The Federal Budget For Dummies

Turning our economy around and getting people back to work has two components -- One is promoting economic growth (through tax cuts and a more sane regulatory structure) and the other is slashing government spending to get our budget and debt (including at the state level) under control.  It's the second piece that I'm writing about today. 

Below is the best, most simplified explanation of what's wrong with our governmental budget that I've seen (many thanks to the anonymous person who first drafted it and started it along the proverbial email chain)--

• United States tax revenue:  $2,170,000,000,000
• Federal budget:                   $3,820,000,000,000
• New debt:                           $1,650,000,000,000
• National debt:                   $14,271,000,000,000
• Recent budget cut:                  $38,500,000,000

Now, remove 8 zeros and pretend it's a household buget--

• 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:  $142,710
• Total budget cuts which some politicians are proud about:  $385

Any more questions?

_______________________________

The Tax System Explained in Beer

I've received the following in email messages once or twice and never tire of it. It perfectly illustrates the problems with a progressive tax system.

Our Tax System Explained in Beer

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.

If they paid their bill the way we pay our taxes, it would go something like this….

The first four men (the poorest) would pay nothing
The fifth would pay $1
The sixth would pay $3
The seventh would pay $7
The eighth would pay $12
The ninth would pay $18
The tenth man (the richest) would pay $59

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20″. Drinks for the ten men would now cost just $80.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men ? How could they divide the $20 windfall so that everyone would get his fair share?

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s bill by a h higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

And so the fifth man, like the first four, now paid nothing (100% saving).
The sixth now paid $2 instead of $3 (33% saving).
The seventh now paid $5 instead of $7 (28% saving).
The eighth now paid $9 instead of $12 (25% saving).
The ninth now paid $14 instead of $18 (22% saving).
The tenth now paid $49 instead of $59 (16% saving).

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

“I only got a dollar out of the $20 saving,” declared the sixth man. He pointed to the tenth man,”but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar too. It’s unfair that he got ten times more benefit than me!”

“That’s true!” shouted the seventh man. “Why should he get $10 back, when I
got only $2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.
_________________

Weakening the Military: A less secure future

The announcement this past week by our President regarding cuts to our military sent a chill down my spine.  It's not that the Pentagon's bloated budget couldn't do for some strategic cuts. For starters, there are many weapon systems that are forced on the Pentagon by various Senators and Congressmen to help out their districts that we could easily do without.

However, I'd be willing to wager that the cuts made will not be in these bloated areas, but will instead harm our readiness, further harm soldiers' morale and send the wrong message to our enemies. I would love to be proven wrong, but the current administration's track record in this area is pitiful.

Jim Yardley, a former Vietnam Vet and blogger, does an excellent job of covering this issue. Click here to read his article.

How Stimulus Works

The following story has been making the rounds in email:

"It is a slow day in the small Saskatchewan town of Pumphandle and streets are deserted.  Times are tough, everybody is in debt and living on credit. A tourist visiting the area drives through town, stops at the motel, and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs to pick one for the night.



As soon as he walks upstairs, the motel owner grabs the bill and runs next door to pay his debt to the butcher. The butcher takes the $100 and runs down the street to retire his debt to the pig farmer. The pig farmer takes the $100 and heads off to pay his bill to his supplier, the Co-op.  The guy at the Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her "services" on credit.  The hooker rushes to the hotel and pays off her room bill with the hotel owner.


The hotel proprietor then places the $100 back on the counter so the traveler will not suspect anything.  At that moment the traveler comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves.
 
No one produced anything.

No one earned anything...

However, the whole town is now out of debt and looks to the future with a lot more optimism.


And that, ladies and gentlemen, is how a 'stimulus package' works."


