The Fiscal Cliff: Reality Always Wins

20121207-005810.jpg

D.M. Lukas is a contributor to The Brenner Brief. His columns appear every Friday.

What did you do with your check from the return on investment from AIG and GM? Isn’t it great that we invested this money to bail them out for billions of dollars and as we were told by Timothy Geithner and the White House, we, the American people, actually made money on the deal? We got paid back more than we had invested! I don’t know about you, but I can sure use my check for Christmas shopping.

Then I woke up. That had to be one of the weirdest dreams I’ve ever had. Seriously — the government actually investing taxpayer dollars, getting a return on that investment, and then paying back the American people with interest, sending everyone a check they are owed? Wow! I guess that is it why they call it a dream.

Speaking of dreams and a trip to fantasy land, let’s talk about the fiscal cliff. Below is a short video on the state of our financial problems showing you the actual numbers from the Federal Government.

Now, after watching that, can you see that the fiscal cliff is really a joke? We have to start saving over $1.3 trillion per year just to get back to break-even each year, and then, on top of that, we would have to save even more to start eating away at our national debt of over $16 trillion. The proposals on the table for the fiscal cliff have us “saving” — at most — $4 trillion over ten years. That is like a spec of dust compared to the problem that needs solved. Furthermore, what you are not being told is that the supposed $4 trillion of savings is on the baseline budgeting that the government uses.

What is baseline budgeting? Every year, the government ups their budget by a certain amount (typically in the range of 7 percent). That is right, they just assume each year that the budget is going up, not staying where it is. In other words, the government actively plans to spend more money each and every year. So, the $4 trillion in “savings” is actually reduced because the annual budget will be much higher ten years from now than it is today. It is a numbers trick. They say they are going to save money, while every year upping what they are spending, therefore diminishing the effects of the savings. Whew! Hopefully you followed that, as it was tough to simplify (and the government wants it that way as most people would never even try to understand it).

Obama and The Republicans
The Republicans, at this point, have literally caved and are trapped. No matter what happens, they will lose and be demonized by Obama, the Democrats and the media. If they walk away (as they should) and let Obama actually have to come up with a plan to take to Congress and get a vote, they will be demonized as “hurting the middle class.” If they go along with Obama and give in, when it comes time for their next elections the media will turn on them and all of the ads will be about how they raised taxes. Here’s the kicker though about Obama: he actually wants this thing to go over the cliff, or at least it really seems that way. The recent proposal given by the Republicans to raise over $800 billion in new taxes was exactly what Obama had said could be done through the same tactics of limiting deductions and closing so-called loopholes just a short time ago.In fact, Obama said he thought we could raise $1.2 billion. But, Obama knows that no matter what happens he can blame the Republicans and, if we go over the cliff, then he can ride in on his white horse and give the Americans a “tax cut” and it would then become the “Obama tax cuts” even if they keep things right where they are as now.

Speaking of keeping things right where they are — if you are in the middle class, you do realize that you are not getting any tax cuts, right? This whole thing is to just keep your current rates the same. Although, what you may not realize is that your taxes are going up. There are tax increases going into effect with Obamacare in the next year.

Currently, you are paying two percent less than what you should be paying into social security, and that tax savings is unlikely to survive the fiscal cliff. There are a lot of other taxes coming your way, even if they keep tax rates the same, so get ready.

What makes you think we will even get the savings they are talking about if anything is done? Reality and the actions of our government, especially Obama — who added over $6 trillion in debt in less than four years — tell us that if the government has extra money, they will spend it. It will not go to pay down our debt, and it will not go to reduce our deficit. Just like our so-called “profits” from AIG and GM, it will be spent. Obama is the biggest “Spender in Chief” in terms of factual numbers that we have ever had. In fact, he still has yet to pass a budget in four years.

Government Does Not Create Wealth
In the end, you have to realize that government does not create any new wealth. They simply shift wealth (from taxpayers) to other areas (entitlements, special pork projects, etc). The government is an incredibly inefficient mechanism, and really has nothing to hold it accountable to its choices, except the American people. When they stop paying attention as they have over the last 100 years, government can run rampant. Think about all the things you pay for: Medicaid, food stamps, foreign aid, section 8 housing, anchor babies, free cell phones, free college, green energy and bailouts of failed companies. All are funded with tax dollars and are pure welfare. This is only the beginning of all the things you pay for. Do any of these help to create new wealth? Nope. The only way new wealth is created is by the private sector creating and growing markets. Obama knows this and if you have read his history, his books, listened to his speeches, you would know that he does not like it. He is truly living out the “dreams” of his communist father.

In the end, the American people are about to go through one of the largest transfers of wealth in history to the federal government, and then their government is going to spend that money and not use it to fix any of the problems that the government caused. The people who have been asleep to it over the last 100 years are about to find out that this is not what we voted for, and what the consequences are of not being informed or holding your government accountable as the founders preached.

The only thing Americans can do now is start getting informed and change things with their votes over the next few years. And what happens if we decide to keep our heads in the sand and stay in fantasy land? Well, in the end, reality always wins.

 

 

Leave a comment or question. Report abusive, harassing or annoying behavior by clicking on Tips/Contact in the top menu.

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: