Thursday, August 26, 2010

'Exclusive Budget Estimates' Show Budget Deficits and National Debt Can Be Wiped Out In No Time Flat!

Americans love the short, quick solution.

(Except when it involves them, that is)

We have one possible solution that would take about 6 words to write in a piece of legislation.  It would be one simple answer to our enormous budget deficits that has never been offered, considered or asked to be scored by CBO by anyone in the known universe.

So with that in mind, let's first put the following predicate out there for you to consider:

When America was attacked by the Japanese at Pearl Harbor, our fathers and grandfathers volunteered and got drafted for active duty by the millions to defend our country and our freedom.

When Americans were attacked and murdered by the Islamist terrorists on 9/11 in New York and at the Pentagon, thousands of men and women volunteered to join the military and do what they could to rid the world of the scourge of Al Qaeda.

We now have a self-inflicted gunshot wound to the economic health and future of the United States in the form of tremendous over-spending and fiscal malfeasance by both Presidents and Congresses of both parties for the past 30 years, sans the 'Glory Days of 1998-2000' when we actually ran 3 successive years of budget surpluses, if you can believe that actually happened in our lifetimes.

If you are under 66 years of age, would you be willing to work longer before enrolling in Social Security and Medicare if you were totally convinced that your selfless actions would guarantee a better future for your children and grandchildren?

Sure you would. Your parents and grandparents did far more for us.

It is now our turn to do it for our offspring.

(Plus, after this economic conflagration of the past 3 years now, you most likely are going to have to work longer anyway just to meet the same retirement goals you may have had circa-2006)

We asked several people in Washington who are true experts in this sort of stuff 'what the real answer is here' and here is the answer they gave us repeatedly:

‘Are you crazy?  There is not one person in Washington, DC who would EVER put their name on a letter and ask for it to be officially scored by any budget agency and then returned to their office for publication! You, sir, must be out-of-your mind!’

A simple ‘No’ would have sufficed instead of hurting our feelings. We were ‘just wondering out loud’, thank you very much.

Here is the question that caused so much consternation, apparently because no one in official Washington thinks the American people are adult enough to be leveled with and talked to in a serious fashion during the serious budget problems we have right now:

“What would happen to all these deficits and debt IF we raised the official retirement age of Social Security from 66 to 70 AND Medicare from 65 to 70 overnight?’

Like tomorrow morning, let’s say.

What is so wrong with at least asking the question? It is like these people think the world will crash and burn to ground if we even have the temerity to ask the question first.

Now that we have your attention, here’s what we think the answer is:

‘We will have over $5.4 trillion of spending reductions from the baseline going forward for the next 10 years which would cover at least 50% of the enormous explosion of debt spewed out by the Obama White House and Congress.

And if we are smart about it, and the new Congress coming in January 2, 2011 holds down spending to under a 3% growth rate for the next several years, we might not add on any more debt at all after 2014 AND begin to pay down the $14 trillion in debt we have already larded up on our kids and grandkids’

Raise your hand if you think this is a good goal to have right now.

(You do realize, all you naysayers about raising the retirement ages, that way, way back in 1983, The Greenspan Commission to 'Save Social Security Once and For All Time!', put into American law a schedule whereby  Social Security would increase the eligibility age from 65 starting in 2003  to 66 by 2008? see '1983')

The Berlin Wall to a higher retirement age has already crumbled!

Imagine if Congress had just bitten the bullet back then and moved it to 70 by the year 2008.  We might not be having these crazy discussions about $24 trillion national debts and $1.5 trillion annual deficits.

But here’s the problem today:  No one (with any sense and an official job) in Washington will dare touch this with a 1000-foot Taser gun.

So we guess you'll just have to write your congressman and senator and ask them to get an official 'score' from CBO so we'll know for sure.

Here’s our ‘methodology’: We are ‘guess-timating’ these results just like the pros at CBO and OMB do on a daily basis. There is no way on God’s green earth that anyone can accurately predict what will happen beyond 3 months nowadays, much less 3 years or 10 years.

The one thing we do know from reading official CBO estimates is that the budget pros say that raising the SS retirement age to 70 in small steps over the next 20 years will ‘eventually’ yield savings up to 1% of annual GDP. Similar long-term estimates for Medicare allude to potential savings of up to 2% of annual GDP.

Raising the eligibility age of both Social Security and Medicare to 70 could conceivably one day save the equivalent of 3% of American GDP.  (We recognize the need for some early retirement thresholds for manual laborers and people with physical or otherwise disabling factors but bear with us for argument's sake for the time being)

3% of a GDP that is the largest the world has ever known is a big, big, BIG number no matter how you slice or dice it.