Priceless. Absolutely priceless.  
______________________________________

Economic Gulf Between Elected Officials and the Constituents

Share

FacebookTwitterGoogle+DeliciousDiggGoogle BookmarksMySpaceStumbleUponRedditMessengerVodpodYahoo BookmarksBeboMister-WongWordPressGoogle ReaderOrkutXINGEvernoteNetvibes ShareStrandsPosterousBusiness ExchangeArtoTipdSmakNewsPlurkAIMYahoo MessengerIdenti.caMozillacaBlogger PostTypePad PostBox.netNetlogTechnorati FavoritesCiteULikeJumptagsHemidemiFunPInstapaperPhoneFavsXerpiNetvouzWinkDiigoBibSonomyBlogMarksTailrankStartAidKledyKhabbrMeneameYoolinkBookmarks.frTechnotizieNewsVineMultiplyFriendFeedPlaxo PulsePingSquidooProtopage BookmarksBlinklistFavesYiGGWebnewsSegnaloPushaYouMobSlashdotFarkAllvoicesJamespotImera BrazilTwiddlaLinkaGoGounalogHuggDiglogNowPublicTumblrLiveJournalCurrentHelloTxtSpurlYampleOneviewLinkatopiaSimpyLinkedInBuddyMarksAsk.com MyStuffViadeoMapleWistsConnoteaBackflipMyLinkVaultSiteJotSphinnDZoneCare2 NewsHyvesSphereBitty BrowserGabbrSymbaloo FeedsTagzaFolkdNewsTrustAmazon Wish ListPrintFriendlyRead It LaterTuentiEmailRediff MyPage

Google GmailYahoo MailHotmailAOL MailAny email    

By Lockerz

I've previously posted about our society splintering into 2 classes.  Power and wealth is becoming concentrated in the ruling class, aka government, at the expense of the rest of society.  A large bureaucracy with overly complex and far reaching regulations is taking over every aspect of our lives, making it difficult, if not impossible, to be a law abiding citizen.  The bigger government grows and the more regulations that are issued, the more money and power becomes concentrated in our nation's capital.  This sets the foundation for the crony capitalism that is so despised by people.  Big business pays to have rules written in their favor and at the expense of the competition, i.e., smaller independent businesses. With an all powerful government, the playing field is not level as the people who make the rules will bend them for their friends. 

Meanwhile, elected officials are enjoying a lifestyle that is disconnected from that of their constituents. Don't believe me? Check out these headlines....

While President Obama Arrives in Hawaii Amidst Security and Fanfare, Former House Speaker Nancy Pelosi Slips Quietly into Big Island Resort  -- By Malia Zimmerman in the Hawaii Reporter, December 24, 2011. The story recounts Cong. Pelosi's annual Christmas trip to Hawaii, staying in a $10,000 a night suite at a Four Seasons resort in Kona.

and

Growing wealth widens distance between lawmakers and constituents -- By Peter Whoriskey in The Washington Post, December 26, 2011.  Mr. Whoriskey states....

"Between 1984 and 2009, the median net worth of a member of the House rose by more than 150 percent, according to the analysis of financial disclosures, from $280,000 to $725,000 in inflation-adjusted 2009 dollars, excluding home ­equity.

Over the same period, the wealth of an American family has declined slightly, with the comparable median figure sliding from $20,600 to $20,500, according to the Panel Study of Income Dynamics from the University of Michigan."

With this growing gulf between the economic experience of our representatives and that of their constituents, it's no wonder they don't appear to comprehend the havoc they wreak on our lives with their constant meddling.
_________________________________

Oh Newt, Where For Art Thou?

A headline on on the Washington Post' Politics page read "Gingrich: Send U. S. Marshals to arrest uncooperative judges."   Earlier this weekend, headlines read that Gingrich stated he would ignore court rulings he didn't agree with.

These statements are forming a disturbing pattern that concerns to me. Over the years, I've heard Newt Gingrich speak several times. I've even had my picture taken with him. He's a nice person and a tremendous speaker.  However, I now understand why diverse people such as Robert Novak, Glenn Beck and editors at the National Review all have (or had, in the case of Novak) concerns about Newt Gingrich. 

