Jim Rogers - Central planners' policies are punishing the prudent in favor of rescuing the irresponsible

I read the following by financial commentator Jim Rogers and it really fits with what I think has been happening for the last couple of years:

To Rogers, the bigger danger that concerns him is the hollowing out of the 'saving class' resulting from this situation. Central planners' policies are punishing the prudent in favor of rescuing the irresponsible. This has happened before in world history, and the aftermath has always had grievous economic, social -- and often human -- costs:

Throughout our history – any country’s history – the people who save their money and invest for their future are the ones that you build an economy, a society, and a nation on.

In America, many people saved their money, put it aside, and didn’t buy four or five houses with no job and no money down. They did what most people would consider the right thing, and what historically has been the right thing. But now, unfortunately, those people are being wiped out, because they are getting 0% return, or virtually no return, on their savings and their investments. We’re wiping them out at the expense of people who went deeply into debt, people who did what most people would consider the wrong thing at the expense of people who did the right thing. This, long-term, has terrible consequences for any nation, any society, any economy.

If you go back in history, you'll see what happed to the Germans when they wiped out their savings class in the 1920s. It didn’t lead to good things down the road for Germany. It didn’t lead to good things for Italy, which did the same thing. There were plenty of countries where it wiped out the people who saved and invested for their future. It’s usually a serious, political reaction, desperation in some cases, and looking for a savior and easy answers is usually what happens when you destroy the people who save and invest for the future.

- PeakProsperity.com

The United States all of a sudden has no shortage of irresponsible people. Nothing is anyone's fault anymore. Too many demand free money and more from the Government. And all too often Liberals and even Conservatives are giving it to them, in exchange for votes at election time.

Don't get me wrong, some people do legitimately deserve assistance, but way less than we are supporting now. And none of these people are going to help build a better country. It is the saver who invest and it is investment that drivers our country and others to an ever better future. It is also savings and investment that improves the welfare of many. Take the 'evil' oil companies. If they really were making so much money and were such cash cows, why not say 'me too' and put some money into these corporations? You can do direct investing in ExxonMobil for as little as $250. Is that too much money, well that is the point of saving. You save until you have enough to buy what you want. Point to someone who has no money and I bet I can point to their way too expensive sneakers, sunglasses, clothing, car, gadgets, vacations, etc... that they also don't have money for but somehow manage to get anyway.

Worse, many of them are liable to have children that will also require support for most of their lives. The Democrats are counting on this, because these people will continues to be their base voters for years to come. 

This is also why the Democrats are pushing to legalize illegal aliens and provide them with a 'Path to Citizenship'. Many of these illegal aliens are 'High Needs' parents. It does not mean that there is something wrong with their children or that their children need special care. Instead, it is the parents that need to be told and reminded about everything about being a good parent to their children. This was as explained to me by a pediatrician in Washington, DC. My kid's first pediatrician. This was during a checkup where she was advising us that she was leaving because she was being burned out due to all the high needs parents she had to deal with. It just so happened that these 'high needs' parents bills were being paid by tax payers. Even the co-pay. It was not that the parents did not have $10, $15 or even $20 to pay for the ability to take their kid to the doctor. It was simply because if they did have to pay anything, they would not take their kid to see a doctor. 

This is the heart of the problem. And this problem will only grow until we stop paying out like a broken ATM.

Go hear to listen to the entire Jim Rogers Interview on Peak Prosperity.

-------------------- --------------------

nextgeneration.tv - Michelle Fields: The National Debt Is Unfair to the Next Generation

This video was highlighted on Instapundit:

This nation has a spending problem that is placing a massive debt load on younger generations. Hear why this is so unfair as Next Generation Correspondent Michelle Fields talks about our national spending problem. - Video Link

I look forward to seeing more from this new initiative. I do believe that the other side started talking about 'fairness'. So lets talk...

The website is http://www.nextgeneration.tv/
-------------------- --------------------

WTF!?!?! Up to 35% of Americans Qualify for a Free Obama Phone???