So if savings of that magnitude of close to 3% of GDP will accrue when ‘fully phased-in’ in 30-50 years, why not start with the full amount of savings on January 1, 2011 and get an estimate of the potential savings just to see what might be doable in terms of making public policy decisions?

$5.4 Trillion. Not 'Billion'....'Trillions'

Think about it.

Sunday, August 22, 2010

The Poulan Weed-Eater Consumption Tax Example

You know, sometimes the best answer is also the simplest answer.

William of Ockham (Occam) was a 14th century English philosopher who came up with the 'crazy' notion that perhaps the simplest answer is the best one and it became known, oddly enough, as 'Occam's Razor'.

Same with the idea that perhaps the United States should go completely to a consumption tax to replace the current income tax system in its entirety.

The income tax might have made some sense back in 1913 when the 16th Amendment was passed making it 'constitutional' to tax people's incomes when only the wealthy had much income and wealth to tax in the first place. (The 16th Amendment can be repealed just as easily as it was passed, you know....has anyone seen the good old 18th Amendment lately?)

For much of US history, incomes were modest by any standards, especially when we were primarily an agrarian nation and people worked on their farms to put food on the table.

But now that we have millions of people who own stocks in their portfolios and a far wider middle-to-higher income cohort in America in 2010 versus that of 1913, maybe it really is time to rethink what is the best way to tax people so that they can not monkey around with the tax code at all.

The simplest way is to make everyone pay their 'fair share' of the taxes we need to fund the federal government at the end of the line of consumption, i.e. at the cashier's scanner.

Think of this:

Every time a person buys something at Wal-Mart, let's say a 'Poulan Weed-Eater', it would be scanned and the receipt would pop out with the following information on it:

Poulan Weed-Eater: retail price, $200. 
Federal Consumption Tax at 20%= $40
State Tax=$16

Of Your Federal Tax Payment of $40: 

$13.20 goes to pay for current Social Security payments for today's retirees
$10.00 goes to pay for Medicare payments for current retirees
$5.20 goes to Medicaid
$4.00 goes to pay the interest payments on this enormous debt we have rung up
$7.60 goes to pay for roughly 2/3rds of the discretionary spending
$0.00 goes to pay for defense/homeland security  

Roughly $12.00 is borrowed to pay for defense, homeland security and the rest of discretionary spending from the Chinese.

Thanks for shopping at Wal-Mart!"

This would help the average American clearly see where their tax dollars are being spent on each and every transaction they make every single day.

Just being able to make the connection between their tax dollar payments and where it actually goes would be an enormous help in getting people to see what we are dealing with nowadays in real-time.  Today, people are just being fed distorted information from both sides merely and purely for tactical political gain and advantage.

There can be some limited exclusions for people below the poverty line to receive federal assistance to either repay this consumption tax or forego it altogether since so much of their resources go towards the basic necessities of food and shelter.

But that would be about it. No longer would anyone be able to manipulate the arcane and byzantine tax laws of this nation to their advantage. Everyone would clearly know and see what their tax liability is on each and every purchase and receipt printed out at the check-out counter or at the closing of a purchase of a home or automobile.

Imagine seeing the taxes you will pay on the next t-shirt you can buy for your kids from Wal-Mart which will have this emblazoned on it:

'My Boomer Parents Got Everything They Wanted During Their Lifetimes and All We Got Was This Enormous $24 Trillion National Debt to Pay Off For the Rest of Our Natural-Born Days!'

Sunday, August 15, 2010

Is It The ‘Laffer Curve’ or the ‘Laugher Curve’?

We think it is neither.  Which we will explain later.

A friend of ours who is a professor of health care economics at the Terry Sanford School for Public Policy at Duke University (they do more there than just win basketball and lacrosse championships, you know) sent this link to us from the Washington Post.

We are not exactly sure what the first economist from Berkeley is talking about in his answer to Mr. Dylan Matthews in the Post article but we did see the figure '73%'...and thought he might as well have been speaking Klingon. Cause we know that 73% just ain't 'the right answer'!

There is this popular notion that lawmakers in Washington somehow are omniscient enough to 'know' what the 'correct' or 'optimal' tax rate is for everyone else to be paying.

How do they know that?  Did Moses hand it off to them on the flip side of the Ten Commandments etched in stone or something?

Does anyone really believe that any elected official in the US Congress has the capacity to pick out the one magical marginal and optimal tax rate based on any decision made up there in the past decade?

