Thoughts on tax breaks…

I think the term ‘tax break’ can be misleading. When you think about it, any tax break ‘costs’ the government that amount of money. It equates to a loss of income generated. It’s not free. Therefore, you could say that in essence, a tax break is just another type of spending bill. When it comes to creating jobs, currently there seems to be two primary options on the table….spend that amount of money to create jobs right now (infrastructure), or give away that amount of money via tax breaks in hopes that it will stimulate job growth at some point down the line.

As we all know, the government already spends more than it brings in. Giving out tax breaks seems counter-productive unless you are certain that those tax breaks will equate to more money coming in than the tax break itself costs. Also, it’s a lot easier to give a tax break than it is to take one back. You better be sure it’s going to work before employing it.

Social Security…

I think most Americans know that the government has totally mismanaged the social security funds. After all, the baby boomers have been paying in tons of money for many years now. Any intelligent, responsible organization/business, would have been investing those funds so that they grew. Instead, the government tapped those funds and used them in other areas. Now that the baby boomers are (finally) getting close to retirement, we are hearing more and more comments about how the whole social security system is bankrupt (or close to bankrupt) and something needs to be done. One suggestion I’ve been hearing is raising the retirement age.

My personal opinion is that if the government wants to raise the retirement age, then that should only apply to the people who sign up for social security after that new contract is put into effect. In other words, those new to social security would be signing a different contract. They would know the new rules, what to expect from the start, and have time to plan accordingly. My Christian Interpretation would be that it wouldn’t be ethical or appropriate for the government to renege on the existing contract that so many people have been paying into, and making plans around, for all these years.

Inflation

Maybe it’s just me…but amidst all the rhetoric concerning the current economic crisis, the one word that I am not hearing is inflation.  I don’t know about you, but my dollars don’t go as far primarily due to the fact that EVERYTHING costs more than it used to, and quite frankly, my wages have not kept up.  I have less money to spend.  Now, what strikes me as odd, is the government’s remedy for our ailing economy is to throw some money on top, the very thing, mind you, that causes inflation.  Once again, it would appear that this remedy is nothing more than a desperate attempt to delay the inevitable.  Not a cure, but rather a bandage. 

 

Which brings up the big question.  What is the cure?  How do you bring the costs down on everything?  How do you level the playing field?  Does anybody really know where to begin?  I sure don’t.  I keep hearing the S-word (socialism) mentioned.  Is that where we are heading?  Would that help in the long run?  I really don’t know.  I’ve never lived anywhere except here in America.  I have no way to compare life styles nor am I well educated in this area.  I think, though, that I would likely survive just fine under socialism primarily because I’ve never really been much of a capitalist.  I’ve never been motivated by a desire to be wealthy.  I suspect that the people that would object the most to socialism would be the people with the most to lose.  Would the majority of Americans benefit, though? 

Corporate America

These are interesting times.  It would appear that corporate America is holding all Americans hostage?  They’ve got their hands out asking for bailout money…but if the government doesn’t appease them, they threaten to close their doors.  Closing their doors would put many people out of work and puts the country at greater risk of falling into a depression.  Now, I wouldn’t necessarily be thinking that these huge corporations are trying to take advantage of us, but when I hear they are buying new jets, or giving out billions of dollars in bonuses, then I’m thinking….bonuses for what?  Running the company into the ground?  Either these companies are really, really, stupid (which could explain why they are failing)….or they are really, really, bold.  It appears to me to be the latter, and they are, in essence, extorting money from all of us.  If one of these large companies did fail, I imagine the CEOs still walk away filthy rich.  Therein lies their leverage.  They have little to lose personally, and are gambling with the fate of their employees and the economic welfare of the country at large.

House of cards

I find it interesting that one of the core issues at the heart of the credit crisis…ie relaxing the government regulations that would have determined if a person ‘qualified’ (had a reasonable chance of being able to pay it back) for a loan and instead giving loans to people who were really at high risk to default on the loans…is exactly what the government is doing to try to remedy the credit crisis. In other words, the government is, in essence, borrowing 700+ billion dollars that it can’t afford (wouldn’t qualify for) and is at high risk at never being able or willing to pay it back, and throwing it in the pot to try to restore confidence in the economy. Remember, our government was 9 trillion dollars in debt before the credit crisis. What kind of example is that? Does that build your confidence in our government? Sheesh.

Smoke and Mirrors...

Politics!  Once again it appears that the politicians have fooled us.  In an apparent effort to make an administration (or administrations) look successful, they (temporarily) stimulated the economy in a short-sighted and irresponsible manner.  Surprised?  I'm not.  The two party system is wrought with this type of behavior.  The politicians love to point to the stats.  Look at unemployment...look at the housing market...look at this and that.  But, so often, the numbers are deceptive because they are the result of, what amounts to, bad business decisions.  Decisions that are based strictly on the here and now...without considering the future implications.  Want to buy a house even if, in reality, you can't afford it?  We'll still give you a loan even if there is a good chance you will default on it.  One little hiccup along life's way and you will be over your head in debt.

The way I understand it, the government is at fault in all this, though business took advantage of the government's idiocy.  Since the government mandated that companies give loans to people who basically couldn't afford them, these companies did exactly that.  There were a lot of commissions on the sale of homes.  Capitalism would say...who cares if the home buyer can't afford the home?  What matters is that I get my commission.  If the home buyer made a bad decision, that's their problem and not my fault.  That's what capitalism breeds,  greed, and shortsightedness.  Who cares that the whole economy collapses later on...what matters is the money I can make right this minute.

imo, the USA needs a whole new government system, as the system we have now has it's origins in selfishness (me), and greed (me).  A system that is based on 'me', is doomed to self destruction.