More Tax and Spend But Where Are The Jobs?

So the news these days is that the stock market is rallying after the passage of healthcare and the stimulus bill is finally bringing us out of the recession. Newsweek (or is it News Weak? I never can remember) ran a story recently that America is back; claiming the recession is over. Well, if we are actually recovering from the recession, where are the jobs? The increase we see in the Dow has nothing to do with the stimulus bill and while it is on the rise, it is not because companies are hopeful about healthcare savings but because they are trying to mitigate the negative effects the tax increases will bring in the future.

There are massive new taxes on the way because of the healthcare bill in addition to the increases business will see after the Bush tax cuts expire at the end of 2010. Corporations operate under different tax rules than private citizens and are able to shift their losses around to offset earnings where it will provide the most benefit. In fact, corporations can amend previous returns and move losses back three years or use them as far as twenty years into the future to offset future income. That is what we are seeing this year in the Dow. Companies know their taxes will be substantially higher in 2011 and are posting their income in 2010 when the taxes aren’t great, but they aren’t as insane as they will be next year. Once the tax cuts disappear and the new tax impositions from the healthcare bill are in place, the losses and expenses from this year will be used to offset the tax liabilities in 2011 and that will have a drastic effect on the Dow Jones.

Reagan made the same mistake when he took office. He promised tax cuts to rouse the economy but rather than make them immediate, he phased the cuts in, which allowed companies to post losses during the years of higher taxes; biding their time until the tax cuts took affect. Once the tax cuts were in place, the economy soared, ushering in one of the largest peace-time expansions of the GDP in history but before those cuts were actually made, the economy lagged and jobs suffered. Conversely, businesses are now taking advantage of the temporarily lower tax rates knowing that those rates are guaranteed to rise sharply in 2011. Furthermore, business is counting on the November 2010 elections to restore some sanity to government. While the Republicans cannot secure enough seats to repeal healthcare, they can certainly block the funding needed to implement it; stalling the healthcare legislation until 2012 can bring in a new Congress and a new President.

The President can try to put a happy face on the prospects Democrats are facing this election but he knows that a vote for the healthcare bill was a vote for their own retirement. Going into the healthcare vote, Republicans were no more liked than Democrats were but the scandalous way this legislation was forced through Congress against the will of the people has severely damaged the Democrats. While people are not quite sure they can trust Republicans right now, Republicans do have the distinct advantage in not being Democrats. The President has been trying to label Republicans as “the Party of no” but the Democrats have labeled themselves “the Party of sit down and be quiet you silly people”. In the whole grand scheme of things there is an awful lot you can do to Americans before they get truly angry but ignoring them just isn’t an option.

The frightening part about the President’s predicament is that it has fostered another sense of urgency in the White House and now every program and policy the President really wants is going to be desperately rushed in much the same way that TARP, the Stimulus and Healthcare was. Don’t forget that TARP had to be done right then and there or banks were going to fail, throwing America into a new depression. Well, TARP passed and Tim Geithner, Ben Bernanke and the President claimed credit for averting financial disaster but isn’t it funny that as soon as executive salaries were capped in the companies that accepted TARP money, those silly companies discovered that they actually did have liquidity and paid the TARP money back as fast as humanly possible. Well, most of them did. Curiously, the only ones that couldn’t pay the taxpayers back, and in fact, still needed more money, were the government’s own Fannie Mae and Freddie Mac. Imagine that!

Then there was the Stimulus Bill. We had to pass that one without thinking about it because joblessness was on the rise and without this critical infusion of money, the unemployment rate would get as high as 8%. Well, we passed that without thinking about it and unemployment climbed above 10% before stagnating at a miserable 9.7%. Recovery.gov still has no idea how much of your money was wasted on frivolous projects like amphibian underpasses so that frogs and salamanders can safely cross the road or funding studies about the drinking habits of Indonesian transgender prostitutes. Billions are listed as being given to Congressional districts that do not exist and since the government cannot say with any accuracy how many (if any) jobs were actually created, the White House has had to claim that the Stimulus Bill saved two million jobs knowing full well there is no way to substantiate a “saved job”.

