Thursday, September 19, 2013

Fix The Federal Fiscal Fiasco

While spin-doctors get to work on the Navy Yard Shooting, infringing on the Second Amendment, covering up the terrorist attack in Libya, and denying that helping Al-Q'aeda backed Syrian Rebels is a form of aiding the enemy; our economy is still screwed up.

The simple reason is too much government. Too much government in terms of regulations and red-tape has gotten in the way of the free market, eliminating competition, and wasting tax dollars. Too much government is stealing what citizens have rightfully earned to support programs that give 20% of the take to those who "need" and wasting the other 80% on a bloated bureaucracy that doesn't deserve it.

More homes these days are being bought "cash", about 30%. That means fewer mortgage loans. That seems good to those consumers who are forgoing the debt. But that is bad for banking. They don't make any interest off of mortgages, then. That means the common citizen isn't getting interest from checking accounts, savings accounts, CDs, money market accounts, etc. Instead, those who have enough stuffed in their mattresses are risking it in an uncertain stock market. So, the finance indices like the Dow and NASDAQ are reporting strong numbers. That doesn't mean anybody is profiting, other than the stockbrokers.

Meanwhile, we have another "fiscal cliff" debate headed our way. We have another argument over credit limits already emerging. We haven't had a budget passed since 2008, when Bush was still in office. So what is the "fix"? Name-calling, rhetoric, and lies being told to gullible citizens.

Obama made a claim that, in our nation's entire history, congress (or a party within) has never held the budget "hostage" over a "non-budget issue". he doubled down on that claim stating the same over the debt ceiling debate. Then again, to Obama, our nation didn't exist before January 20, 2009. Such a tactic was employed by progressive Democrats in 1953, for one example. There have been several others since.  In short, Obama lied.

Obama's claim that the attempts to remove funding from the PPACA are a form of legislative extortion. He also claims that the PPACA has nothing to do with the federal budget, the debt ceiling, or anything within government that would require funding. He may want to actually read the law. It is embedded within the budget simply because it is, legally, a tax. It sets up government programs and expands federal bureaucracy, which requires funding (a budget) to operate. It is deeply entrenched in the budget. That scares him.

The PPACA will increase individual costs. It mandates citizens purchase something or pay a tax. Either way, it means less in the pockets of citizens. It also adds taxes to "medical supplies" including exercise equipment and "stress management tools" like fishing tackle.

Next, Obama's minions in the unions have taken up his call for a "living wage". In January, Obama called for an increase in minimum wage. Somehow that got distorted into unskilled laborers in the fast food industry protesting for $15 an hour. Similar cries have gone out towards Walmart as well. What these high school dropouts fail to understand is basic economics. If their wages double, so do the costs of the products they make. Demand will fall. People will be fired. Stores will close. Unemployment will rise. Basic commodities like a loaf of bread will be unaffordable until the cost of living reaches symbiosis with inflation.

Then again, the number of people (including illegal aliens) on SNAP (Food Stamps) continues to rise. When a Big Mac costs $9 for just the sandwich, that will eat up those EBT funds rapidly. More people will be living in poverty. Yet, the rhetoric over a potential $4B cut in SNAP funding has the progressives already scraping to increase addiction to unearned "entitlement". Let us not forget that there are Starbucks, etc. that accept EBT cards for a luxury vice item such as a double-shot latte with vanilla. A better solution would be those 5lb blocks of orange wax labeled as "cheese" from the early 80s. 

Perhaps many of those people would gladly work a better-paying, skilled job if one were available. Blackberry just announced it is cutting its number of employees across the board. Other companies, because of the PPACA, have shifted positions to part-time, or cut back their labor force and production. Cutting production decreases supply, increasing prices, by the way. The U3 unemployment rate has dropped only because people have given up even trying to find a job. It's more cost effective to take those government handouts that are funded through Prince "John" Obama and the Sheriff of Nottingham (the IRS). Pay no attention to the fact that $1 in taxes is supplying $0.20  to the "needy". 

To meet our nation's debt and to pay for the necessary functions of the federal government does require some revenue. The question is simple. Is it better to sell 10 widgets to 10 people at $1000 each or to sell 10000 widgets to 10000 people at $10 each? Imagine 80% overhead. The second option earns a lot more. That's the same concept as a tax base versus a tax rate. The larger base gets more revenue at a lower per capita cost. Well, when you count so much on income (and payroll) taxes, fewer people working means a lower base, lower overall revenue. The answer is the government needs to get out of the way of business and allow the market to correct. Increasing regulations and taxes does the exact opposite. It shrinks the base.

The Federal Reserve just punctuated the bad news by revising its predictions for the rest of 2013 and for 2014. Our Gross Domestic Product (GDP) is set to grow at only 2%. Inflation is above 4%. That leaves a 2% deficit. That translates to less average per capita income. In other words, less money for the government to tax, therefore even less government revenue. The Fed also predicts a drop in the U3. What they fail to admit is that this drop in unemployment will be the most likely result of a diminishing and disappearing workforce.

Meanwhile, federal spending as a percentage of GDP is high. It is unsafely high. It is at bankruptcy levels. In other words, our nation is in debt and will be making less than it will spend in the next 18 months, at least.

Back to the legislative arguments, Obama wants his credit limit increased, even though he is showing that he has a lower earning potential and won't be able to pay back the new loans. Any legitimate lending agency would tell him "No!". Congress should do the same.

It's time for the lies and diatribe to cease. It is time for an adult to come into the room and balance the budget. The first step is cutting funding to Obamacare, the Department of Education, and the Department of Energy. (Sorry kids, that pesky 10th Amendment strongly implies that the federal government should not be involved in local education programs such as public schools). Start cutting funding to private businesses unless they are directly contracted to provide a good or service to the government. In other words, don't fund any more research projects, especially ones involving a prawn on an elliptical machine.

This isn't some political move of some rogue faction holding the budget hostage or extorting policy changes. This is a group of representatives who actually listened to their constituents who are sick and tired of this non-recovery-recovery.