is one of the reasons Mr. Obama is adamantly opposed to extending tax cuts for Americans earning over $250,000 a year.

The ten year cost would total $700-billion and Mr. Obama says it would needlessly add to the deficit and Debt.

The ten year cost comes to $70 billion per year.  Or approximately 1.7% of his projected deficit.  This isn’t even chump change.  This is statistically insignificant.  Now, Obama denies being a socialist.  Says he believes in free-market capitalism.  But all of these numbers say otherwise.  A free-market capitalist knows that tax cuts stimulate the economy.  A free-market capitalist is against massive government spending.  Therefore, Barack Obama is not a free-market capitalist.  He’ll spend trillions on stimulus spending that doesn’t stimulate anything in our economy.  But he won’t approve tax cuts that have always stimulated economies whenever we’ve tried them.

President Obama and Congress await recommendations on ways to reduce federal deficits from the National Commission on Fiscal Responsibility and Reform.

The 18-member panel will report December 1st – after the midterm election.

And here comes the tax hikes.  The ‘bipartisan’ committee will report that there is no choice but to increase taxes.  This bombshell (Obama reneging on his no new taxes for anyone earning less than $250,000) won’t affect the midterm election result.  And they are no doubt hoping that 2 years will be enough time for the American people to forget this broken promise before Obama runs for reelection.  But I doubt anyone will forget in 2012 who gave us the 2nd Great Depression.  And that is exactly what he’s giving us with this out of control spending and massive tax hikes (coming sometime after November 2010).

There will be a middle class tax hike.  The rich just aren’t rich enough to pay for all of their spending.

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FUNDAMENTAL TRUTH #36: “Politicians oppose across the board tax cuts because they are not politically expedient.” -Old Pithy

Posted by PITHOCRATES - October 19th, 2010

Pay Raise or Christmas Bonus – Which is Better?

If times are tough and the boss has to cut costs, which would you rather see cut?  The annual pay raise?  Or the Christmas bonus?  You, the employee, should pick to cut the Christmas bonus.  You, the employer, should pick to cut the pay raise.  The reason is the same for both.  A bonus is a onetime thing.  A pay raise is forever.

If you chose a Christmas bonus this year over a pay raise there is a very good chance you will take a pay cut the following year.  For if you got a $1,000 bonus this year but get nothing the following year, your annual earnings next year will be $1,000 less than they were this year.  However, if you chose the pay raise over the Christmas bonus this year and you get neither a pay raise nor a bonus the following year, you’ll at least make the same amount next year as you did this year.  Because that pay raise is still there.

The allure of a big check, though, is tough to beat.  Getting a 4-figure bonus check for the holidays may make the difference between a truly merry holiday and a not so merry holiday.  That’s why some people have more income tax withheld from their paychecks.  They want to get a big, sexy check after the holidays to help pay off their holiday debt.  Another $20 or $30 in a weekly paycheck just isn’t as sexy.  But it’ll do a whole lot more for you.  Perhaps even being just enough additional income to get you approved for that mortgage.

The Mortgage Interest Deduction

Big Government likes to spend money.  Their money.  When it comes to spending, they operate under the premise that it’s all their money.  Your net pay is only the portion of their money that they let you keep.  For you to spend as it pleases them. 

Affordable housing is important on both sides of the aisle.  The Left likes it primarily for putting people into houses who can’t afford to buy houses.  This makes for grateful voters at election time.  The Right likes it primarily for the economic dividend.  New housing drives a host of other economic activity to furnish those new houses.

Now Big Government is not very generous with their money.  Hence their pervasive taxes.  They don’t want to lower taxes too much.  If they did, we would be able to keep more of their money.  And they just won’t have that.  But on the other hand, they want us to buy houses.  So they came up with the mortgage interest deduction (MID).  If we buy what they want us to buy, they’ll let us keep a little more of their money via this income tax deduction.  Their little way of saying thank you for going into debt up to our eyeballs.  Of course, if they would just cut our taxes we could probably buy those houses without the MID.  But we must remember whose money it is.  It’s not about us enjoying our life as much as we can.  It’s about them giving us as little of their money as possible.

What Have You Done for Me Lately?

They give us (for the time being, at least) the mortgage interest deduction because they get something for it.  Housing sales.  Which gives the Left more grateful voters.  And the Right a more bustling economy.  In other words, Big Government received a sufficient payment on this gift of money they gave us.  This to them is a sensible tax cut.  It’s not general.  It’s not across the board.  It’s specific and targeted to the people they want something from.

This is how they measure the value of any projected tax cut.  They ask themselves how will this tax cut benefit us, Big Government.  And if that benefit is sufficient, that they will gain real value for it, then they grant us this sensible tax cut.  It’s basic accounting fundamentals, matching the costs to the benefits. Which is why they really eschew across the board tax cuts.  With those there’s no matching of costs to benefits.  Sure, everyone may win, but that ‘everyone’ doesn’t include them the way they see it.

They’ll provide a tax credit to buy a ‘green’ car because they can match the cost to the benefit.  They get campaign contributions (and votes) from the Left for promoting ‘green’ technology.  And they get kickbacks from ‘green’ industries the more green technology is used.  They can match the costs of these ‘green’ tax credits to the benefits they receive in exchange.  These tax credits make sense to them.  Across the board tax cuts, on the other hand, don’t.  It’s a lot of money thrown away without anything specific to show for it.  Sure the economy may be better off, but what demographic did it buy?  What specific graft can they count on?  Big Government operates on props.  And if they don’t feel the love (and the money), you better watch your back.

A Crisis is a Terrible Thing to Waste

Pay raises and Christmas bonuses.  Targeted tax cuts and across the board tax cuts.  They have something in common.   Two of them benefit us in the short term (bonuses and targeted tax cuts).  Two of them benefit us in the long term (raises and across the board tax cuts).  Tax credits and the MID are nice, but you have to spend a lot of money to get them.  And they’re short lived.  A pay raise and an across the board tax cut, though, gives you more money to spend with every paycheck.  And the more money you have, the less you have to borrow.  The less interest you will pay on your credit cards.  And the smaller your mortgage will be (and the less interest you will pay on that mortgage).

But, of course, letting us keep more of our money doesn’t help them.  Big Government.  It won’t help reelect them.  And it won’t help them get rich.  (And who hasn’t left Washington rich?)  And that’s what it’s all about.  At least, based on history.    And so what if they crash our economy in the process?  A bad economy is good for them.  A bad economy calls for stimulus spending.  It calls for reform.  It calls for Big Government to step in and do something.  Anything.  Because the people are desperate.  And a crisis is a terrible thing to waste.

And the people will willingly suffer for a couple of years.  They’ll make their sacrifices.  Suffer unemployment.  To help build a better tomorrow.  But when that tomorrow never comes, they will grow impatient.  They’ll stop giving them their props.  They will stop loving them.  Believing in them.  Which may back Big Government into a corner.  Where they will either move to the center and govern according to the will of the people.  Or rule by executive order against the will of the people.  Should they choose the former, we better all watch our backs.

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