With the Healthcare Bill we all watched in horror as the legislative process was subverted into a corrupt and underhanded push to pass something nobody wanted. Harry Reid, Nancy Pelosi and Barack Obama all blamed the Republicans for trying to stonewall the legislation when the bare fact is that the resistance that nearly derailed the bill was entirely on the other side of the aisle. Reluctant Democrats had to be bullied, threatened and bought off just to get the votes they needed to push this through. Once Scott Brown had been elected to the Senate, it was thought that the bill would finally die the death it deserved but the Senate Bill was taken behind closed doors once more where Pelosi and Obama abused House Democrats. They would use the same tactics Harry Reid used, forcing them to vote for the Senate Bill so they could ram it through under reconciliation; requiring only a simple majority in the Senate, effectively negating Scott Brown’s vote.

Now that the healthcare bill has passed all the nasty little details are emerging. The Medicare cuts, the tax increases and the admission by Senate Finance Committee Chairman Max Baucus, that the healthcare bill is designed to “correct a mal-distribution” of wealth in America. For those of us that warned about the redistributive goals of the bill, a healthy “told you so” might certainly be warranted but what good would that do now? Then there are the unintended consequences to deal with. America’s largest corporations are reporting that they will loose hundreds of millions in profits because of the healthcare bill; something that Henry Waxman fumed over, demanding that these companies appear before his committee and explain themselves. Waxman claimed that a report prepared prior to the passage of the bill said these companies would see a decrease in healthcare costs amounting to roughly three-thousand dollars per employee and he insisted upon knowing why they were not taking those savings into consideration. As it turns out, the report to which Henry Waxman was referring had nothing to do with the Senate healthcare bill and was based on a limited and incremental approach to healthcare reform similar to what the Republicans had proposed.

I suppose the funniest story came out last week when the Congress found out that the healthcare bill they all told us they read contained a little secret none of them knew about. Unless they act to correct the bill, Congress and their staff members are all going to lose their health insurance and will be forced into the exchange market. The only problem for them is that the way the law is written, they must lose the insurance now and the market they have to purchase from won’t even exist until 2014.

Despite the President’s promise that jobs are going to be his priority in the coming year his next race to get something past the Senate is on the financial reform bill. This bill places drastic and dangerous limits on American financial institutions placing them at a severe disadvantage when competing against foreign banks that are curiously not mentioned in this “much needed” reform bill. Even though Harry Reid said it may not be possible in an election year, the President insists that immigration reform is right behind his Financial Reform Bill. Also tucking into the White House fast track to destroy the country is the infamous Cap and Trade massive energy tax. The Senate is threatening to unveil their copy of that scam as early as the end of next week. So I have to ask the same question I started this article with….Where are the jobs?

Paul

Tax Day 2010 - Getting Ready for the Next Depression

Tax Day is here and while protests are taking place all over the country, we would do well to realize that April 15, 2010 may be something to celebrate only because these will be the lowest tax rates you will see for the foreseeable future. The spending spree brought on by the election of Barack Obama has accelerated the American free-fall into debt and the lending machine we have been using to finance our deficits has finally warned us that they are about to pull the emergency brake handle; bringing it all to a screeching halt. Think of it…our nation has spent so much money that we have not only exhausted our own ability to finance it, but the ability for an entire pool of foreign nation’s to lend us the difference. That is quite a feat and certainly qualifies as the primary definition of Obama’s proclamation that he would “fundamentally transform” America.

What has happened here? In the timeline of human events it wasn’t all that long ago when we were a nation that innovated self-reliance; which was the catalyst that sparked the solutions to every one of our difficulties. There is a long history of financial cycles where business and employment waxed and waned but the free market responded with dynamic solutions; not under the watchful eye of government, but because government was not involved at all. Today, that dynamic structure is shackled by the heavy hand of government regulatory control.