OK, so there is a program that telephone and cellular phone subscribers pay for that gives away cellular phones to the poor and dare I say 'near-poor'. The money comes from Universal Service Fund fees that are tacked onto most phone bills. The Universal Service Fund is:

The Universal Service Fund (USF) was created by the United States Federal Communications Commission (FCC) in 1997 to meet Congressional universal service goals as mandated by the Telecommunications Act of 1996. The 1996 Act states that all providers of telecommunications services should contribute to federal universal service in some equitable and nondiscriminatory manner; there should be specific, predictable, and sufficient Federal and State mechanisms to preserve and advance universal service; all schools, classrooms, health care providers, and libraries should, generally, have access to advanced telecommunications services; and finally, that the Federal-State Joint Board and the FCC should determine those other principles that, consistent with the 1996 Act, are necessary to protect the public interest. As of the third quarter of 2012, the USF fee, which changes quarterly, equals 15.7 percent of a telecom company's interstate and end-user revenues - Wiki

One of the approved uses of this money is to give free cellular phones, and cellular phone service to people who qualify. Who qualifies? Well, according to the Obama Phone website up to 35% of all Americans

If you, or members in your household are, receiving the following benefits you automatically qualify for the Lifeline program. Those interested in the program must have an income of less than 135% of the Federal Poverty Guidelines. (For example in the 48 Contiguous States and D.C the income level is $22,350 per year for a family of four.)

• Food Stamps or Supplemental Nutrition Assistance Program (SNAP)
• Medicaid
• Supplemental Security Income – commonly known as SSI
• Health Benefit Coverage under Child Health Insurance Plan (CHIP)
• The National School Lunch Program’s Free Lunch Program.
• Low-Income Energy Assistance Program – LIHEAP
• Federal Public Housing Assistance ( Section 8 )
• If you are a low-income Eligible Resident of Tribal Lands
• Temporary Assistance to Needy Families – TANF

Qualifications can vary by state. - The Obama Phone

You have got to be kidding me. That is a huge number of people. And in certain areas of the country, I guess people could claim that everyone has an Obama Phone like was done in the video from Cleveland, Ohio earlier this week...

So where do I sign up for free alcohol? But seriously, I do not have a land line phone. The cable company is more than willing to give me one for free, but I gave that phone up years ago because the 'Free' phone cost me about $10 a month in taxes. Part of those taxes was to fund this program which is probably being abused all to hell. What's next? Free internet? Apparently this is the direction that we are headed. 

Keep this in mind the next time you look at your phone bill. What other programs are you paying for through fees in your phone bill.You might find some surprising things. Take the NY City area. Their phone bills also include a surtax for the Metropolitan Transit Authority. All of this you pay for to subsidize other people.

Yes, some people should get help. But I bet that people will be surprised at just how much help poor people already get as they cry to politicians to put their hands into your pockets yet again... Don't wait for any accountability anytime soon. They only want to audit the rich. There is no interest in auditing what happens to the money when it it given to the poor (in exchange for votes).

-------------------- --------------------

US Spending Problem Explained

I was forwarded this and enjoyed it enough to share. If only President Obama and his follow Democrats could understand and confront this problem. I am not saying that the Republicans are blameless here. However, they are the only ones that both sides will hold to account regarding future spending....

----------------------------------
This rather brilliantly cuts thru all the political doublespeak we get.
It puts it into a much better perspective.

US Tax revenue:  $2,170,000,000,000
Fed budget:         $3,820,000,000,000
New debt:             $1,650,000,000,000
National debt:   $16,000,000,000,000
Recent budget cut:   $38,500,000,000

Now let’s remove 8 zeros and pretend it’s a household budget

Annual family income:                             $21,700
Money the family spent:                           $38,200
New debt on the credit card:                    $16,500
Outstanding balance on the credit card: $160,000
Total budget cuts:                                          $385


OK, now Lesson # 2:

Here's another way to look at the Debt Ceiling:

Let's say … you come home from work and find there has been a sewer backup in your neighborhood and your home has sewage all the way up to the ceilings.

What do you think you should do ......

