by Lloyd Streeter
Let me tell you why I am in favor of allowing the country to go over the “fiscal cliff.” Both the Democrats and the Republicans in Washington, both the President and congress are threatening each other with the most dire consequences if the country goes over the “fiscal cliff” on January 1. All of these politicians, of course, are posturing for political advantage. They care more about who is going to win politically than they do about solving our country’s economic problems.
The, so called, “fiscal cliff” is a date certain, January 1, 2013, when taxes will go up in a very steep way. The “Bush tax cuts” will end and everyone’s taxes will go up. Both the middle class and “the rich” will find themselves paying more to the Federal government.
But the “Bush tax cuts” ending is not the only tax increase on January 1. There will be a three and a half percent increase in capital gains for people who make over $250,000 per year. There are several other taxes that individuals will face, including penalties for not participating in Obama Care. There has been a payroll tax reduction in effect for sometime now, a sort of “stimulus” for the economy. But this “payroll tax holiday” will end on January 1. Some states will also increase their income taxes. It is a frightening prospect and will be shocking to people. Going over the cliff will be painful. Paying the piper always is.
No one likes the thought of his taxes going up, and what happens on January 1 may, or may not, cause another recession. It may, or may not, cause a lot more unemployment because employers will have less money to hire people and keep people on the payroll.
So, even though the vast majority of people will disagree with me, and though no one else is saying this, I think the country would be best served by going over the “fiscal cliff.” Let me tell you why.
First, the American people are not going to insist that government cut spending until they have to begin paying for some of the “free stuff” they have been getting. The real problem with our economy, of course, is government spending and the National debt, now more that $16T, and likely to be over $20T by the end of Obama’s second term. Most of the American people have no will to solve this problem, as evidenced by the reelection of the President. However, if the American people had to begin paying for some of the “free” goodies they receive, it might shock them into demanding that spending to be seriously cut.
Second, it is immoral to keep going deeper and deeper in debt. I have always believed in paying for what I get. That is only right. What would happen to a family if it went further and further in debt every year, but kept on spending and borrowing one third of all that it spent? What would happen to a company if it did such an immoral thing? But this is what government does. We should raise taxes on everyone enough to pay for what we get. That, along with serious spending cuts, will eventually put the U.S. back on a sound financial basis.
Third, it is high time that the “middle class” and even the low income people begin to pay their “fair share.” About one half of the American work force pays no Federal income tax at all. Everyone should share in the sacrifice to pay for our country. Half of Americans should not be “takers,” paying for nothing. Even people who earn $30K per year should pay something. Are we real Americans? If so, we should have “some skin in the game.” The low income and middle income people will never stop demanding more and more “free stuff” until they actually have to start paying for some of it.
Fourth, going off the fiscal cliff and raising more revenue is better than simply printing money to pay for what we want. The government borrows a lot, but also prints a lot of money to pay for government. The government is flooding the economy with cheap dollars. In a sense, these dollars are fake dollars. It is a sort of legalized government counterfeiting operation. The more dollars that are printed, the less your money is worth. Have you noticed that what you need to buy has been getting more and more expensive? Groceries, gasoline, and all other products needed for your daily living have been increasing more and more in price because your dollars are worth less and less. This is called inflation. Inflation is the cruelest tax of all because it devalues all that Americans have saved and devalues every monetary instrument. Your retirement account, your mutual fund investments, and your savings account are all worth less every day. The government sneaks into your bank account and steals some of the value out of your money. The government is able to get your money this way without any vote in congress, or anywhere else. If the government is going to continue to spend an enormous amount of money, we ought to at least raise the money through taxes, not just print it. So, either go over the cliff or stop spending so much.
Finally, I favor going over the “fiscal cliff” because none of the proposals being advanced by either the Democrats or the Republicans will solve the country’s economic problems. Obama wants to raise the rates from 36% to 39% on just the top 2% of taxpayers, only on the “rich.” This will raise only a pittance, not enough to run the government for 10 days. The Republicans, on the other hand, want to simply eliminate some tax deductions. This will also result in just a pittance of revenue, not enough to do any real good. Some Republicans are in favor of cutting spending in a serious way, and that would certainly be a good step. But if they are truly serious about it, they will refuse to raise the debt limit when it comes up in a few months. It is time for some desperate, lifesaving action. Do any of these politicians realize that this is an emergency? We are broke! We owe more than we can ever pay, but we had better make a start at it.
The U.S. government needs to drastically cut spending. That is the only real solution to our country’s economic problems. I do not favor huge cuts in our military (though some cuts are necessary), but we should take an ax to much that we are spending in other areas. Only when the American people are jarred out of their deadly slumber, will they begin to demand that politicians start doing something about these problems. Let’s go over the cliff!
Posted Dec. 8, 2012