Tuesday, October 20, 2009

"I'd Gladly Pay You Tuesday for a Hamburger Today"

If J. Wellington Wimpy's famous quote is not the quintessential slogan that describes the current American attitude towards massive over-consumption of government services without paying for it, then we don't know what is.

We are putting Popeye the Sailor Man's best friend to shame by the way we spend and borrow as a nation.  Take a look at the news today:  The so-called 'public option' is now back in the health care bill mix and that one provision alone is almost guaranteed to drive up the costs of this bill by a factor of 3 when all is said and done over the next decade. Mostly all borrowed, by the way.

'Tax-and-spend liberals' used to be an epithet hurled by the opposite side.  But what do we call both political parties when they spend like there is no tomorrow and borrow like there is? "Spend-and-borrow lunatics"?

There is some real redistribution of wealth going on right now and it isn't from the wealthy to the poor, as some would have you believe. They want you to believe that all we have to do is slap a big tax on the wealthy, big insurance, big tobacco or big oil and everything will be fine and dandy.

Except the truly rich can afford to hire expensive tax lawyers and accountants to help them minimize their taxes to almost any level they so choose.  And the increased taxes on all the companies mentioned above are paid for by you and me in the higher prices they charge for their products and services as a result of the higher taxes we are 'punishing' them to pay.

So don't buy that Robin Hood stuff about taking from the rich and giving to the poor. In fact, it is far worse than that, and more sinister and deceitful when you really sit down and think about who is going to pay for all of this borrowing we are now allowing Congress to get away with.

Where does this redistribution come from? Your children and grandchildren’s pocketbooks and wallets, just like always.  Where else can a government systematically raid a defenseless and unrepresented group of people year after year to get the funds they want to provide current benefits to living voters?  The young and unborn children can not vote and the ones who are aged 18-35 barely vote at all on a regular basis.  Young voters came out in droves to be a part of history last year during the Obama campaign but are you willing to bet the mortgage that they will vote again in the off-off year elections this fall in Virginia and New Jersey or any of the municipal elections across the country?  (You didn’t even know that these elections were full-bore, did you?)

There are a lot of people who think the main purpose of government is to ‘redistribute the wealth’ from the rich to the poor in some sort of noble effort to pursue peace and justice. So they continue to advocate loudly for 'higher taxes on the wealthy' to 'pay their fair share'...even though the top 1% of American taxpayers now pay more in income taxes than the 'bottom' (?) 95% of all taxpayers combined.

The only 'redistribution of wealth' that we have actually been able to accomplish over the past 30 years is from our children and grandchildren to us and our parents and grandparents now living. We have borrowed now close to $6 trillion from them in the form of bonds. Like Wimpy, we all have eaten our hamburgers today and 'promised' investors we'll pay you next Tuesday...like in 2032.

Will 'we' be the ones paying them back? Heck no, most of us will be long dead and gone.

A lot of the bonds we 'owe' are somewhat fictional as we have pointed out in previous postings.  They are associated with the Social Security 'trust fund' that is really no more than an accounting entry and can only be paid off by higher taxes or savings from future spending programs. 

But over half of the bonds now outstanding are 'real' meaning institutional investors and the Chinese government who will demand they get paid regular interest payments and principal, period.  Who will pay off the obligations we are making to them?  Our kids and grandkids.

Is that what we really want to do as a nation?  Are you 'proud' of being part of a nation that does that to our children?

Here's what might happen in the interim:  We may very well experience higher inflation rates and lower currency valuations of the dollar, both of which make paying back these bonds less expensive in real terms.  Neither are great for any economy in the long-run.  Plus our kids will have to pay the interest on these bonds regardless of who owns them....and our current interest payments are close to $500 billion in the budget today.

So forget about trying to drain the pockets of the current living breathing billionaires…there ain’t enough of them to shake down completely anyway to solve our fiscal problems in the first place.

Focus on what we are doing surreptitiously to our children and grandchildren.  And then tell your elected politicians to stop it, first by not voting for any more expansion of spending at any level of government.  And then, by paying down the debt with savings from programs already on the books and not run very well.

You’ll feel better about things.  Like next Tuesday.

courtesy of creditbrain.wordpress.com

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