Here's what we think is the 'bend point' for the marginal tax rates:  It is whatever 'point' truly wealthy people decide it is for them...and them alone!

Wealthy people can afford the best tax lawyers and accountants in the universe. If they hate government and don't wanna send any of their hard-earned money to Washington, they usually don't and they can do it in legal ways unimaginable to the average person. And they turn the Laffer Curve into the 'Laugher Curve', at least for them.

Ever wonder why Warren Buffett makes a big deal out of taking 'only' a $100,000 salary every year?

Or wealthy people use the basic ‘Marginal Cost > Marginal Benefit’ argument to pay more taxes when the cost and the headache of tax avoidance is more than the amount they owe so they just stroke a check, send it to Washington and are done with it.

We have run into a few mega-wealthy people, believe it or not, over 22 years in Washington, DC and 2 of them have told me 2 very different things when it comes to how they view new tax bills that will raise their taxes:

1) The first guy, let’s call him ‘Mr. Midas’, told me he sits down with his army of accountants and lawyers (he has 'hundreds' in his employ...seriously!) at the end of each fiscal year to plan for the next. He asks them what it will take to get his 'effective tax rate' down to around 19%. He doesn’t care about ‘marginal’ tax rates at all when it comes to his own personal situation.

‘Effective tax rate’ is what percentage of your earned income you send to Washington at the end of all the calculations. ‘Marginal tax rate’ is the rate you pay on the 'next dollar earned' above a certain threshold set by Congress. Most of the news and cable-jabber focuses on the ‘marginal’ tax rate but the key point for each individual is how much you send total during the year, regardless of what the next rate threshold is.

His rationale? He believes 19% is the 'optimal' level for federal spending as a percent of GDP and he is 'willing' to part with the same percentage of his income to pay for it. No more, no less.

And then he does it....each and every year.

2) The second man, call him ‘Mr. Croesus’ told me: "I am the luckiest SOB on the face of this planet (actually one of the total of 403 "lucky' but hard-working, smart billionaires in the US today). I just pay whatever Washington tells me to pay because I got rich in the best country in the world!"

I told him he was a sheer lunatic and might as well be howling at the moon. I offered to send him a copy of the federal budget, all 2400+ pages of it with 2400 Post-It notes attached to every page to show him where at least 50% of what he sends to Washington each year is wasted.

He gracefully declined and sighed: "I would really rather not know!'

He is truly insane. But he did sleep at a Holiday Inn last night so we guess he really does know what he is doing.

We hate to step on the distinguished Professor Laffer's toes.We also hate to step on the toes of the professor from the University of Klingon or even Martin Feldstein.

But in our humble opinion, there is no single 'bend point' when it comes to generating the optimal amount of tax revenue with tax policy for anyone making over $500k in annual income or have a net worth of, let's say, over $5 million.  To assert that there is some sort of 'magical' marginal tax rate that gleans every available dollar out of people's pockets to be paid in taxes to Washington strikes us as being more than a little bit ridiculous to be honest about it.

The truly wealthy make their own decisions on what they are willing to pay in taxes to Washington. The rest of us have darn little choice but to have it withheld from our paychecks or make quarterly payments and hope for the best.

Like 'hope for' the days when we will have some adults elected to Congress to reduce spending, balance these horrific budgets and then reduce our taxes as they reduce spending every year for the rest of our lives.

That is what it is gonna take, people. Spending is something Congress can control down to the penny each year and we have to elect people who will vote to hold down the rate of growth in federal spending to below 3% annually for the rest of our lives.

Congress can not control the 'optimal' amount of tax money that will be sent to the US Treasury every year any more than Captain Kirk could control the Klingons, Romulans or even the Vulcans.

'It just is not logical.'

Wednesday, August 11, 2010

How to Start Getting Out of this Economic Mess

One thing we do know about economics and the effects on the federal budget: ‘If people ain’t working, they ain’t paying taxes!

Income, corporate, payroll, excise, capital gains…nothing, nada, zippo!’

Any convoluted scheme to raise taxes on this group or another is doomed to abysmal failure if people are not able to find a job and start drawing a paycheck.

Herbert Hoover raised taxes in 1930 (bad idea early in what became the ‘Great’ Depression for a reason) supposedly to close the yawning budget deficits but in 1931, the IRS reported that less than 5% of the projected revenues had been collected.