Raise the ceilings, or pump out the crap?
----------------------------------

-------------------- --------------------

Globe and Mail: "IRS bearing down on Americans in Canada"

Many Americans both Conservative and Liberal are upset with how their Government is functioning at the moment. I know I am not happy with the idiocy that is going on and the lies being put forward that somehow, we would be able to continue spending the outrageous amounts of money that the Government is currently spending, IF ONLY rich Americans paid a little more. Even Americans living overseas cannot escape the long arm of the US Government, which has decided to extend the arm of the Internal Revenue Service, the dreaded IRS, into the pockets of Americans overseas, even those who have no link to the country other than to have been born in the US or born by US parents. Apparently, there are lots of them. From this story, there are about a million living in Canada alone:

One person who’s off the hook is my brother. He was 11 when we moved to Canada. At 17, he got a draft notice. So he renounced his citizenship (after a long lecture from a consular official). I suppose I could renounce, too – but they won’t let you do that until you’ve filed your back tax returns. As many as a million U.S.-born residents of Canada are caught in this Kafkaesque nightmare. Finance Minister Jim Flaherty has written an indignant letter to leading U.S. newspapers. All of us are getting wildly conflicting professional advice. At first, Brian and his wife, who are by no means wealthy, decided to come clean. But when they were told they’d be on the hook for $250,000, they changed their minds. - Globe and Mail

I lived in Finland for three years while doing my MBA. Two of those years I filed a tax return. The third year I didn't because I didn't meet the minimum reporting threshold. It turns out that it was good that I did because a short while later I moved back to the US and applied for a GreenCard for my soon to be Finnish wife. One of the requirements was providing copies of my previous three years Income Tax Returns, or an explanation of why I didn't file.

This experience did result in not pursuing US Citizenship for my wife. We did have plans at the time to eventually move back to Finland, and we knew that it would be better tax-wise if she did not obtain US tax liability.

It is odd however, to see the amount of effort that the IRS is extending to track down money overseas the US thinks it can extort from Citizens, however unfair, while at the same time they do little to nothing to hunt down illegal aliens living within the US who are working without the legal authorization to do so, are conspiring with their employers to not pay/evade taxes (in some cases also committing identity theft) and are simply getting a free pass. 

• It is not fair. 
• It is discrimination. 
•  It cannot last. 

 Unfortunately, I think it is going to get a lot more painful before it gets better. This is an illustration of a pile of $100 bills totaling $15 Trillion. That is $2,500 per person on earth. That is a hell of a bill to pay off and it is still growing. And this is why the US Government is trying to fleece Americans living abroad, they are simply running out of places to rind more revenue.

-------------------- --------------------

Social Welfare is OK, if it results in Lessening the Number of Those in Need

I think many conservatives would have less of a problem with social Welfare if these programs reduced the number of people in need of support.

That said, why is it that it seems that there is a constant growth in the number of people that these programs support? Nobody ever gets off these programs and those receiving support appear to breed more people destinehttp://www.blogger.com/img/blank.gifd to require/receive support. I would say that the mere fact that half of all Americans pay no taxes is evidence of this.

The UK has an even more substantial benefits system and appears that the problems that result are even greater as the riots demonstrate. Take the story of this one benefit recipient's mother:

She is on benefits, does not live with the boy's father and has 10 other children, the court heard. - Mother of 13-year-old who smashed up shop blames government - The Telegraph, UK

AND

But the woman also suggested her son was not entirely at fault, when asked who she blamed for the looting.

''The government,'' she replied, her son by her side, adding: ''There is f*** all for them to do.'' - The Telegraph, UK

Her 13 year old son caused well over $20,000 in damage during the riot and all the mother can do is blame the Government for not finding something more productive for her 11 children to do. This is madness. Let the father(s) of the eleven children support them. People already have to support their own families, why do they have to chip in and support her's as well?

Also, I always found it strange that the UK is supporting this huge families, where the parents have not worked in years, in houses in expensive areas. Why not just ship them out of the cities and house them more cheaply in the countryside?

This brings up another pet peeve of mine. If I am being forced to support others, why can't I get a say in how they are using this support? For all this talk of 'shared sacrifice', it always seems that the tax-payers are always being asked to sacrifice more, but others on the receiving end are not asked to sacrifice at all. Not exactly fair, is it.

So, social welfare programs that over time reduce the number of those in need = Good

Social welfare programs that we (and the UK) currently have = Bad

All we are doing is growing the ranks of the poor. This support needs to come with an expiration date for those who are of working age.

--------------------

--------------------

The US is Going to Have to Take an Axe to the Budget

One thing that has become quickly clear to me while listening to all the talk inCongress of the Continuing Resolutions to fund the Government and just what to cut in terms of spending, that is it going to be impossible to 'apply a scalpel' to the US Budget and carefully cut spending. there are two problems with such a method. First, most every dollar of spending has some Congressman ready to stand up and speak against cutting it. And second, the sheer amount of overspending, around 40% of all spending is borrowed, there is no way that we will be able to get Congress to selectively cut a tiny fraction of that amount.

Ace of Spades has been covering the budget/debt problem for a while:

With just this year's spending, President Obama, Henry Reid, and Nancy Pelosi have saddled us with debt that we will probably never pay back, and the White House budget (even before the CBO corrections) agrees. It doesn't even try to pay back these deficits - in fact it doesn't even balance the budget. Ever. - Ace of Spades

I think it is time to axe the budget by starting with a new budget where each kind of spending needs to be justified with total spending limited by the amount of expected revenues.

Does this mean that I want to cut Head Start? Damn right it does. I already pay for two children of my own. It is a responsibility of parents. Shame on the Government for deciding that I should also contribute to support children of other parents.

The budget Axe. It's the new scalpel. It needs to be.
-------------------- --------------------

Democrat Messaging Republican Cuts - 'Reverse Robin Hood'

So on the way home Tuesday evening I caught a couple minutes of Congress debating how to, and how not to cut Government spending. Lucky me caught Boston Congressman Stephen Lynch's attempt to redefine Republican efforts to cut spending while at the same time not raise taxes against the rich as 'Reverse Robin Hood'. You can catch his comments here (Clicking the image will take you to the CSPAN site where his comments start a couple seconds into the video):

Video Link

I have a couple major issues with his line of thinking.

FIRST, in the case of 'Robin Hood', he was stealing from the rich to give back money that was taken by the Government from the poor. In our present society, the bottom half of income earners currently pay no taxes. In effect the Government is asking/taking nothing from them in the form of contribution as part of a collective payment towards the costs of our society. So what Congressman Lynch is defining as taking from the poor, is in actuality proposals to give less to the poor. There is a huge difference.

Second, he attempts to portray Republicans as evil because he claims that Government giving to the poor could somehow continue if only the Republicans would be big enough to raise taxes on the rich or in his words to ask millionaires 'to give a little more'. This is ridiculous for a number of reasons:

• While he is saying millionaires, he then goes on to talk about raising taxes on those earning $250,000 and more. The last time I checked, that was much less than a million, unless he is inferring that people earning such amounts are already millionaires.
  
• The potential increase in Government revenue by letting the Bush tax cuts expire for the richest Americans is nowhere enough to reduce the yearly Government spending deficits. In fact the cost to extend the tax cuts for the richest for ten years is less than this year's deficit (Previous post pointing this out).
  
• The Top Federal income tax rate would have gone up to 39.5%. That is like working two days a week just to cover Federal Income taxes, once getting to that rate. Then tack on more work time to cover state and local taxes, before taking care of one's own needs.
• The President's proposed 2012 budget plans to spend the equivalent of $12,000 per American. So, for my family of 4, the Government will spend $48,000. That is much more than what many families pay in taxes. And there is the reason why the Government has to borrow so much.
  

Congressman Lynch asks what about the single mother's and those in need? They are good questions, but there are other good questions that he and his Democrat buddies never bother to ask, such as

• What about all the other assistance these people seeking aid already receive?
  
• Who is working to help those receiving public assistance make their money go father?

As for the single mothers, how about demanding their respective single fathers pitch in? After all, if it is expected that I and other wage earners are expected to substantially support a good percentage of the population, then perhaps we should have a say on how these people are living their lives?

Before you declare this an unreasonable demand, look at how often aid money is wasted and abused. Remember the news of how Katrina aid given to evacuees was used in all sorts of wasteful ways, and now the Drudge Report is highlighting a Colorado Bill that would Ban the use of welfare cards at Strip Club ATMs. California has also be fighting abuse of their welfare funds. When is this all going to stop? The rest of us have to adjust to the current reality, so should the poor.

As for the elderly, I do have sympathies, but now I am starting to wonder about their innocence in all of this. They are the ones who elected the politicians who promised them the social welfare whose cost is now threatening to crush the system. They are the ones who permitted the Government to run deficits year after year for most of their lives. Social Security and Medicare entitlements are going to have to be adjusted. It is just a simple reality and given how people are living much longer, it is a fair adjustment to raise the retirement age, for starters.