As the Twentieth Century approached, America found itself allured by the false promises of European thinkers. Progressives had entered the scene armed with the teachings of Marx, Engels and Nietzsche hoping to create an America that could coalesce power under a strong central government with the authority to pool the nation’s resources together to provide a base standard of living for all. Our first truly Progressive President was Theodore Roosevelt and while he didn’t have the power to bring about the change that he wanted to see, he certainly planted the seeds of Marxism thinly veiled behind the uniquely American label of Progressivism. What Roosevelt did do was to create the precedent of creating administrative agencies under a loose interpretation of the Commerce Clause. After all, if you could tweak America’s understanding of the constitutional authority for Congress to “regulate” commerce, then nearly anything could be brought under Federal control.

Woodrow Wilson would be the next Progressive President to assault the Constitution and is in fact, the most damaging. As a man who considered himself a “Progressive intellectual”, Wilson began the process of radicalizing America and using the precedent established by Theodore Roosevelt, created the Federal Reserve, the Federal Trade Commission, the Federal Farm Loan Act and of course, the Progressive Income Tax to pay for it all. Curiously, there was no constitutional authority to create any of those programs but since Roosevelt had already started the vilification of the Corporation; it was an easy sale to convince America that it just needed to be done. Of course, since these programs added to the Federal budget that gave Wilson the ability to institute the Progressive Income Tax because the Constitution allows Congress to collect taxes to pay for the debts of government. Incidentally, when the Progressive Income Tax became law, it was promised that the top marginal rate would never exceed 10% and most Americans would accept a minor tax to provide for such important programs.

Wilson narrowly won his second term in 1916 by promising America that he would keep us out of the unpopular war that was raging in Europe; a promise that he would break less than a year later. The war expenditures created the economic conditions that would have Wilson break another promise in short order, when he raised the top marginal income tax rate to 77% to pay for America’s war debt. Wilson’s actions crippled business and investment and led directly to the unknown depression of 1920. The reason it is called the unknown depression is that while there is plenty of data available about this calamity; none of the facts are particularly flattering to Wilson or the Progressive movement so it is simply not discussed in schools, the press or academia. Worse news for our Progressive friends is that the facts surrounding our recovery from that depression soundly refute Progressive policy. President Warren Harding recognized the damage done by Wilson’s wild tax increases and responded by halving Federal spending and eventually reducing the top marginal tax rate to 25%. Within two years, the nation’s economy rebounded and the “Roaring Twenties” had been born.

Progressive Herbert Hoover became President in 1929 and as though he had no recollection of the damages wrought by Woodrow Wilson, immediately sought to use his Presidency to bring about more transformative change. Hoover began by closing what he called “tax loopholes” for the rich and could probably be credited for creating the open war against wealth that modern Progressives use to sway the general population’s support for any program or policy that will punish evil wealth and better the lives of average Americans with the proceeds. Hoover also raised tariffs and farm subsidies while increasing Federal expenditures for public projects such as veteran’s hospitals that for the first time thrust our medical system into a direct an unfair competition with the Federal government. Hoover also cancelled oil leases on government lands (does that sound familiar?); chaired White House conferences on child health, protection, homebuilding and homeownership; created an anti-trust division within the department of justice and generally saw the presidency as a vehicle for improving the conditions of all Americans by regulation and by encouraging volunteerism.

It wasn’t a year before the nation slipped back into fiscal chaos as the bottom fell out of the stock market in 1929. Failing to learn the lessons set by Warren Harding in the early 1920’s, Hoover implemented huge public spending projects and raised the top marginal tax rate to 63% in 1932 throwing the nation into a full fledged depression. The Depression allowed the next great Progressive President his shot at transformative change; Franklin Delano Roosevelt. Although Roosevelt had accused Hoover of spending and taxing the nation into depression, FDR immediately began his bid to tax and spend the nation out of depression. Yeah, that didn’t make sense to me either but that is what happens when Progressives control what you read, hear and learn. The lessons of history become lost in the fog of “intellectual rhetoric”.

In the midst of a crippling depression, FDR created a huge new Federal entitlement program (Social Security) and saddled us with a labor relations act that would legitimize collective bargaining. He is also the first President that advocated the establishment of a second “bill of rights” that would enumerate certain economic rights that were unnervingly similar to the rights listed in the Constitution adopted by the Communist regime of the Soviet Union. Fortunate, we dodged that bullet or we may be a very different nation today. In a slight of hand, FDR balanced the regular budget but the “emergency budget” created to combat the depression had increased Federal spending from 8% of GDP under Hoover to 10.2% under Roosevelt. As a result, the National Debt increased more than 100% and was 40% of GDP by 1936. To pay for all this spending FDR raised the top tax rate to an insane 79% in 1936 and Truman would continue this ultimately topping out at 94% after World War II.

