With Christmas over and the New Year fast approaching, so is the fiscal cliff that will see automatic spending cuts and an across the board tax increase. This nation waits with baited breath to see if Speaker Boehner and President Obama craft a grand deal that is going to save us all from the pain of falling off the cliff. The reality is that the terms of a deal really don't matter, or even if there is a deal at all. This nation's fiscal problems that have resulted from the Obama policies, have only just begun. And any hope of a solution was lost with the election in November.
Tax revenue to the Federal government is to the level it was before the recession. Rick Santelli from CNBC said recently that all the focus of the fiscal cliff debate is on taxes which are 7% of the problem, too much spending is the other 93% of the problem, and it is not being addressed. Federal spending since the end of World War Two has averaged 18-20% of Gross Domestic Product, Barack Obama's policies have increased Federal spending to over 24% of GDP. If you combine the increased spending with the fact that 40% of that money is being borrowed, and 70% of the borrowed money is being lent to the Federal government by the Federal Reserve whose printing machines haven't stopped spitting out ever-decreasing-in-value dollars since Obama took office, you have a cliff that looms much larger than any we are facing now.
In the midst of this financial malaise caused by over-spending, President Obama and the Democrats want to institute a discriminatory tax increase on the very people who can create jobs and economic prosperity. As ridiculous as this sounds, it is even more ridiculous for the President to suggest that raising taxes on the so-called wealthy is not going to deliver a gut shot to an economy that is already stumbling.
This is why my suggestion for the Republican leadership in the House is to illustrate the ridiculous by being ridiculous. They should propose a 100% tax rate on anyone making over 250 thousand dollars a year and let the Democrats defend the Conservative position of why raising taxes on job creators during a failing economy is a bad idea. Because even if the Federal government took every dollar from this group of taxpayers, they would only be able to run the government for a couple of weeks. The real problem is that politicians in Washington will continue to spend more money than is paid in taxes, and those in the private sector who burden the cost will have less and less with which to create future wealth and shore up the economic health of this country. The real solution is to limit the amount the Federal government can spend by requiring it to balance its budget and limiting it to 18% of GDP. But accomplishing this solution is a little like the proverbial fox limiting his visits to the hen house.
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