Third, given that EVEN IF the Government raised taxes substantially, the budget will still spend more than it takes in in revenue, benefits are going to be cut. So Just who is robbing from who?

Decades of deficits have resulted in a mountain of debt. If Anything, the group that is being robbed is not the poor, but the children of this country. So as Representative Lynch would like to call out that Tea Party supporters are throwing the elderly into the harbor, what he is calling for is for all of us to saddle my generation and my children's generation with their irresponsible spending including their cleaning out of the Social Security Trust fund.

Now you would think that the poor would be concerned about their children having to pay for the support that they are receiving. However, given that they were never asked to pay for the benefits their parents received, why should they consider anything other than the possibility of the Government cutting back the benefits (and in many cases free lunches) that they are receiving.

Another Point. The Federal Government is not the only Government around. States are also responsible for providing public services, such as fire, police and education. If the people of a state want more, they they should be asked to pay more. This is not happening, partly because the Federal government has been footing the bill. For example, why is the Federal Government sending aid to Alaska while at the same time the State collects no income tax? Who considers this fair.

There is much more to this issue. Again last night I heard another Congressman use the Reverse Robin Hood comment. And I suspect that she will not be the last.

-------------------- --------------------

A Very Valid Reason to Raise the Retirement Age in the US

Out comes word that the President will not call for raising the Retirement age as part of controlling Government spending:

The direction of Obama's speech became apparent over the weekend, when the White House informed Democratic lawmakers and advocates for the elderly that he would not endorse the commission's recommendation to raise the retirement age and make other cuts to Social Security - the single largest federal program.

Liberals, who have been alarmed by Obama's recent to shift to the center and his effort to court the nation's business community, applauded the decision, arguing that Social Security cuts are neither necessary to reduce current deficits nor a wise move politically. Polls show that large majorities of Americans in both parties - even in households that identify themselves as part of the tea party movement - oppose cutting Social Security benefits. - Washington Post

This is unfortunate, because there is a fair way to explain why the retirement age should be raised. Simply put, most Americans are living longer. In many cases much longer. And as retirees live longer they put a greater strain on Social Security (as well as other parts of the Government). We need to deal with that strain somehow. One way is to raise the retirement age.

Another way to fix Social Security is to raise worker contributions. I am only in favor of that option if we overhaul the entire program, introducing private accounts. (See my post: Democrats Hate the Idea of Private Social Security Accounts - Because They Cannot Steal From Those Accounts...)

-------------------- --------------------

Liberals Have No Right To Demand That Others Pay More In Taxes Than They Do

It seems that Liberals are all up in arms about the President agreeing not to raise taxes on all Americans. This goes against the Liberal/Democrat demands that taxes be raised for the richest Americans.

First, one argument that Liberal Democrats were making, and something that Congressman Pelosi was using as an argument to raise taxes, was that all Americans were still going to get a tax cut, up to a certain point. In other works that the richest paid the same taxes as those earning less than them for that same portion of earnings, i.e. under $250,000 for couples. This however is disingenuous and the Democrat's first lie, because not all of the tax breaks are extended to Americans that exceed a certain income level. One of those tax breaks that cuts out is the child tax credit.

Credit worth as much as $1,000 per child

If you have children who are under age 17 at of the end of 2009, you can get a $1,000 tax credit per child on your tax return. A tax credit reduces your tax bill dollar-for-dollar, so three qualifying children, for example, can cut what you owe Uncle Sam by $3,000. The credit may be limited if your income exceeds the levels listed below.

And the credit does not affect the exemptions you take for dependents—worth $3,650 each in 2009. The child tax credit is in addition to those exemptions.

Credit is phased out at higher income levels

The child tax credit is reduced or eliminated if your adjusted gross income is above certain thresholds. The credit amount is reduced by $50 for each $1,000 (or fraction thereof) by which the taxpayer's modified adjusted gross income (AGI) exceeds the threshold amount.

