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Tax And Spend vs. Spend And Spend

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So our economy is in the tank and all the savvy politicos are demanding that we bail out the Wall Street fat cats to the tune of seven hundred billion dollars.  Most people can't even really comprehend that amount of money. To make it more real world, that is the money that our nation spends on importing oil every year. 

Since President Bush took office the national debt has doubled. When President Clinton left office at the end of eight years the federal budget was balanced and there was a surplus of several hundred billion dollars a year which was being paid on the debt. Our nation was on the way to becoming debt free within ten years. This despite a war of liberation in Bosnia aimed (successfully) to end the genocide of a people.

Right now, after eight years of Republican control, the national debt has increased to $9,791,951,982,217.43 That is essentially double what it was when President Bush took office and would be $32,125.92 owed by every man, woman and child in the country. Every year our government takes in far less money in taxes than it spends. Despite this the Republicans keep making promises to cut taxes which will only further decrease our national income and thereby increase the deficit and the debt. I know it sounds good when they do it and it gets them elected but, when you stop to think about it, there is a certain insanity to it.

Ronald Reagan first popularized the idea of spending more than we have (deficit spending) as a good thing. It all sounded so good on paper. We could have more than our means would allow and never have to repay the money we were borrowing because the market would take care of us all. Like most things that look good on paper, that didn't fly so well in the real world.

In the real world it is pretty easy for anyone to understand. You don't need a degree in economics to understand what happens when you spend more than you make. Imagine living your life that way. You spend a couple years living high on the hog, you run up $100,000.00 in credit card debt, you buy a $500,000.00 house on a 50-year, interest only loan and then take out a second mortgage for $100,000.00 to put in an in-ground swimming pool and tennis court. Now you are almost a million dollars in debt and before you know it you are taking out small loans to cover your shortfall every month.

This is exactly what we have done as a nation and today we are on the verge of adding another 700 billion to that total debt which will bring the total to $10,491,951,982,217.43. That is 10.5 TRILLION dollars. Or, $34,422.52 per citizen. I know, I know, what is a couple more thousand per citizen, right? That would make the bill for the average family of four to be $137,690.08. Then if you factor in the homeless and those living at or below the poverty level, who will never be able to repay their share of the debt, you probably add on another 25% for a total current per family debt of $172,112.60. That is YOUR debt my friend, added onto your personal debt and eventually that debt too will have to be paid.

So where does that money come from? Do you have it in your budget? Maybe, if you throw in your retirement. Oh wait, that is worthless now. Or your kids' college money (if that still exists), or if you take out a second 30-year mortgage on the full equity you have in your house (if you haven't been foreclosed on yet). Yeah, I guess if we all chip in everything we have, we will get through this just fine. It will be just like starting over in life, won't it? There is almost a sort of nostalgic romance in that idea.

There is a different way to live, though. Some people don't spend more money than they earn. They even manage to save money and invest that savings into our economy. When they have to go into debt for a major purchase they do so carefully, knowing that they can repay that debt and still have the lifestyle that they want. Maybe they don't have the biggest house or the flashiest car in town but they are secure. If they need extra money they work overtime or get a second job.

That is the perspective from which I see the two major political parties right now. The Republicans use the term "tax and spend" to describe the Democrats, but isn't that just good financial policy? If the people of the United States want or need more services then they have to realize that these things have to be paid for and the only way to do it is to raise the money through increased taxes or by cutting other programs. If on the other hand we don't want increased taxes then we have to learn to live without the things that we don't need as a nation and spend our money on the things that we do need. That policy leaves more money in the hands of individual consumers who will spend it and grow the economy.

The Republicans on the other hand seem to have a policy of "spend and spend". When they reduce taxes and increase spending there is no other possible outcome than to drive us all into debt. The extra money that consumers have because of those tax reductions or cash handouts is not "real" money because it is money that should be being spent elsewhere — just like the person above who is spending money on themselves each week instead of paying on their debt. Sure it is nice because you make yourself believe that you have all this extra money but really it doesn't exist because it is money that belongs on your house or car or credit card debt. So eventually it all has to crash.

Now we are at the point of that crash. It was inevitable and yet people act as though it is a huge surprise. The Republicans, as usual, have learned nothing. They think that they can borrow their way out of this one, too. But whatever money they borrow will not be real money because it should be spent on our debts. I am sure that they will be talking up more tax cuts, too, as a way to stimulate the economy and sure, that will increase spending in the short term but in the long term it will just keep our artificial economy afloat a little longer while our debts continue to accumulate in a shoe box on the desk.

