Zombie Apocalypse

Today's post is written by guest blogger John Galt.  It's a humorous warning about a serious concern, mindless taxation and spending in Washington.

The zombie apocalypse has arrived.  In movies and on TV, zombies shuffle along in pursuit of mindless gratification at the cost of others.  There is no plan or coordination or end.  They feed off the flesh of others without remorse.  I’d say the same lack of remorse is true in the people that feed off the work of others.  There is no appreciation or compensation.  There is only the insatiable desire for more and more.  They are merely consumers providing no service or benefit. 

The zombie apocalypse is playing out right now in Washington, DC.  Our government demands more and more from the American workers in the form of fees and taxes.  Have you ever looked at your pay check and wondered who gets so much of it before you do?  Do you know where your tax dollars go?  What about sales tax, social security tax, user fees, road and bridges fees, hospital tax, metro tax, and taxes on utilities, alcohol, and gas?  Almost everything you do has a fee or tax taken off the top.  Where does that go and how does it really benefit you?   Would you like to have a say where your money goes? 

Well, you are feeding the zombies.  You have no control over how much you give and who gets it.  The more you work, the more you earn, the more that is taken.  You can try to outsmart the zombies, but at some point, they will get you unless you act.  For as long as you can, keep your head and alert the others.  Use your mind to prioritize what is important to you and where your money should go.  Tell everyone to send a letter to their representatives in Congress and the Senate.  Tell the President that enough is enough and you want a real, fiscally-responsible plan.  Use your mind while you still have one to find a cure for the zombie apocalypse. 

Just like in the movies, they will feed until there is no more to consume.  Lying down and covering your head won’t make them go away.  The people that take action and push back are the survivors.  Well, I challenge you to be a survivor.  Ask questions and make our elected officials accountable...before it is too late. 

Kicking the Can

A couple of hours into 2013, the Senate passed the American Taxpayer Relief Act of 2012 by a vote of 89 - 8. This is the result of compromises between the Senate and the White House that is supposed to avert the looming financial crisis known as the “fiscal cliff”.   After much debate, the House also approved the bill. CNBC’s headline reads With Final Vote, Congress Resolves 'Fiscal Cliff'. Does this legislation really resolve the crisis?

The bill extends tax credits and tax rates for all but those in the highest tax bracket.  It also extends certain tax credits for businesses. The act makes changes to the Alternative Minimum Tax to prevent nearly 30 million middle- and upper-middle income taxpayers from being hit with higher tax bills.

However, the measure restores the Social Security payroll tax back to 6.2%.  It raises the income tax rate for individuals earning more than $400,000 and couples earning more than $450,000 from 35% to 39.6% and the tax rates on capital gains and dividends from 15% to 20%.  It also extends the limits on itemized deductions and the phase-out of the personal exemption for individuals making more than $250,000 and couples earning more than $300,000.  So let’s put a face on this and picture two married doctors with a family of kids headed to college giving Uncle Sam $180,000 of their $450,000 income.  Then subtract living expenses, utilities, mortgage, college tuitions, car payments, homeowner insurance, health insurance, malpractice insurance, etc. out of the remaining $270,000.  Makes all those years of medical school, student loans and sleepless days and nights really appealing right now, right?

According to Foxnews.com, the legislation will raise approximately $620 billion in tax revenue over 10 years.  Yet, the act contains $330 billion in spending, such as $30 billion to extend unemployment benefits for the long-term unemployed, approximately 2 million people, for one year.  Because of the spending provisions in the measure, the net spending cuts amount to $15 billion over 10 years.

The budget deficit has exceeded $1 trillion dollars for each of the last four years, yet Congress and the President managed to cut only $15 billion over 10 years?  Seems to me that President Obama and congressional leaders aren’t serious about reining in the debt, or incredibly bad at math. Either way, the new law isn’t much of a resolution. Nor is it much of a relief to the taxpayer.  An analysis by the Tax Policy Center indicates that 77% of households that actually pay income tax will see a tax increase.   Recall that only 54% of Americans contribute to the tax revenue.

