Thursday, February 14, 2013

Sequestration Scare Excuse For Tax Hikes

Obama made a bunch of promises during his imperial decree state of the union speech to congress. He proposed a multitude of of new government programs.

Meanwhile, the nation is looming near that fiscal cliff. It backed away a step earlier this year. However, the nation's credit limit is still over-extended and facing another debate over raising it. Then on March 1, 2013, the so-called "sequestration cuts" will take place.

So, on March first, the majority of government programs will face having their budgets cut. Yet, here was Obama proposing more programs that will cost more money the federal government doesn't have.

How important is this issue to congress? Not very. They are on a one week break. Some are using the sequester cuts to push their agenda. Socialists are using it to push for higher taxes and raising  the debt limit. Conservatives are pushing for more  reasonable cuts in domestic spending and reducing the burden on national defense. In the end, perhaps the best would be for nothing to be done.

It seems that is exactly what the majority of our legislators believe as well. However, there just may be some "last minute, save the day" bill that is a poor plan comprised of conservative capitulation, yet again, with a new law that will prove disastrous to our nation. Most likely, it will amount to just kicking that can down the road until sometime this summer.

That opens several questions that require explanation from Obama, his cabinet, and the legislators in congress.

First, what is the problem with the sequester?

The only government "programs" facing cuts that perhaps should not, or should not see as deep of cuts as they face are national defense (military), postal services, Social Security (since this is actually a debt the government owes to those who paid into it), the VA (part of national defense), and Medicare (another loan Americans are forced to give to the government that they owe back to those who paid into it).

But how deep are these across the board cuts?

Let's look at this in terms of a household budget. Currently the government spends about $4.3 Trillion a year. Their income is about $3.1 Trillion. That means they fall $1.2 Trillion short, per year, and are forced to borrow.

In "kitchen table" terms, say your family has a take-home pay of $31,000 a year. Your bills, expenses, and other spending is currently $43,000 a year. You are falling short by $12,000 a year. Well, it may be a smart idea to sit down and start cutting luxuries and seeing where you can save some money. That would be common sense, anyway.

The sequestration cuts equate decreasing that household spending by $850.00 a year. That would be $16 a week in spending cuts. That still leaves $215 more a month to cut.

Instead of cutting, however, Obama is suggesting engaging in more luxuries we cannot afford.

So how will we afford all of these new luxuries?

To cover repair of  postal roads and interstate commercial roadways, the proposal is to raise fuel taxes. The tax on gasoline and diesel is currently $.18 a gallon, and has been for 20 years. Now this tax is an excise tax directly on the consumers. It doesn't include the other taxes and regulatory fees collected from the refiners, drillers, and importers of crude oil, all of which are also passed along to consumers in the form of higher prices at the pump. Then that additional direct tax is applied. With prices already high, the proposal is to raise them even more on the individual citizens.

But that is ok. Obama wants a $9 minimum wage. So, minimum wage earners will make more. Meanwhile, those making over $9 an hour will face not seeing a raise in a long time. That is if they will even be able to hold a job since positions will be cut in order to afford the higher costs of labor. Supply and demand dictate that the more something costs, the less of it that will be purchased. Also, the higher rate will mean more taxes collected by the government. 12% of $9 is more than 12% of $7.75. But wait, those same people will be facing other taxes due to the PPACA. So this raise in minimum wage will net a take-home wage lower than what they are making now. So, it won't help anybody. It will hurt them.

Also, fewer people will then be paying any taxes, since more will be unemployed.

The plan for federally mandated and controlled schools, to include this "universal pre-K program" is going to cost money. Where will it come from?

Well, that is a great question. We're broke. The only answer is to hike income taxes and other regulatory fees. Expect a federal tax or regulatory fee on charter and private schools (to include home-schools). It may not ever pass congress. But it will be proposed. Also, they will fine any non-public school that does not conform to their mandated curricula. It's coming. Pay attention.

So, the next great question is simple: Where is the federal budget?

We haven't had one in over 4 years. Each proposal Obama has presented has been late and voted down even by his fellow socialists in the US Senate.

And he is late this year, yet again. All of these proposals and no prospectus on how much they will cost and how they will be paid for. 

Sequestration cuts are real cuts. They just are not enough. The only bad parts are the cuts on national defense, especially if they don't promote eliminating civilian public sector jobs in the DoD. But, in the grand scheme, the cuts are not that deep. In fact, they aren't deep enough, especially on the little pet-project spending that is outside of what the Constitution mandates.

So, they are a good start. Public support for the sequestration cuts just may wake up the less informed voters. It may force the socialists to face the fact that they have run out of other people's money to spend. It may force them to see that it is time to balance the budget and direct federal spending where it is supposed to be spent. We cannot take this much longer.