It is time that we get our heads out of this dream world and start to live like responsible people. The Republican fantasy of spend and spend with no consequence is over. Now it is time for the real Americans, people like you and me, who know the value of the money we earn because we work hard for it, to stand up and say enough is enough. Time for a change. Time to elect people who understand real fiscal responsibility because they practice it in their lives and in running the country. Time to face the fact that our bills have come due and we are going to have to shoulder the responsibility for them.

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About Mike Johnston

  • Arch Conservative

    “Right now, after eight years of Republican control”

    It’s actually six years there Cochise. The Dems have had control of Congress since 2006.

    I feel sorry for anyone that truly believes that one party is that much more equipped to bring about economic sanity. It’s quite clear that the only way for either party to gain power (which when push comes to shove is all they really care about) is to buy it with government spending.

    Democrat/Republican…there’s no difference. As long as one’s own side can blame the other while making themself look good who really cares if anything is being done that might somehow better the lives of American citizens.

    The author suggests that the Democrats with their tax and spend philosophy somehow take into consideration what the American people actually deem necessary or not as far as government programs go. If I had been drinking something when I read that I probably would have spit it out.

    The Democratic party is interested in curbing spending on ANY government program. Not now. Not ever. Their only answer to every problem is more spending on more governemnt social and economic tinkering. That is their philosophy and they never waiver from it. Thatmeans that they will always be for higher taxes. Over the years they have become very clever in couching this practice in more pallatable or should I say much less obvious methods. The average American doesn’t even know from which direction and how often big brother’s hand is reaching into their pocket and that’s the way Democrats like it.

    “Now it is time for the real Americans, people like you and me, who know the value of the money we earn because we work hard for it, to stand up and say enough is enough. Time for a change. Time to elect people who understand real fiscal responsibility because they practice it in their lives and in running the country. ”

    Did the author have a certain someone or someones in mind when he wrote this?

  • http://www.EurocriticsMagazine.com Christopher Rose

    You know, for a moment there, when you were addressing the issue of how both parties are failing, you had my interest. Then you wandered off into one of your little rants and I just wandered off…

  • Arch Conservative

    My little rant was not meant to stick up for one of the parties Christopher but rather to point out that the author was seemingly sticking up for one of the parties.

    If it would make you feel all warm and fuzzy inside about me I could write a little bit about how happy I will be to see Bush go and how the GOP through their bumbling inept ways have grossly mismanaged Iraq and wasted billions of dollars among other bonheaded things thay have done in the last 8 years has forced me to leave their party.

  • bliffle

    One might wonder why the crisis is so big and so sudden. Could this not have been seen earlier and steps taken to avert the collapse before it became so huge?

    Or was it, in fact, seen, and the knowledge suppressed? Did the administration KNOW that a disaster was imminent and actively suppress the fact to avoid embarrassment and pass the hot potato on to the next administration?

    One might well imagine the admin, given their record, making the decision to postpone the news of this problem in order to get out of town before the spit hit the fan.

    If so, did the attempted postponement make them disloyal Americans? If they exacerbated the problem by hiding it and delaying solution, does that make them traitors?

    One might further suppose that the coverup could not be maintained, and, realizing that the lid was about to blow off, that Machiavellian plotters would ask “how can we turn this to our advantage?”.

    Whereupon, one might suppose, they devised a scheme for a final looting of the US treasury through Crisis Manipulation and the solution being a trillion dollar gift to Wall Street, thus assuring everyone of lucrative employment in the Wall Street hereafter.

    So, one might ask, if they foresaw the crisis, suppressed the knowledge, then manipulated the crisis to their own profit, does that make them prosecutable? Is that complicity concomitant to deliberately provoking the crisis?

    If that were true, would that make them criminals and traitors to the USA?

    Just asking.

  • http://www.EurocriticsMagazine.com Christopher Rose

    Arch, instead of pointing out some of the current administration’s many faults, why don’t you post something about the changes politics needs to undergo in order to make it more relevant?

  • http://handyfilm.blogspot.com handyguy

    I’m not an economist, but what I’ve read suggests that people knew there was a problem but kept hoping the market would correct itself.

    The ‘suddenness’ relates to Wall St’s herd mentality. The worthless mortgages infected almost every big bank’s books, to the point where none of them trust each other enough to extend credit to each other or to businesses or to individuals.

    The whole economy depends on that trust and that credit. When it becomes unworkable on a massive scale, the consequences could potentially multiply very fast, and by then the process could be hard to reverse.

    Thus the scared looks in Paulson’s and Bernanke’s eyes.

