Go here to read the accompanying article. What lies ahead for this country is debt repudiation down the road or a new currency with the same face amount, and an actual value of 10% of current value, which is another way of saying debt repudiation. This is going on in almost all the nations of the world and we are heading for a crash which will make the Great Depression seem like a minor blip in comparison. The tragic element in this farce is that it is all man made and could have been avoided.
The above video by Bill Whittle from 2011 illustrates how deep in the hole we are when it comes to annual deficits. The idea of the Obama administration that the Bush tax cuts must expire for “the rich” earning over 250K (In Chicago that would be a cop and his schoolteacher wife.) has everything to do with politics and almost nothing to do with deficit reduction. Here is why.
If you abolished all of the Bush tax cuts for “the rich” earning over 250K a year, and assuming they did not come up with ways to legally avoid the additional tax by deferring income, the Treasury, further making the rash assumption that increasing taxes does not have any negative impact on the economy, would receive about 70 billion dollars in additional taxes, according to the Congressional Budget Office. This year our deficit is approximately 1.1 trillion dollars. If we eliminate the Bush tax cuts for all taxpayers, the increase in taxes would be about 370 billion, according to the CBO, assuming, rashly, that increasing taxes on the middle class would not have a negative impact on the economy and swell the ranks of people qualifying for “freebies” from Uncle Sucker. Continue Reading
Another fine econ 101 video from the Center for Freedom and Prosperity. This video exlores the lessons that America can learn from the current European fiscal and debt crisis.
The lessons are very simple:
1. Higher taxes lead to higher government expenditure and not reduction of government debt.
2. A value added tax is a recipe for run-away government expenditure.
3. A welfare state breeds dependency.
4. Fiscal reform and reduction of government expenditure is impossible once more people are living off the government than are paying taxes to support the government.
5. Bailouts do not work. Continue Reading