Gingrich has stated on more than one occasion that he considers himself a Teddy Roosevelt president, and he has made admiring remarks about the effectiveness of FDR as a president.

Teddy Roosevelt believed that the federal government shouldn't begrudge a person making a lot of money so long as he/she earned the money in a manner that the government approved of and then spent it in a way that the government approved. This guy was the forefather of political correctness and big government control.  Why should the government at any level have any say as to how much money I earn so long as I've earned it legally?  Teddy Roosevelt clearly didn't understand or respect individual liberty.....and Newt picks this guy to be his favorite?

Now to FDR, who accomplished a lot of what he did ( or inflicted all the damage he did, depending on you perspective) by trampling on the civil liberties of the individual.  The rule of law was often an inconvenience that he ignored when it suited him.  By 1939, many Americans believed we were on the brink of being a dictatorship. What saved FDR's reelection was WWII.  Newt has indicated he admired FDR's ability to get things done. However, FDR did so by ignoring the rule of law.  Newt's a student of history. He would know this.

Now, back to the headlines regarding ignoring court rulings and hauling judges in front of Congress when he doesn't like their rulings. Again, the rule of law appears to be for the other guy.  I'm troubled by this.

A society's economy flourishes as a free society when two things are present-- (1) the preservation of private property rights, which has been eroded a great deal in recent years, and (2) a rule of law consistently applied.  Taking Newt at his word, he would dispense with this second pillar of freedom if he felt it was appropriate.   That kind of thinking scares me.  You either respect liberty or you don't.  Understanding and respecting these rights is paramount to American citizens keeping their freedom and flourishing as a free society.
__________________________

Climate Change: just a means to an end

“As a senior UN diplomat told me last year, 'The UN exists for only one purpose: to get more money. That, and that alone, is the reason why it takes such an interest in climate change' ” -- Lord Christopher Monckton.

I've believed for a long time that the environmental movement is dominated by people with ulterior motives. Many are anti-capitalists that use environmental issues as a weapon to push their economic agenda. For others it's a means to money and power. Then there are those "true believers" for whom it's a source of piety (serious, it's a religion to some of these people).  Finally, some people don't really think that deeply about it, they just want to be part of the latest fad and to be perceived as 'caring' about the environment. 

Some of the information coming out of the intercepted emails of climate scientists shows that in private they voice lot more skepticism about man-made global warming and climate change in general than is ever revealed in public. Why, you ask, do they never publicly voice their concerns? I imagine it has a lot to do with (a) the taxpayer money that keeps on coming to them for their research, (b) likely ridicule by others if they don't stay in lock step with the others, and (c) the money (had to state it twice; you always follow the money). Think about it. If they ever came out and stated that the catastrophic consequences originally predicted were in fact exaggerated, then the taxpayer funds dished out by various governments would dry up overnight.  We can't have that, can we? (Yes, more sarcasm. I can't help myself.)

For the United Nations (UN), climate issues provide an excuse to push for a world tax and a UN police force to enforce it and compliance with its climate treaty. I went on a tour of the UN back in the early 80's and came away with the impression that it's a useless organization. Nothing has happened over the years to change my mind. It's a large group of unelected self-important bureaucrats who, if they succeed in their current attempts to pass a global climate treaty, would have unchecked money and power.

"Power corrupts, and absolute power corrupts absolutely."

It's time we started paying more attention to what this organization is doing.  A short term failure in passing their climate treaty doesn't mean it is dead for good; it will keep trying. Unfortunately, I fear we currently have a president who would not stop the UN's plans and in private would likely be cheering them on.
_____________________

Reuters: Draft U.N. climate accord emerges, debate turns ugly
Infowars.com: UN calls for Eco-Fascist World Government at Durbin Summit
Infowars.com: World Government Climate Deal Fails in Durbin
_____________________