So what did Congress and the President do?  They didn’t resolve the fiscal cliff, they merely postponed it.  Instead of the mandatory, across-the-board reductions in federal spending occurring on January 2, 2013, as required by the Budget Control Act of 2011, the new law merely changed the date these reductions occur to March 1^st. In addition, Congress and the President still must address the debt ceiling issue I addressed in a previous post.  Because Congress has not passed a federal budget in over three years, it has funded government operations through a series of continuing resolutions. The third issue the next session of Congress must address is the current continuing resolution is set to expire March 27^th. 

With these three financial issues ahead of us, sequestration, debt ceiling, and expiration of the continuing resolution, Congress, along with President Obama,  must make some hard decisions, both long term and short term, to get this country back on sound financial footing.  Unfortunately, I don’t see that happening.  As I wrote in a previous post, Senator Reid has been an obstacle to getting budgets passed. During a December 30^th appearance on “Meet the Press”, President Obama said his second priority was to “stabilize the economy.”

 As I said, I don’t think they are serious about reducing the debt or reforming entitlement spending.  But those things must happen or we risk a weaker economy, higher taxes, higher inflation, and higher interest rates.  Erskine Bowles and Alan Simpson, co-chairs of President Obama’s bipartisan National Commission on Fiscal Responsibility and Reform, warned that “the reckoning will be sure and the devastation severe” should the United States fail to “put its fiscal house in order.”

Tell our leaders it’s time for serious solutions.  They keep demanding more and more money from taxpayers without demonstrating fiscal responsibility.  We cannot allow them to continue to kick the can down the street while tossing our money into the wind.  Contact your Senator (www.senate.gov), your Congressman (www.house.gov) and call (202-456-1111) or email the President (http://www.whitehouse.gov/contact/submit-questions-and-comments) and let them know you want fiscally responsible solutions.

Eat the Rich

Many in the media act as if the rich are evil tyrants who prevent others from prospering or who gained their riches by stealing from the poor.  And many think that the rich should be penalized by paying higher tax rates than the rest of us.  But I wonder, if the rich prospered through hard work instead of ill-gotten gains, why should they pay more than the rest of us.

Recently, Senator Harry Reid said, “we will not consign the middle class to higher tax bills while millionaires and billionaires avoid all the pain.”  But in fact, the President’s proposal is to raise tax rates on individuals making more than $200,000 per year to 36% or families making more than $250,000 per year to 39.6%.  What’s more, the President also wants to raise taxes on dividend income for these two groups.

I learned that some types of small businesses such as S corporations, limited-liability companies, partnerships, and sole proprietorships do not pay corporate income tax.  The taxes on these entities are paid by the shareholders in the form of personal income taxes.  Therefore, a change in the top two personal income tax rates also affects small businesses.  I’ve mentioned in an earlier post that small businesses are the backbone of our economy. 

While $200,000 may seem rich to someone making $30,000 a year, it’s not exactly Bill Gates or Warren Buffett kind of riches. But if these tax increases occur, how much more tax revenue is collected and what is the consequence?

CNBC reports that the raising the tax rates would increase tax revenue by $40 – 45 billion the first year.  That’s a lot of money, but without significant spending cuts, $40 billion doesn’t make a dent in the 2012 budget deficit, estimated by the White House to be $1.33 trillion.  So what are the consequences of raising tax revenue this way?

The House Ways and Means Committee commissioned an independent study by the accounting firm Ernst & Young to look at the long-term effects of changing tax rates.  The Ernst & Young report finds that higher tax rates will result in a smaller economy, fewer jobs, less investment, and lower wages.  More specifically, business output could fall by almost $200 billion; wages could fall by 1.8%, and a resulting loss of roughly 710,000 jobs.

In his fiscal cliff plan, President Obama has proposed another $200 billion in stimulus spending, including extending unemployment insurance.  Raising tax rates that jeopardize the economy and increase the risk of job cuts to raise $40 billion and then spend an additional $200 billion to stimulate the economy doesn’t make sense.