While FDR’s programs caused a brief drop in unemployment from 25% when he assumed office to 14% in 1937, the tax hikes and new government programs would take their toll and create a new depression within a depression, throwing more people out of work. FDR’s programs are widely credited for ending the depression, which is the white-washed and revised history offered by Progressive historians that again, want to conceal that Progressivism, like its Socialist sister; does not work. The Depression would not end until World War II when the American industrial base was the only untouched manufacturing center left standing and if you wanted to buy anything, you had to buy it here. Of course modern Progressive’s use the artificial manufacturing boom of the ‘50’s to justify higher income tax rates. After all, if the nation had economic expansion with a top marginal tax rate of 94%; doesn’t that negate the validity of the cuts imposed by Harding? Well, since the economic expansion was based on an artificial and temporary demand, those Progressive assumptions must be equally artificial.

So now it’s 2010 and we have another Progressive in the White House and this Progressive is as corrupt, evil and devious as Woodrow Wilson was. While Barack Obama is seemingly ignorant of the historic solutions that are proven to relieve financial problems on a national scale, this Progressive has a willing band of co-conspirators holding absolute control over the Congress making his regime particularly dangerous. Ronald Reagan understood what needed to be done but by then, the Federal agencies created by the Progressives of the early and mid- twentieth century had become so powerful, and the misinformation fed to the general population was so complete that not even the charismatic “great communicator” could restore the Federal government to its basic and most successful roots.

While 2010 may be the lowest taxes we will see in a long time history has taught us that we must now brace for a new “Great Depression” as Obama continues to make the same mistakes that all of his Progressive predecessors made. In his case, I sincerely question whether his actions are actually mistakes. We may be witnessing the only Progressive President that truly understands the history of his actions and is intent on using them to complete the work started by Theodore Roosevelt to create an America based on the principals of Marx, Engels and Nietzsche. God help us all.

Paul

Obama Care Is On Display in Massachusetts

Since 2006, Massachusetts has had a State managed healthcare system nearly identical to the healthcare bill that just passed into law. During the debates I had suggested that people take a long hard look at existing State health systems because every State that has meddled in healthcare has experienced crippling difficulties. While several States have attempted this, Massachusetts was the one that had nearly everything the Senate bill featured. The exchange; the subsidies and most importantly, it had an individual mandate requiring all residents to purchase an acceptable insurance plan or face a penalty.

The first effect Massachusetts felt was that individuals that had the money, desire and an idea to create a business began slipping across the borders into neighboring States to avoid the increased taxes and regulations imposed after the implementation of “Commonwealth Care”, the Massachusetts healthcare plan. As the plan began to mature and more of the uninsured obtained insurance either purchased to satisfy the mandate or provided through subsidies for the impoverished, the number of uninsured dropped to the lowest in the nation at just around 4%. Unfortunately, Massachusetts did nothing to make the prospect of practicing medicine in the Bay State any more palatable than it was before everyone had insurance so there was a measurable doctor shortage almost immediately. Wait times to see doctors have become frustratingly long and the extra burden placed on primary care physicians has taken a toll on the quality of care which were two things that voters had been assured would never happen.

The other thing that the people of Massachusetts were assured was that the cost of obtaining health insurance would finally be reigned in but that too, would turn out to be just another broken promise. The fact is that the cost of insurance in Massachusetts that was already the highest in the nation continued to climb at a staggering 10% per year, well ahead of inflation. By early 2008, the “safety net” hospitals that provided care for low income people in urban areas were experiencing serious budget shortfalls due to the combination of reduced "free-care" payments from the state and low enrollment in the exchange or “Commonwealth Care”. The State had reduced payments to hospitals expecting a reduced need for hospital charity as more people enrolled in Commonwealth Care but the enrollment that took place made little difference. What the social engineers in Massachusetts did not anticipate was that the fine for not having insurance was so low that people would learn to “game” the system. You could avoid thousands in insurance premiums and pay a minimal fine of a few hundred dollars and then get insurance through the exchange later when you absolutely needed it.