  • jamminsue

    Hnadguy, you said:
    The ‘suddenness’ relates to Wall St’s herd mentality. The worthless mortgages infected almost every big bank’s books, to the point where none of them trust each other enough to extend credit to each other or to businesses or to individuals.

    The whole economy depends on that trust and that credit. When it becomes unworkable on a massive scale, the consequences could potentially multiply very fast, and by then the process could be hard to reverse.”

    If so, wouldn’t a message of “suck it up” be appropriate?

  • Arch Conservative

    One might this……One might that………

    Yes Bliffle and if one did enough of the right types or exercises and stretches one might ultimately be able to fellate oneself in due time……

    Not that I would give passing grades to the current administration or their party with regard to anything that they have endeavored to take up during the last eight years but your entire comment was nothing but a blatant attempt to get in one last jab at placing all of the blame for another major national problem soley on the current administration.

    We have barely over a month left to go. Then you can switch to either espousing all kinds of conspiracy theories about “McSame,” “McBush,” or whatever other cute little nickname you have for him or praising your messiah, “Eight Ball Barry” and everything he does.

    Arch, instead of pointing out some of the current administration’s many faults, why don’t you post something about the changes politics needs to undergo in order to make it more relevant?

    Well a good starting point would be if we could somehow enact term limits for Senators and Conpressmen/women. Two terms and you’re out. They way it works now is that our elected officials in DC resemble herpes more than altruistic public servants. Most of the time you don’t even know they’re there but every two to four years ago they come back with a vengance, getting all up in your grill and reminding you of how unpleasant and they can make your life.

    Both parties have sold out the American people for a few pieces of gold. As a conservative who belives in entrepeneurship, the free market and personal effort and reward, I fully realize the dangers of the unrestrained, rampant profit motive that never pauses, not even for a millisecond to consider the human element of their business practices.

    The second thing we need to do as an entire society is do away with the entitlement mentality. The notion of individual effort, accountability and obligation is on it’s last leg and it seems like both parties are content to keep kicking that leg until it snaps in half.

    Honestly…..we have infantilized the generation that is entering young adulthood right now to their point of unbelievable absurdity. We can’t keep score in t-ball because it hurts the other teams feelings to lose? This is going to be the biggest generation of whiners, cry babies and other assorted pussies ever to come down the pike. If it were up to me, use of the term meterosexual would be punishable by death.

    It may seem that these last two sentiments are at odds but that is the crux of the probelm I see facing our nation.

    How do we combat the corporate greed that routinely runs roughshod over people’s lives without becoming a sociliast state that infatilizes it’s citizens by establishing an enitlement/dependency culture?

    Do we want to be screwed over and told to like it by big business or big government?

    Is there some happy medium that is in reality acheivable?

    The best solution I have come up with Christopher is to build a time machine and go back to the late 1940’s/early 1950’s. We had just beat back facism and people were happy.

    Short of that I don’t have any practical answers.

  • jamminsue

    The inevitablity of the financial meltdown is truly obvious to anyone that can balance a checkbook. That anyone considers this a “sudden crisis” is silly. However, it is strange that it is the Bush administration recognizing the problem. I thought W was doing the ostrich thing rather well for the last few years.

    Based on the Republican Party’s mythologic claim to fiscal responsibility, they could not be responsible for this problem, could they?

    The borrowing the $600+ Billion for the Iraq war does not count, somehow. Lowering taxes so the basic government costs were not covered, means the government is borrowing just to stay afloat. This seems to suggest the government was probably competing with domestic borrowing, so of course domestic borrowing had to get creative.

    So, like he elephant in the living room, the government needs to become a responsible spender before the credit problem can be fixed. To me it seems borrowing another 700+ Bilion is like putting gasoline on a wood fire.

  • Arch Conservative

    So, like he elephant in the living room, the government needs to become a responsible spender before the credit problem can be fixed.

    That’s right jam and you won’t get an argument from me that the recent GOP leadership and fiscal sanity aren’t mutually exclusive concepts.

    However I don’t see how the Dems can claim to be any better. Thier nominee has promised universal healthcare and hundreds of billions of dollars in spending and he’s miraculously going to deliver on all of these promises by raising taxes on only the very rich.

  • Jonathan Scanlan

    Well, ya know Arch, during the great depression the surplus unemployment created a big pool of volunteers for various public projects, and doctors tended to charge people on the basis of whether they could pay (no money, no fee)….

    Maybe Obama will achieve the desired outcomes as a result of this crisis :P

    Only drawback is you’ll have to beat us communists off with a stick again.