The country is facing a fiscal cliff that will adversely impact nearly every American if Congress doesn’t reach a deal to trim the deficit. As provisions of Obamacare take effect in 2013, employer costs will increase 6.5%, further impacting job growth opportunities.  Do we really want our leaders to further jeopardize the economy in order to tax the rich?

Hearing “tax the rich” being repeated over and over on the news reminds me of the Aerosmith song, “Eat the Rich”.   But once their bones are picked clean, who will provide employment or business opportunities for the country?

Its time our leaders make sensible economic decisions.  Contact your Senator (www.senate.gov) or Congressman (www.house.gov) and tell them what you think.  Better yet, call (202-456-1111) or email (http://www.whitehouse.gov/contact/submit-questions-and-comments) the President and let him know you want solutions, not games. 

To Whom Do You Owe Your Life?

Today's post is another one penned by guest blogger John Galt. I hope this one makes you think and appreciate.

To whom do you owe your life?  I’m not talking about the couple that shared a private moment; I’m taking about the people that made the world that you live in.  Some escaped oppression to seek promise in the New World.  Everyone has a family story of how they got here.  What about the people that risked everything to start again and again when crops or businesses failed.  The inventors and the dreamers.  And remember the soldiers that marched off to war; mere boys to start the march and the men that came home.  And sadly, those that didn’t.  The world you enjoy was shaped by all the little pieces contributed by everyone that came before you.  In a time where so many live in the world of “I”, our world is so much bigger than just you.

When you find yourself frustrated when an old man or woman walks too slow, or repeats a story again and again, find patience in your heart and think about how they may have influenced this world you call home.  My pastor’s story in the Christmas Eve service was about the couple, Joseph and Mary, who were turned away from the inn the night Jesus was born.  Later, he mentioned Hall of Famer Hank Aaron’s story about a full hotel and how he was told that there were no rooms available until someone recognized him.  The clerk told Hank he would have given him a room initially if he had known that he was somebody.  Hank replied that everyone is somebody.  Everyone you meet is somebody.  Collectively, all of those somebodies have made the world that molds your life. 

My dad didn’t look like someone extraordinary, but he was.  Mom thought he hung the moon and since I look like him, I’ll admit he was a very good looking man.  He never put on airs.  He wasn’t one to tell stories about himself or boast of his accomplishments.  Actually, he hardly ever spoke of himself.  But, from very humble beginnings, he put himself through college, earned a Bronze Star in Korea while fighting on the 38^th parallel, educated farmers for 34 years on ways to improve their crops as a soil conservationist, and raised three kids to respect America, honor our word and strive to make this world a better place.

 

He’d give you the shirt off his back, pull you out of a ditch or give you his last dollar.  My dad really was a somebody.  And not just to me and my family.  He saved soldiers’ lives in Korea when he carried the wounded to safety.  As an expert marksman, he taught other soldiers how to shoot.  He saved farmers’ farms by making them productive.  More than once, he pulled a car out of the ditch on a snowy night.   The list is just too long, but you get the idea.  He made a difference in so many lives.  You wouldn’t know it to meet him and he wouldn’t take credit for any of it.  It was just the right thing to do.

My dad represents everything good about this country.  He quietly marched through his life, silently performing good deeds along his journey.  I see him every time I see the US flag fly.  He wasn’t just somebody, he was a hero; he made this world a better place.  So, if you find yourself in an “all about me” moment, ask yourself if your actions will make you anyone’s hero?  And before you push your way past the old man struggling with his burden, remember that he is somebody.  Maybe just the somebody that made the life you enjoy possible.

Debt Limit

The Secretary of the Treasury sent a letter to Congress the day after Christmas stating that the US government would reach its debt ceiling limit of $16.394 trillion on December 31^st.  If the debt limit is reached, the Treasury Department must, according to the letter, take extraordinary measures to avoid exceeding the limit.  An appendix to the letter outlines the four measures to be taken. 