Some had argued for meaningful fines associated with the refusal to purchase health insurance but the bill would never have passed with the higher fines in place. As it was, the State spent years in court defending the mandates and fines and still has legal challenges waiting in the wings. One would think that the shortages to the hospitals would be an easy fix to address and all that would be required was to have the legislature reinstitute the reimbursements for indigent care but by then, the State was facing a short term funding gap of one-hundred million dollars and needed a new three year commitment from the Federal government for an additional one and a half billion dollars or the system would be in serious trouble.

Since the referendum ballot adopted by Massachusetts severely limited the States ability to increase taxes, the State floated several ideas to increase revenues such as an additional one dollar tax on a pack of cigarettes, but none of these measures were capable of stopping the arterial bleeding endemic in Commonwealth Care. The one-hundred million dollar short term funding gap would be the good news for 2008 as the State disclosed they had a one point three billion dollar deficit, much of which was attributed to the failings of Commonwealth Care. In 2010, the portion of the Massachusetts budget consumed by health and human services is a staggering fifty percent (50%) of all State spending. In response to the growing cost to the State, Massachusetts Governor Deval Patrick has instructed the State Division of Insurance to reject any request for health insurance rate increases that exceed the rate of medical inflation. Guess what? All of the available plans requested rate increases that exceeded the rate of medical inflation and 235 of the 274 requests were denied setting the stage for a showdown between the authority of government and the independence of business in Massachusetts.

The Governor’s instruction to the State Division of Insurance amounts to a unilateral imposition of price controls on an industry already hampered by State regulations and reduced reimbursements from the State. Four of the six companies that provide insurance through the Massachusetts exchange have posted substantial losses for all of 2009, which is what prompted the requests for rate increases. The insurers responded to the Governors edict by refusing to write any new policies until the matter was addressed and immediately filed suit against the State.

On Monday, a judge in the Suffolk County Superior Court ruled against the insurers stating that the insurers must exhaust the appeals process with the Division of Insurance before seeking a ruling from the courts. Four of the insurers have already filed appeals in accordance with the judge’s decision, vowing to take the matter to the Superior Court if necessary. Facing what is in essence, a health insurance blackout, Massachusetts Insurance Commissioner Joseph Murphy ordered the protesting insurers to return to the market with acceptable price quotes by 3pm Thursday, April 15th or face fines of five-thousand dollars a day per carrier plus one-thousand dollars for every consumer that is unable to buy coverage because of the action. So far, only one carrier, Health New England, has provided the new quotes demanded by the Commissioner.

Hopefully, they can resolve this for the benefit of those that rely on their health insurance because of long term illness or emergency needs but this may turn into our first real case of “Atlas Shrugged”. Let’s face it, the Federal government may have prohibited health insurers from competing across state lines but they are national companies. The only thing the Federal prohibition does is force the largest insurers to create 50 separate companies with the administrative costs that go with them. Blue Cross-Blue Shield in Massachusetts can thumb their nose at the Governor and Commissioner and close up shop completely in that State and do all the better for it. When a train has a car with a bad wheel, they separate it from the train and keep on going and for government to attempt to force a private company to sell a product at a loss is not just foolish, but un-American.

This isn’t the only challenge Commonwealth Care has. They still haven’t been able to attract doctors that want to work under those conditions so the State is now relaxing the restrictions on nurse practitioners and allowing them to perform health services formerly reserved for licensed doctors opening the door for yet another lowering of the quality of care. Before anyone goes into a rage over my comments, I know that nurse practitioners are hard working and dedicated people worthy of praise but they are simply not doctors. If there were no distinction between the two, there would be no need to bear the expense to complete additional education and go through the rigors of licensing to become a doctor. The fact is that just the suggestion that a change in State regulations would lower the quality care to fill the shortage of doctors leaves the State open to massive new law suits. It won’t take long for savvy personal injury attorneys in Massachusetts to provide a costly link between the State’s expansion in the role of nurse practitioners and the perception that suddenly, every medical procedure that doesn’t meet the recipients expectation could have had a different outcome if a bona fide doctor performed the services.