When there are no jobs, or economic growth, or capital appreciation of assets owned by people in the form of real estate, homes or business, there is just not much that can be taxed to pay for any of the wonderful sounding programs any legislator wants to pass supposedly 'for the good of the entire nation'.

We have long believed that the best program to promote the ‘general welfare’ of the nation as directed in the Constitution is to enact policies that encourages investors to invest and entrepreneurs to risk their own capital and start new companies so they can hire the rest of us to work for them.

Let’s face it: The chances of anyone of us having the brains and skill sets that allows us to become the next uber-wealthy Bill Gates or Warren Buffett is, well…it is precisely 2 in 310 million, the current population of the US. (There are 403 billionaires in the US today and close to 8 million households with family net worth over $1 million in case you are interested)

So contrary to the class warfare you hear coming out of the left side of the political spectrum, sometimes pretty vociferously, we say this:

'Thank God for wealthy people!

We hope and pray we can create more of them going forward in the US of A! They hire the rest of us; they take risks and borrow the money and do all sorts of things most of don’t like or want to do to run a business. They pay for our health care; contribute to our pension and 401k plans and then when they die, they leave $600 billion to charities to further enhance our way of life!

Is this a great nation or what?’

We recently heard from an expert on tax accounting and business planning about his ideas on how to end the uncertainty in the commercial real estate market which has been a millstone around the necks of investors and banks for the past 3 years and could be prolonged unless we do something pretty dramatic about it soon.

Maybe we have too much commercial real estate in this country; it is way over-built in many states. But until the problems are cleaned up in this important job sector and economic engine of our country, we fear we may be in for a dreary state of economic malaise as Japan has experienced for the past 20 years due to their political inability to recognize their losses, clean up the banks’ balance sheets and reinvigorate the economy by dealing with their commercial real estate problems.

Here is what he had to say about it:

"Under President Reagan, we had ACRS (pronounced “acres” and means Accelerated Cost Recovery System) tax depreciation.  In short, it allowed at 15-year recovery period on buildings. Currently, the period is 39 years.

('Depreciation' just means tax deductions that can be taken off of your income tax returns to recognize the wearing down of fixed assets like buildings over time.  The shorter the time frame, the higher the deductions each year which means more money stays in your pocket and does not have to be sent to Washington)

Think about it – will the building down the street have that Starbucks you visit every morning on the way to work housed in it for the next 39 years?!

But wait, there is a second Reagan policy that is needed today. Back then, you could take those depreciation deductions and actually use them on your tax return. Today, there are complicated “passive loss” limits that operate to limit current-year deductions to zero and provide no incentive for people to buy up marginal real estate investments – much less the ones that are not finished when the developer went broke.

In the early 1980s, companies with extra cash set up subsidiaries to buy into all sorts of investments where they could deduct the ACRS tax depreciation. A return to the ACRS policy will give companies sufficient incentive to actually start deploying their cash horde into the economy.

Going back to such Reagan policies, the return on acquired real estate would go up significantly, energize the industry and attract large amounts of capital. Numerically, the cash flow enhancements from such an incentive can be as great as a 38% improvement-- THIRTY-EIGHT PERCENT! The enhancement steps down marginally in subsequent years.

Bottom line: a real estate investor would get a 38% improvement on year-1 cash flow by going back to Reagan policy -- much more powerful than a $600 rebate check for individuals (Bush) or any of the so-called 'stimulus' provided by the Obama administration so far.

I believe such a policy would single-handedly give a significant bump to the real estate industry and help unclog bank balance sheets by providing better liquidity for which banks can deal with distressed real estate loans.  Plus it would finally set a 'floor' under plummeting real estate values and allow banks and investors the certainty to get back to work doing what they do...making loans and managing real estate.

I agree – don’t go back to W. Go back to Reagan.’

What do you think? It has to be better than anything we have heard out of Washington for 3 years out of either political party. Both established parties appear to be either entering the Alzheimer’s stage of political thought processes or the ‘Back to the Future’ economic thought circa 1930 that helped keep our parents and grandparents alive with federal support, to be sure…..but which did not help return the American economic engine to full speed for over a decade!

Anybody want to wait for this economy to fully recover in the ‘Happy Days Are Here Again!’ year of 2020? That is what might happen unless we make some dramatic decisions and changes on both the fiscal and financial side of things.

‘Anyone? Anyone? Bueller? Ferris Bueller?’

courtesy of

Saturday, August 7, 2010

'What If.....?'

We have had many, many people ask us over the past year what it would take to balance these budgets and get this 'long national nightmare' over and done with.