So, what does that all mean?  If the debt limit is increased or Congress reduces the amount of debt held by the US Government before the measures expire (approximately two months according to the letter), nothing happens.  If neither of these happens and the measures expire, then the federal government would either have to drastically reduce spending or fail to pay interest and/or principle on US Treasury securities.  One choice creates severe economic impacts in the US, the other impacts world financial markets; neither are attractive consequences.

So why doesn’t Congress simply raise the debt ceiling or get rid of it altogether so this issue doesn’t reoccur?  The Second Liberty Bond Act of 1917 established a limit on the amount of debt held by the US Government.  In the past, it’s been fairly routine for Congress to increase the debt limit.  It is a misconception to think the debt ceiling is an arbitrary limit without consequences. 

The letter from the Treasury Secretary states that the US public debt is increasing by $100 billion per month, on average and the Congressional Budget Office predicts that, if the government continues to maintain current spending policies,  within 20 years the debt could approach 200% of the nation’s gross domestic product (GDP) (http://cbo.gov/sites/default/files/cbofiles/attachments/06-05-Long-Term_Budget_Outlook_2.pdf). Currently the debt is approaching 100% of the GDP and at least some in Congress have attempted to reign in the government’s spending before the US has a financial meltdown similar to what occurred in Greece this summer.  Simply, if the government spends as much or more than the country makes, every year brings a greater risk of financial collapse.  This collapse will have real consequences in the lives of every American.

Simply extending the credit limit, or debt ceiling, isn’t the solution.  When an individual applies for a loan, the bank asks what you plan to do with the money and assesses your financial stability.  They determine if lending you money is a financial risk.  If your existing assets and liabilities are too great, you are a poor candidate to meet your obligation to pay them back. The same is true for businesses applying for a loan.  The lender will want to see a business plan, detailing financial plans plus existing assets and liabilities.  Without a viable business plan or if the liabilities are too great, the bank won’t extend the credit.

Some might say the bank is being unfair in denying a loan to any and all, but it’s simply good business practice on their part.  If I’ve already shown a penchant for running up debt, what assures them I’ll meet by obligations and repay my debt to them?

If the US Government were a business, I certainly would not loan it money.  It has no approved budget and no plan in place to reign in long term spending or address long term obligations such as Social Security or Medicare.  Frankly, due to a lack of leadership, it looks like a mismanaged company headed for bankruptcy.  Is that the business model we want for our country?  This is your tax dollars and federal fees they are mismanaging.  When programs that matter to you are cut because the government has decided there aren’t sufficient funds, it is due to the mismanagement of the money you send to the federal government.  What would happen to you if you didn’t pay your bills and kept spending money you don’t have?  You can be sure that at some point, you would be called on your debt with dire consequences, such as losing your home, seizing your possessions, or garnishing your wages.  Well, the time has come to call the government on its debt.  Like the rest of us, they need a financial plan that outlines a viable spending plan for our money and how they will meet their financial obligations.

Contact your Senator (www.senate.gov) or Congressman (www.house.gov) and tell them what you think about the debt ceiling.  Even better, call (202-456-1111) or email (http://www.whitehouse.gov/contact/submit-questions-and-comments) the President and let him know you want solutions and reductions, not more of the status quo.

No Win

The Republican Party seems to be in a no-win situation with this whole fiscal cliff fiasco.  A Quinnipiac poll taken two weeks ago indicated that voters would blame Republicans for failure to avert the fiscal cliff disaster by a margin of 54-27.  It’s no wonder, given the fact the media seems to focus primarily on Obama’s proposal to raise taxes on the “rich” but extend tax cuts, currently set to expire at the end of the year, for others versus the Republicans opposition to raising tax rates.  This focus seems to paint the Republicans as bad guys, willing to sacrifice the country in order to protect their rich friends. But is that really what’s going on?