With the similarities between Commonwealth Care and our newly passed healthcare bill I seriously doubt there can be a substantially different outcome. Since the healthcare insurers will not be able to avoid the draconian price controls that will undoubtedly be imposed within a year or two after implementation by simply moving their business to another State, the insurers will most likely be driven out of business when the money runs out. You can bet we will have the same doctor shortages, the same wait times and the same willingness on the part of the public to pay the fines until they actually need insurance; insurance that will no longer be able to exclude pre-existing conditions. It’s a little late for the hard look the media is giving Commonwealth Care and I doubt they would even be doing these stories now if Mitt Romney, the former Governor of Massachusetts wasn’t a possible Republican contender in the 2012 Presidential election. What Obama Care may eventually bring us is a resurgence of questionable home remedies as doctor services become a game to see who can survive the wait, but this is the kind of progress that Progressives bring to everything.

Paul

Obama Breaks the Record for Broken Promises - The VAT Tax

It must be Monday because here comes another broken promise from our fearless leader. Does anyone recall when Barack Obama was campaigning for President as a moderate? I know it’s hard to remember those days; especially since he has taken such a hard left since his inauguration but for those that know where to find the quotes, they are still out there. Try these on for size:

“You will not see any of your taxes increase one single dime.”
Barack Obama

“I will cut taxes - cut taxes - for 95 percent of all working families, because, in an economy like this, the last thing we should do is raise taxes on the middle class.”
Barack Obama

Since late last week, a lot of focus has been placed on suggestions made by Obama’s economic advisors that the Federal government should consider a value added tax or “VAT” tax. The VAT tax was popularized in Europe as a means to raise revenues to fund a plethora of social programs such as nationalized healthcare and other redistributive policies developed in European nations lead by Socialist political Parties. It allowed those nations to raise vast amounts of cash without the complication of having a direct tax on the public; which makes it all the more appealing to sneaky politicians.

The VAT tax levies a tax on each stage of manufacture. For instance, if you consider a book, most people can not imagine how many stages actually go into the manufacture of a simple book. To make paper you must harvest pulp trees. That step adds value to the wood simply because it has been harvested and delivered to a processor so therefore, it would be taxed. Then the paper manufacturer grinds the wood into a pulp to make paper, but first, chemicals are added to bleach the pulp and stabilize it and each of those chemicals began life as a raw material that had to be processed and refined adding value (and a tax) to each stage of development. Of course the energy used to operate the equipment runs on electricity which is generated using fuels. Those fuels are not ready for consumption until they have been processed, adding a value and the corresponding tax to that as well so the energy they produce is more costly to the paper manufacturer.

Now that the finished paper has been delivered to the printer, the actual work of creating a book can begin. The paper must be cut to a size that is usable for the book that will be produced, an added value. Then the ink that is used is another chemical that was delivered to the printer with all the taxes that were applied at each step of manufacture. The act of applying ink to the paper is another step that adds value and let’s not forget that a book bound for reading is more valuable than one that is not, so that adds another tax. There are glues that must be made to bind the book; a tax. There is card material that must be made to form the cover; another tax. There is the lithograph and cover material that is applied to the card-stock cover for yet another tax. In the end, a simple $15.00 book now costs $20.95 because of all the taxes added at each stage of production and for each of the materials involved.

Most areas of the country have a sales tax of roughly 8% and that would net about $1.20 on the sale of a $15.00 book. That is why the government would love to sell you on the idea of a VAT tax. If they had to come directly to you for a national sales tax, what could they possibly get away with? 1% or maybe 2% would be the most they could start with and not enrage a nation already drowning in taxes. Governments that have a VAT tax love tell everyone that this is a tax on those evil corporations and that they are finally paying their fair share but they leave out one tiny little detail. Corporations never pay taxes. Did I say never? Yes, I said NEVER. All taxes assessed on corporations, manufacturers and retailers are immediately passed on to the consumer (you) through higher prices so the government gets to tax you indirectly using the corporations as the tax collector. Neat trick huh? Through this practice that $15.00 book will have to go up by about $6, the price of a Kindle would increase by roughly $100 and an automobile; roughly $3,000. Oh yes, then you still have the honor of paying your local sales tax of about 8% on the new, higher price.