'Give us the bad news, doc, and we'll take it like a man!' they all seem to be saying.  'Just make it fair and equitable and we'll go along with it!' as if it is some sort of cancer diagnosis or something.

How about if we said to you: 'You don't have to even quit smoking cigarettes altogether.  You just have to reduce your intake from 3 packs a day to only 1 pack per day...and remarkably, you will be healed completely in no time flat!'

There is this completely misguided and untrue notion that any time you start talking about 'spending cuts', it is going to be 'draconian' and 'devastating' and any other nasty adjective politicians can come up with.

All they are doing is trying to get you to not vote for their opponent who might reduce funding the incumbent's favorite programs and send him/her home packing after the next election.

Even if the incumbent knows that ever-increasing spending and deficits and debt accumulation will ultimately suffocate our economy and future.

They all know it is true. They want to get elected 'just one more time' before they have to tell you the truth.

Repeat after me: "There are no real absolute cuts in spending in the federal government!  There are only 'reductions from projected 'future' baseline estimates of growth in each program'! 

Congress makes it complicated so the voting public really doesn't know what the truth really is anymore.

Anyway, what would you guess the growth rate would have had to have been since 1970 in order to balance the budget 90% of the time since then? 1% overall annual growth?  3%?

The expected rate of annual inflation going forward is 3% so if we just keep pace with the rate of growth in population, federal spending growth at 3% per year would make eminent sense.

Guess what the overall annual rate of growth in federal spending on average has been for the past 40 years?

Just under 8% per year. 8 bloody %!

Take a look at this Budget Data and download it as an Excel spreadsheet to your computer so you can play with it all day long if you want.  (Think of it as riding on one of the wildest and scariest roller-coasters you have ever seen.  "The Hurler' has nothing on this ride.)

Any person reading this article would be insane not to accept a steady 8% annual increase in income from their employer or business. If you were making a healthy $12,000/year income in 1970 and were 'guaranteed' an annual 8% increase in income for each of the past 40 years, you would be making over $261,000 in income in 2010.

Well over the amounts President Obama considers 'rich' and subject to all kinds of new taxes to pay for the new programs he and the Democratic Congress have passed in the past 18 months.

We thought it was important for you to have this handy chart gleaned from the CBO budget archives (make sure you look at all 13 tabs at the bottom marked 'F-1' thru 'F-13) so you can: 1) inform yourself and 2) pass this information along to your friends, families and colleagues so they can become well-informed as well.

And here is the most astounding news of all:

"If we would just hold overall growth in federal spending to roughly the rate of expected inflation of 3% per year going forward, we would return to fiscal balance in 2013.'

No kidding. 2013. Right after the next presidential election.

It is simply math.  Return to the 'normal' level of federal spending before all the bailouts (which are supposed to make money for the government) circa 2008 and then clamp down on the only thing we can control, federal spending, from defense to homeland security to education to Social Security and Medicare.

20  years ago, before we worked on the House Budget Committee and the 1994 Entitlement Commission and read the entire 2000+ page federal budget at least 3 times over (every single page, mind you!), this might have been a hard thing to assert.

But we can say that beyond a shadow of a doubt that perhaps close to 50% of every page of the federal budget is not 'absolutely necessary' to protect the Republic and provide for the 'common welfare'.

In fact, there are thousands of programs in the federal budget that no Member of Congress or the U.S. Senate has even looked at in years!  They don't even know what they are funding most of the time when they cast a budget or appropriations vote!  Even the leaders of Congress now admit openly they have not read the bills they pass.

It is simply amazing that all we have to do is hold the rate of growth in spending down to the overall reasonable rate of growth of 3% and not 'cut' a blasted thing in actual amounts in order to save our nation's economic future from being poisoned by too much debt and too many interest/debt service payments.

Oh, and almost forgot to mention this: "No New Taxes!'

Is that too much to ask?  Will you agree to this common-sense approach?

courtesy of

Sunday, August 1, 2010

'Tax Cuts/More Spending/More Debt Are The True Opiates of the American People'

If Karl Marx was writing today, we think he might amend his famous comment about religion and replace it with the statement above.

We have been struck time and time again by the fact that the American voting public, on both ends of the political spectrum, actually has been persuaded and 'numbed' to believe that ever-increasing amounts of debt are ‘sustainable’ and ‘A-OK!’

Huge national debt amounts are not. Most definitely, they are not sustainable or 'A-OK!' in any language, country or time period.

Check out and read a great article by Harvard history professor, Nialls Ferguson He plainly points to facts as borne out by history regarding past powers and empires that have been crippled or ruined by excessive debt.