The threshold is:

• $110,000 on a joint return
• $75,000 for an unmarried individual
• $55,000 for a married individual filing a separate return

- TurboTax

The argument for higher taxes for the rich made by Liberals also ignores a simple fact that the tax system is progressive and those that earn more pay a higher percentage of tax on their higher earnings with or without keeping the current tax rates. Click on the images below that cover both the current rates (10%, 15%, 25%, 28%, 33% and 35%) and the previous rates (10%, 15%, 27%, 30%, 35% and 38%) and in each case, the rich always pay a higher percentage in tax on their higher earnings. (Tables found here)


Liberals are also complaining that the announced tax deal by the President is unfair in that it extends the tax break for two years but only extends unemployment for 13 months is another weak argument. Simply put, unemployment payment is supposed to be temporary aid in order to help people find replacement work. It is crazy to extend such payments for years. This has the ability to distort behavior against taking other work, especially if the new work does not pay as well as the old job did. Unemployed were never entitled to unlimited unemployment benefits. To offer up another year is doing little more than creating a class of permanently unemployable 'workers'. This needs to stop.

The argument made by Liberals is distorting the actual cost of extending the current tax rates. they are using the cost to extend the current tax rates for the next ten years. Comparatively speaking, this amount is much smaller than any one year deficit during the Obama Administration. It is also about the same cost as the failure known as the 'Stimulus Bill'. As I wrote before:

As for the number that the President is commenting on there above, while being large, they pall in comparison to the actual deficit total. As for the $700 billion cost the President mentions, that is the cost to extend the tax cuts for the rich for the next ten years. In comparison, 'The total deficit for fiscal year 2009 was $1.42 trillion'. - Link

The argument made by the Liberals also ignores that the richest Americans already pay the majority of taxes. the lower half pay next to nothing. Take a look at the mint.com graphic below. The bottom half of the population is paying no Federal income taxes. How is that fair? Everyone should contribute. Many do not and this is distorting rational decision making as they are only looking at the Federal Government in terms of handouts. So it then becomes in their best interest to ensure that the richest are taxed as much as possible. It also perverts the perpetration of fraud among benefit recipients who, instead of reporting fraud, instead also look to benefit by replicating the crime, since it does not cost them anything.


The Democrats in Congress are talking about extending the Tax Cut for the middle class, because the poor don't pay anything. They are also ignoring the real problem which is spending. The Government is addicted to spending. As with any addition, the cure is never more, in this case money, but less. (and do not forget the other problem which is simple waste...)

UPDATE:
OK, I got the additional unemployment time wrong:

Just wanted to point out that the unemployment benefits extension doesn't give the 99ers another 13 months. The 99ers are still done after 99 weeks. This new bill just covers those behind the 99ers who are about to lose benefits.

I won't denigrate these people. I will say that people who can't find work for two years should perhaps move to where the opportunities are. - Lou Minatti

As for that last comment about moving, I have written about that before. It is hard to find work when the jobs have moved from your part of the country. Yes, some are moving overseas but many are just moving to cheaper parts of the country. There are lots of jobs here. Just ask all the illegal aliens doing them. See my posts ""The economy will recover faster if workers are willing to seek out and seize distant opportunities"", "Don't Redistribute wealth. Redistribute the poor" and "Don't Redistribute the Wealth - Redistribute the Work!" for more on that.

-------------------- --------------------

Democrats Hate the Idea of Private Social Security Accounts - Because They Cannot Steal From Those Accounts...

One issue that keeps coming up in US politics is the Democrat's claim that Republicans will wreck Social Security if they ever get back into power.

One way that they mention the Republicans will do this is by changing Social Security to permit workers to put at least part of their Social Security payroll deductions into private accounts that they can then influence how they are invested. One benefit of this change put forward is that the money put into those accounts is dedicated for the person who earned the money and gives the possibility of a better return on the savings than the Government might be able to provide. The Democrats in turn has falsely labeled this plan as just another way to steal money from workers and give it to Wall Street.

Democrats are wrong to claim that personal accounts would hand Social Security over to Wall Street because - unlike having Washington centrally manage investments, as Bill Clinton favored - individuals would make their own decisions along with their choice of financial advisers.

