If you are paying attention - you need to be outraged by this election. I am sick sick sick of hearing politicians running on platforms of tax cuts. You know why? It's a gimmick that works because most Americans are either 1) too dumb to figure it out or 2) too selfish to care about the consequences of continuing our tax cuts. I am all for getting government spending in check and cutting out the "pork" - however ignore all of that because it is too small to matter. We are on a path where by 2030 ALL taxes collected at our current rate won't cover mandatory (non-discretionary) spending (Some estimates put it closer to 2044 before this occurs - but does it really matter? It's bleak!).
This means if we want to keep Social Security, Medicare and Medicaid dolling out the same benefits as we are today, we won't have any money left over for ANYTHING ELSE in 2044. We won't have money left over from taxes collected for a military, education, interest on our mounting debts, we won't have money for ridiculous government bail-outs, NASA, transportation & infrastructure (want a bridge repaired in the next 50 years? Even if it goes to nowhere?), unemployment benefits, congressional salaries and perks, etc. In my opinion we need to step up and say "we F-ed up our calculations" and start cutting social security benefits - but imagine running on a platform of taking money away from retired seniors!
Our government is running a company that brings in 2.4 Trillion dollars per year (that's $2,400,000,000,000.00) and they can't figure out how to balance the budget. Forget about AIG - Someone ought to bail out the United States! And I am paying into social security (and P&G is matching it) and all of that money is being spent by the government instead of being put aside for my retirement. You may have heard that our national debt is now over 9 trillion dollars, but I just read that it's really only 5 trillion as debt held by the public. The remaining 4 trillion wasn't borrowed as debt, it was taken from previously collected social security payments with a 4 trillion dollar IOU from the government!
So back to the campaign. When either politician says "I want to cut taxes" you should be booing. Why? Because we are just literally robbing money from future generations and it's a joke that American voters are not informed enough to impact this with their votes. All a candidate has to do is promise tax cuts and people flock to them with their votes. Imagine if the democrats (traditional tax raisers) had Obama go out there saying he'd raise taxes because it's the responsible thing to do as a country? The very next day McCain would slam him for being non-patriotic and a tax and spend liberal - and then win the election in a landslide. Well - the problem has been that the conservatives have been tax and spend liberals just without the taxes! (OK maybe not the liberal part too - but you get the idea - Tax and Spend panderers to the Wealthy!).
So I'll end my rant with the recent analysis of McCain and Obamas tax plans. Remember how McCain keeps saying Obama wants to raise taxes - an effort to scare people into voting for McCain. Well that is true but only for the top 1% of wealthy income earners. If you make under $100,000 per year you really need to ask yourself why you'd vote for a Republican because they have continually cut taxes predominantly for the wealthy. In that case I can only imagine that the middle class voting republican are doing so for more of the social issues than their own personal economic situation. I don't have a problem with the Republicans making the rich richer - especially since they keep convincing 50.5% of the country to agree with them. Americans get what they vote for in my opinion - here's the recent data of how the rich are getting richer.
Source: Congressional Budget Office, Historical Effective Federal Tax Rates: 1979 to 2004, Table 1C, December 2006.
Source: Economic Policy Institute, State of Working America 2006-07, Table 5.1, citing Wolff (2006).
What's funny is that this data doesn't outrage me either. In fact I may shock some people by stating that I think this trend would be true regardless of what the government was doing - only maybe to a lesser extent if we weren't continually putting tax plans in place to favor the rich. But then again I am not sure we should be taxing the rich at a higher rate to begin with but the flat tax will be another blog all together.
Back to the candidate's tax plans. Read 'em and weep.
To balance my argument - I think Obama's plan of raising taxes for the wealthy while cutting taxes for most americans (90-95%) is an interesting spin on a Democratic position because they could get the majority to decide to Tax and spend with the rich footing the bill! And the rich are too small a voting pool to stop it - so the rich they smartly hold onto social issues with broader appeal (or continue to lie and have people think Obama is raising taxes on everyone) in order to gain favor of their economic agendas. Obama's plan - however - in my opinion is still irresponsible and continues to push the burden back to later generations.
That being said - given the fact that in my opinion the current econimic crisis fundamentally is due to the fact that the middle class can no longer spend enough to grow our GDP. And we have probably tried for enough years to see if any money trickle's down from the top. I'd rather give a better tax break to the middle class and have the rich get richer selling them goods through their businesses than through taxes. In my opinion the rich know how to make money, so if you empower the middle class with a little more money to make them feel better off - they will then spend it at the rich people's businesses (if you think this is some generalization, just know that 80% of the wealthiest americans have some amount of busines ownership contributing to their income. Find me someone in the Forbes 400 that isn't a business owner (though a few in there inherited the money from a business owner - see the Walton family).
It is funny to think that when politicians talk about wasteful earmarks and spending, the fact that they can say that one party is asking for a BILLION dollars in pork spending - and it sounds terrible (he said BILLION), but it's really invisible (most people estimate all pork barrel spending at ~1% of the budget) compared to the 9 Trillion dollar debt.
What's the point of all this? I guess I just want to raise awareness that in order to be elected, politicians use gimmicks to get your vote that are really only hurting the country. These gimmicks could be lowering taxes, gimmicky vice-presidents (couldn't resist), or blocking free trade (but that's a whole other blog too!).
Isn't this just a symptom of the broader issue Americans have of not being able to save money? I mean really - the fact that people too often focus on short term gratification versus long term well-being is why these gimmicks work, and why personal spending rates outpace personal incomes.
You just want to yell STOP THE MADNESS...