The Athenian Democracy. The Roman Empire. The British Empire. The Soviet Union. It doesn’t really matter who you are or what your perceived ‘superpower’ status is at the time or has been in the past. When you can’t pay your bills on time, balance your budget or borrow any more because your currency has become unstable and ravaged by inflation, you can just hang it up, according to Mr. Ferguson.

We hope (against hope) that he is wrong. But what if he is right?

It can come on like a ‘thief in the night’ as in the Biblical analogy. So why dare we take any chance whatsoever to allow excessive debt to cripple us as a great national power?

If you had had a chance to sit in on perhaps hundreds of congressional hearings on economic policy and the federal budget over the past 30 years in Washington, you would have heard Fed Chairmen from Paul Volcker to Alan Greenspan to Ben Bernanke say the following:

‘Budget deficits on the order of 3% of GDP each year are ‘sustainable’ in the short-run. However, accumulated debt over the long-run can lead to ever-increasing amounts of interest payments that steadily consume more and more of the federal budget which will take away valuable resources from other discretionary programs such as education, environment, energy and transportation programs.

At some point in time, this debt will have to be repaid in full. Public holders of debt, such as foreign sovereign nations like China and Japan, will not look kindly on any effort to renege on payment of interest owed to them, nor any inflation that deteriorates their assets held in US bond or cash-denominated holdings.

From a macroeconomic level, it does not make much difference how the budget deficits are reduced. Just the fact that they are reduced, or there is a solid plan that shows how they can be reduced in the near future, will give comfort to the world financial markets.

However, the preferable solution is to reduce federal spending in the aggregate since raising taxes has a deleterious effect on job creation and economic expansion.’

I ran into Alan Greenspan one time in an elevator on Connecticut Avenue and told him I had listened to dozens of his testimonies to Congress, particularly on the House Budget Committee. He asked: “Did you understand everything I said?” I said, ‘No sir….I have to admit, I did not.’

He smiled slyly and said: ‘Good. Then I did my job right!” and walked off the elevator into the streets of Washington.

We remain steadfast that we have reached a critical turning point in our history. The time for shallow polemics and political posturing has passed, primarily because these deficits and debts are simply too enormous to just ‘grow out of them’ as a recent congressional leader proclaimed recently.

To simply ‘grow out of it’ would mean the US economy would have to grow at a rate of approximately 10% per annum for the next decade. Like until 2020. That is a growth rate that has only been reached a few times in American history such as maybe during the Industrial Revolution of the post-Civil War era and which has only been achieved by rapidly-growing nations such as China in recent years.

In short, that congressional so-called 'leader' is dreaming, or worse, 'delusional'. 10% annual GDP growth rates ain’t ever going to happen to a nation the size of America with a $14 trillion GDP.

One of the more experienced people we know in the world of high finance and federal budgets explained our infatuation with tax cuts this way:

"Even Reagan after passing his tax cuts had to go back and raise them after the cuts had done their stimulative work in 1981-82. There is a lesson in that if Washington decision-makers have any understanding of economics and some imagination.

The tax cuts were designed as a stimulus. But when the stimulus has done its magic, it can become addictive and one more drink is likely to render one unconscious rather than continue to 'stimulate'. Our combined steps of tax cutting when coupled with massive spending expansion is leading us to such a state of fiscal rigor mortis.

I would also emphasize the fact that excessive debt and an increasing interest burden will prove far more restrictive of individual freedom and initiative than taxes at a relatively low rate in the historical perspective of taxes. Exposing ourselves to rampant federal spending and exorbitant debt service payments are far more depressing than returning to the pre-Bush W rates."

None of us wants any higher tax rates or payments to the IRS. But if you propose to extend the Bush tax cuts through 2021, it is incumbent upon you, as a scholar and a gentleman or lady, to come up with $3 trillion in additional spending reductions over the roughly $7 trillion in savings we have already identified over the past year JUST TO GET TO FISCAL BALANCE in 2021!

We have not even started to talk about paring down the roughly $14 trillion in debt we now have so even after all this work and pain, we still have another Mount Everest to climb going forward.

And if perchance you don’t believe the United States can ever succumb to the burdens of excessive debt and unmanageable debt service payments, drink up and say a toast to your new intellectual hero, Professor Karl Marx himself!

He would be proud that Americans have finally proved that we can be the cause of our own destruction by our intoxication with more tax cuts and more spending increases while we pile up the Mount Vesuvius of debt just like all the great empires that have passed on before us.

courtesy of