The idea would be to take control of retirement away from politicians in Washington and from politically connected Wall Street insiders and put it in the hands of workers themselves. The upside is that the accounts would be able to provide much higher returns than the current Social Security system even promises, let alone what it can actually pay. They can therefore be sold to the public as what they are - benefit increases. - Washington Times

The one real problem to the Government (and to Democrat's demand to ever increase spending) with moving to private accounts is that the Government would no longer be able to take Social Security money and use it for other purposes. And how much of the Social Security surplus has the Government taken? How about all of it. Over $2 Trillion.

Social Security taxes are paid into the Social Security Trust Fund maintained by the U.S. Treasury (technically, the "Federal Old-Age and Survivors Insurance Trust Fund", as established by 42 U.S.C. § 401(a)). Current year expenses are paid from current Social Security tax revenues. When revenues exceed expenditures, as they have in most years, the excess is invested in special series, non-marketable U.S. Government bonds, thus the Social Security Trust Fund indirectly finances the federal government's general purpose deficit spending. In 2007, the cumulative excess of Social Security taxes and interest received over benefits paid out stood at $2.2 trillion. - Wikipedia

So on the one hand, Social Security has a surplus of over $2 Trillion to meet it's needs. On the other hand, all of that money was traded for Government bonds. The bonds are a promise from the Government to repay Social Security.

The Government took the money and spent it. The Government now either needs to pay that money back to Social Security, and with running a deficit, would need to borrow that money to repay the bonds. That could be a serious problem given that the Government already needs to borrow to cover the current year's spending deficits. And that is a problem with the idea of selling the bonds held by Social Security. Doing so increases the amount that needs to be sold into the market, and the Government is already having trouble selling the bonds it needs to need to cover current-year deficit spending.

Of course they could just print more money. I am not sure exactly how that would work out.

So remember, no matter how the politicians try to claim that Social Security has no problem, keep in mind that these same politicians turned the Social Security Trust Fund of $2 Trillion and turned it into added Government debt.

-------------------- --------------------

1994 BMW - 200,000 Miles

My 1994 BMW 325i just hit another milestone this last Monday as it passed 200,000.

I took almost 3 years to drive 10,000 miles with it.

The question now is 'Now what?'

-------------------- --------------------

Obama - Raising Taxes vs Tax Cuts: 'I've got a whole bunch of better ways to spend that money'

To add to my post from yesterday 'Bush Tax Cuts Are not the Problem, Spending is...'

What I am saying is that if we are going to add to our deficit by $35 billion, $95 billion, $100 billion, $700 billion, if that's the Republican agenda, then I've got a whole bunch of better ways to spend that money - President Obama (Via The Hill)

Of course he does. Hell, if given the chance, President Obama and his Democrat buddies have no end of 'better ways to spend your money'. The trick is, they have no plans of spending it on the people that they are taking the money from. Worse, they have no plans on spending this money on you either.

At least the President's words give good insight into how the President thinks. Basically he sees letting people keep their own income as Government spending. It is backwards and wrong. This money is owns and somehow we collectively decided to lets the idiots in control of the Government spend it on our behalf.

As for the number that the President is commenting on there above, while being large, they pall in comparison to the actual deficit total. As for the $700 billion cost the President mentions, that is the cost to extend the tax cuts for the rich for the next ten years. In comparison, 'The total deficit for fiscal year 2009 was $1.42 trillion'.

Government spending is a reckless joke. Look at all the money that has been spent and basically wasted. Just how much more needs to be spent before we all feel good? Me, all I am thinking about is my income tax going up at the end of the year and eating away any raise that I might have coming. It get worse given the tax on dividends will go up. There is nothing that the Government can do for me to compensate for the additional tax money they are going to seize from me. And frankly, I am not interested in having that money being used to help other people, like in the recent billions spent as called for by the President to save teachers jobs in a number of states. That for me is a state issue. If those states are willing to lay off teachers, firefighters, whoever, then that is their decision. If they want to keep them, then the state needs to figure out how to pay their salaries. It is asinine to force me to pay for teachers in another state in addition to paying for those here.

-------------------- --------------------

Bush Tax Cuts Are not the Problem, Spending is...

Seems that President Obama has set his sights on letting the Bush tax cuts expire for the richest Americans at the end of the year. This move is purely designed to both punish the richest Americans as well as a political move for the next election to show his core voters (Other than those rich idiots who voted for him) that he is doing his best to 'stick it' to the group of American who already pay the most taxes. They claim that the rich need to pay more because otherwise the deficit will continue to grow.