  • http://ruvysroost.blogspot.com Ruvy

    Time for a change. Time to elect people who understand real fiscal responsibility because they practice it in their lives and in running the country. Time to face the fact that our bills have come due and we are going to have to shoulder the responsibility for them.

    As right as you are, Mike, you are too late with your advice. Your advice was my advice eight years ago when I voted for Al Gore over that stupid chimp and Saudi ass-kisser George Bush. But the stupid chimp and Saudi ass-kisser George Bush won and Gore lost.

    Now I leave you with the words of the prophetess Hulda, found twice in the Hebrew Bible, once in Kings II and once in the Chronicles.

    “…Thus said Hashem: Behold, I am bringing evil upon this place and its inhabitants…because they have forsaken Me and burned offerings to the gods of others. My wrath has been incited against this place and it will not be extinguished…”

    Your nation has forsaken basic prudence and fiscal responsibility and you will suffer the consequences. You have my sincere sympathy.

  • http://blogcritics.org/writer/dan_miller Daniel Miller

    Ruvy,

    Well, perhaps St. Al the Gored is correct this time. How will Israel fare with all this global warming stuff? Perhaps up there in the mountains, you won’t have a problem, even if the seas rise a few hundred meters. Neither, for that matter, will I, up at just about 1,000 meters AMSL. On the other hand, you may find it a bit crowded, what with all the sea level denizens seeking refuge. Has that been a big problem thus far?

    Merely in the interest of acknowledging where I am coming from, I think St. Al is one of the bigger frauds in recent history. But then, that’s probably just me. I can probably find some great carbon credits, if you are interested in a rock solid headed investment.

    By the way — any recent changes on your views of McCain/Palin vs. Obama/Biden?

    Dan(Miller)

  • bliffle

    A cynic might suppose that the Bush administration thinks that Obama will win the election and that they want to pre-commit as much money as possible so that Obama has little volition upon entering office. Perhaps they will invade Iran, too, so that course is also pre-determined.

    A cynic might think those things.

  • http://ruvysroost.blogspot.com Ruvy

    Dan,

    I never wasted my time on baloney like “the environment”. I always kept my eye on the bottom line of the balance sheet, and one of the things the Clinton Gore administration attempted to do was to provided a balanced budget. They even succeeded once.

    St. Al had to concentrate on “the environment” and similar nonsense because he had to make money somehow and fight the boredom that losing power inevitably brings. Gore was retired against his will. Think about that.

    In the meantime, America’s government has abandoned all shreds of fiscal responsibility. America’s collapse is only a matter of time.

    I doubt that any American leader can avert the severe decree facing America or Israel.

  • Cindy D

    Obama and McCain Tax Proposals

    According to a new analysis by the Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution, Democrat Barack Obama and Republican John McCain are both proposing tax plans that would result in cuts for most American families. Obama’s plan gives the biggest cuts to those who make the least, while McCain would give the largest cuts to the very wealthy.

    Could someone who is not making at least $227,000- $603,000 a year please explain to me how Obama is going to raise your taxes?

    Please someone?

  • http://www.associatedcontent.com/user/39420/joanne_huspek.html Joanne Huspek

    I’m of the opinion that both parties knew what was going on, and a long time ago too. Both are guilty of padding their own pockets and leaving the rest of us to suffer. Case in point: Michigan. A heavily Democratic state, with waste and abuse and a reluctance to cut spending. Term limits are here, and guess what? You are in the legislature six years and you get a pension and health benefits for the rest of your life. “Public” service is a misnomer. It’s the public lottery, and like in casinos where the house is the only winner, Main Street ends up being the loser.

  • Richard Urban Jr.

    Uhh Mike, DEMS had control of Congress and the budget for Bush’s last 6 years and we had TWO wars and were recovering from the WORST attack on American Soil EVER… Obama’s first 2 years he had TOTAL DEM control, he gave bail outs to UNIONS while seizing rights and funds from LEGAL stockholders (and look, Chrysler just went to Italy), Increased Taxes, Increased Spending more than ALL his predecessors COMBINED (deficit nearly $18 Trillion now…DOUBLE what it was JUST 5 years ago). He has broken EVERY campaign promise he made, LIED straight to the American Public at least 26 times on camera (‘keep your plan, PERIOD’). Unemployment and poverty levels have gone up, you and I are FORCED to use failed ObamaCare, and he talks about ‘Income Inequality’ while taking yet ANOTHER multi-million $ vacation at our expense….so how you liking that Hype and loose Change from your boy Obama?