A VAT tax is not the tax on the wealthiest 1% that Obama campaigned on; it is a tax on anyone that buys anything regardless of income. Of course you can avoid that tax provided you have property with trees that you can cut down and the mineral resources to create ink, glue and paper with. Then of course you would have to know how to make those products yourself and find the time after all of that to have written something worth putting in the blank pages of the book you just made. No, I’m not being silly. I am trying to illustrate the fact that this type of tax is insidious, hidden and unavoidable. Even the poor need food, shelter and clothing and they will be burdened by the price increases on all of that just as much as the wealthiest 1% is. The hardest hit will be new families and the young that are just trying to make it on their own. They are the largest consumers of manufactured goods and none of them even come close to being in that “top 1%”.

A recent report stated that a full 47% of the nation currently pays no Federal income tax because of the Progressive Tax system we use in the United States. I doubt anyone is short sighted enough to imagine that we can have a $3.8 trillion dollar Federal budget, avoid collecting taxes from nearly half the nation and still be able to afford it. Of course if Obama was an honest man, which he isn’t, he would have to tell America that the freebies are over; that we must end the earned income credits and reduce the current amount to be eligible for a tax exemption or begin shutting down essential government services and programs. Unfortunately, the Democrats and Progressives have quite a few people trained to believe that these programs are not government charities but entitlements that they have a right to collect. Since they can’t eliminate the programs without riots springing up all over the country they have moved on to considering a VAT tax that would allow them to give with one hand while taking it back with the other hand hidden safely behind the companies that will have to collect the tax for them.

The institution of a VAT tax would be more than just another broken promise; it would be an outright lie. The tax would be collected from manufacturers that would, in turn, get the money from you while the President would still claim that he has not raised taxes on the middle class. Obama will still try to sell this to his base group of supporters as another tax on the rich and on those evil corporations knowing full well, by every example set in Europe, that the people that actually pay that tax are the ones that buy those products. To be able to claim that he is concerned about the deficit and debt, Obama has commissioned a debt reduction panel to investigate the problem and develop strategies for dealing with it. Every expert in the nation says that no plan will be effective without a meaningful reduction in government spending but that is where the agreement ends. The Progressive economists say those reductions must be coupled with massive new taxes dedicated to debt reduction while the ones that truly understand the power of a free market economy say we must slash taxes to attract foreign investment and to put money back into the hands of the consumer where it belongs. By the way, the report from Obama’s debt reduction panel is not due until December, well after the November election which is another neat little trick.

I know to those that have been raised in the era of class warfare, this idea seems ridiculous. You have been told since birth that the rich are too rich and the poor are getting poorer; that the rich must give more so that the playing field can be leveled to help the poor through these difficult times. I will be blunt. I have never sought out a poor man to apply for a job. While we all have different measures of what “filthy rich” actually is; the fact is that it is the wealthy that create jobs and I can think of no better way to help the poor out of poverty that to nurture a thriving economy that can support meaningful jobs for all of the people that are stuck in government projects now. The government has never created jobs. The best they can do is to steal from those that have to give to those that don’t. The only problem with that is the money they just stole was the money that would have been used to create businesses and new jobs.

Europe is about to implode under their mountainous debt and the wealthy in those countries are looking for a safe place to invest. They would much rather invest in the United States because we have the most stable society and government on the globe. Instead, they are seeking investments in China and others like China because America has gone wild with ideas of Socialism lately. If we can reign in our spending and slash taxes, money will pour into this country as never before. We can prosper and reemerge as a world leader if we have the strength to bite the bullet in the short term and grow our economy instead of sapping the last few drops of blood out of it. Of course we need leaders that understand the free market and wealth instead of those that despise it. This November will determine the course of America and if we don’t elect a roadblock to stop these runaway Progressive Socialists in Congress and in the Presidency, we may not get another chance to return America to prosperity and peace.

Paul