The reason why I call BS on this is that reinstating the Bush Tax Cuts will do absolutely nothing to reduce the deficit. Take the following story found on the Huffington post noting that the cost to the Government to keep the Bush Tax cuts for the next ten years is between $2.5 and $2.9 Trillion. That is about $250 billion a year.

President Barack Obama favors making the cuts permanent for middle class families, those individuals making more than $200,000 and couples making more than $250,000.

The Tax Policy Center, a Washington think tank, estimates it would cost $2.9 trillion over the next decade to extend all the tax cuts, while Obama's plan is estimated at $2.5 trillion over 10 years. - Huffington Post

Now take the following recent news noting that President Obama's Administration has managed to add over $2.5 trillion to the national debt in just 19 months in office.

(CNSNews.com) - In the first 19 months of the Obama administration, the federal debt held by the public increased by $2.5260 trillion, which is more than the cumulative total of the national debt held by the public that was amassed by all U.S. presidents from George Washington through Ronald Reagan. - CNS News

Given the numbers above, any politician who claims that we have to end the Bush tax cuts for the sake of the national deficit should be run out of office. These idiots in power will just use the addition revenue as a reason to spend twice as much.

Take a look at this graph (from Wikipedia) noting the difference between what the Government is taking in and what it is spending.

The problem is not revenue collection. It is spending. The amount of additional revenue by expiring the tax cuts for the richest would not be enough to cover Medicare spending in the graph above. And as you can see, it is a mere sliver of the additonal revenue needed to close the gap.

And for all these people out there saying that it is OK for people earning more than you to pay more taxes, keep in mind that they already pay more.

Also, as noted in my post 'Obama's 2010 Budget Spends Almost $12,000 Per American!' the level of Government spending is not only unsustainable, it is truly an irresponsible amount of spending:

Now comes the President's 2010 budget that is also screaming that this is something the Country can't afford.

After taking office in January, Obama released a bare-bones version of his budget in February that offered a spending plan for 2010 carrying a price tag of $3.55 trillion. The White House revised up the size of the spending plan to $3.59 trillion. - Yahoo News

At $3.59 Trillion, the Government will be spending around $11,970 per American (Given 300 million Americans). That comes out to Government spending of $47,900 for a family of four.

This is an impossible spending figure for the country to sustain. Hell, it will take years, most likely decades of taxation just to pay this one year's deficit back. - Link

I can't believe that there is any excuse to continue spending like this. None.

-------------------- --------------------

It is Financially Irresponsible To Buy A $41,000 Chevy Volt!

So word comes out that Chevy's new 'Green' car, the Chevy Volt is going to sell for the insane amount of $41,000. Are they crazy?

The long-anticipated Chevrolet Volt, General Motors' electric car, will cost $41,000, the company announced Tuesday, leaving consumers to decide whether its environmental appeal is worth a price far above that of similarly sized conventional autos.

Electric-car technology has been around for years, but the high cost to make the vehicles has prevented automakers from producing them for the mass market. The price announcements for the Volt and its electric rival, the Nissan Leaf, have been highly anticipated as a result. Nissan, the only other major manufacturer expected to bring such a vehicle to market this year, said the Leaf will cost $32,780.

GM and Nissan are relying on a $7,500 federal tax credit for buyers of electric vehicles to offset some of the added cost, and they're hoping that the allure of their novel power source will make up the rest. - Washington Post

First, forget the tax credit because you need to pay for the whole car, and I suspect that many people once they get the credit, will use it to either pay other bills, such as higher interest rate credit card, or simply blow the money on some other personal 'reward.'

A look at a car loan calculator gives an $800 monthly payment for a 5 year loan. This is on top of insurance and other costs. For most all Americans, this is an unreasonable monthly expense for a car to the point of being irresponsible.

Given the amount of debt that many Americans are carrying, this car does not make sense given the investment required. Hell, I wonder when it would make sense given that there are many nice alternatives as half the price. And since many families are 2+ car families, this choice is a great way to load up on crushing debt.

And people wonder why GM was in financial trouble. This car is a good example why. buying this car will just give you a share of GM's troubles.

-------------------- --------------------