I wondered about the differences between Obama’s proposal and the Republican proposal.  It appears the Republicans are proposing deeper spending cuts than the President and increasing tax revenue through an overhaul of the tax code; this overhaul includes lower tax rates plus an extension of the expiring tax cuts.  The President is proposing spending cuts, although less than the Republicans, but also proposing new spending of $200 billion in new economic "stimulus" initiatives, including payroll tax cuts, continued write-offs of business equipment purchases, extended unemployment benefits, help for borrowers "under water" on their mortgages, and new spending on infrastructure. In addition, the President wants the ability to increase the government’s debt limit without approval from Congress.

Although there are differences, it seems that both sides, if willing to compromise should be able to reach a solution. But the actions of some in Washington suggest scoring political points is more important to them than solving the country’s problems.  On December 5th, Mitch McConnell (R- Kentucky), took to the floor of the Senate and suggested an immediate vote on the plan that Obama offered up to Congress on November 29th.  Senate Majority Leader Harry Reid (D-Nevada), immediately objected and shut down any chance to vote on the plan, calling it a Republican “stunt.” 

Both the President and the Majority Leader are from the same party, so why wouldn’t Senator Reid allow a vote?  Does Senator Reid not agree with the President’s plan?  Or is the Senator just playing politics?

I suspect the good Senator is playing politics.  Earlier this month, he stated "We are willing to compromise, but we also will not consign the middle class to higher tax bills while millionaires and billionaires avoid all the pain."  On December 20th, Senator Reid, explained the Senate’s inaction on Republican’s “Plan B” proposal by saying, "We are not going to do anything." He later added, "We are not taking up anything they are working on over there."  Considering that Plan B is similar to an earlier Democratic proposal, why wouldn't Reid want to take it under consideration, especially if it helps the country avoid the cliff.

In the last three years, the Senate, under Reid’s leadership, has not passed a federal budget, so I am not surprised at his “do-nothing” comments.  And, according to a Wall Street Journal article titled, “How ‘Cliff’ Talks Hit the Wall,” the President is prepared to use his upcoming inaugural speech and State of the Union address to blame Republicans if a deal isn’t reached. 

None of that sounds like people who are trying to avert an economic disaster.  It sounds like people who don’t care what happens to the American public so long as they can blame someone else. It’s time for members of Congress and the President to stop the games and do something to keep the country from going over the cliff. Not just short term solutions, but real, meaningful, long-term solutions that stabilize the economy and fully fund the government’s obligations. 

Tell our Congressional leaders it’s time for solutions.  Contact your Senator (www.senate.gov) or Congressman (www.house.gov) and tell them what you think.  Better yet, call (202-456-1111) or email (http://www.whitehouse.gov/contact/submit-questions-and-comments) the President and let him know you want solutions, not games.  Failing to avert the cliff will cost us all.

Merry Christmas!

On Christmas Eve, 1968, three men circled the Moon for the first time.  In 1968, the world seemed to be coming apart at the seams, so the crew wanted to send a message of hope and inspiration back to the people on Earth.  While a grainy image of the lunar landscape played on TVs around the world, Bill Anders, Jim Lovell, and Frank Borman read the first ten verses from the Book of Genesis.  The impact of the Christmas Eve message and the successful flight was summed up in telegram sent by a stranger to Frank Borman.  It said, “Thank you Apollo 8. You saved 1968.”

Borman felt that he needed to make some sort of statement in his TV broadcast as the Apollo 8 crew circled the Moon, the first humans to ever do so.  In the midst of all his training, he struggled with choosing the words he would say from lunar orbit.  A friend suggested that the words were already written; Borman, simply read from the Bible.

I’d hoped to write a really great post to wish everyone a Merry Christmas.  I wrestled with how best to express what I really wanted to say, but I could not find the right words.  Like Borman’s friend, I realized the words were already written. So today, I will rely on the words of a Greek physician who recorded the events of nearly 2,000 years ago. 

"And the angel said unto them, Fear not: for, behold, I bring you good tidings of great joy, which shall be to all people. For unto you is born this day in the city of David a Saviour, which is Christ the Lord."

"And suddenly there was with the angel a multitude of the heavenly host praising God, and saying, Glory to God in the highest, and on earth peace, good will toward men."

Merry Christmas and God Bless us all!