How I Came To Love The Fiscal Cliff

President Barack Obama sent his chief negotiator, Treasury Secretary Timothy Geithner, to Congress yesterday with his glorious plan for deficit control and to avoid the fiscal cliff.

Treasury Secretary Timothy F. Geithner presented the House speaker, John A. Boehner, a detailed proposal on Thursday to avert the year-end fiscal crisis with $1.6 trillion in tax increases over 10 years, $50 billion in immediate stimulus spending, home mortgage refinancing and a permanent end to Congressional control over statutory borrowing limits.

What is magical about this?  Note what is missing:  spending cuts.  Basically, Obama wants $1.6 trillion in new taxes, another $1 trillion in new spending, a permanent lifting of the debt limit (a power no President has ever had)…and says he will promise to cut spending later next year.

Heh.

Credit Mitch McConnell…he can be a doofus sometimes, but don’t call him stupid.  He laughed in Geithner’s face…literally.

I am what many conservatives may call a moderate.  I am, reluctantly, willing to give up some tax revenues if we get some real entitlement reform.  I think increasing taxes now is terrible fiscal and economic policy, but the American people gave the White House to Mr. Obama, so I live within that reality.  But, if we take Obama at his word, we should expect $3-$4 of cuts for every $1 of taxes.  That is what he himself promised on the campaign trail, as well as in the Presidential debates against Governor Romney.

This proposal?  At best (and this is an actual stretch) he proposes $1 of spending cuts to $4 of tax increases.  In other words, exactly the opposite of his prior promise.

Liberals applauded Obama’s courage, taking a stand for grand progressive ideology. That is ludicrous.  What Obama did is marginalize the centrists in the Republican party who were willing to at least consider tax revenues, while giving the Right more power to control the debate.  In short…Obama overplayed his hand. Obama does have some political capital here, but not as much as liberals would like to think.  They have argued that he won a huge mandate on November 6th.  And although I am willing to admit he deserves some leeway (one reason I am giving up the huge concession of tax revenues to begin with), defining his electoral victory as a mandate is laughable.  And more to the point, delusional.

So what Obama has done is forced the minority party into a corner.  What possible reason would Republicans have to talk to Obama about a proposal like this?  There frankly is none.  Obama seems set not to get a victory for the American economy, which would include some tax increases but also spending and entitlement reform; instead, he seems to be aiming for a short term political victory by blaming Republicans for going over the fiscal cliff.  Clearly, this is what will occur; the polls are quite clear on who the public will blame if that eventuality occurs.

For me personally, giving up tax revenues in the debate was for a simple reason:  I am deeply concerned about the American economy.  Obama is playing not with fire, but with nuclear fissionable material.  Our economy is languishing, and has been on the precipice of a recession for well over a year, and if anything things are getting worse.  Going over the fiscal cliff could easily push us into a recession.

But Obama simply doesn’t seem to care.  His priority is small minded political victories at this moment in time.  So I say, lets give it to him.

This ends up to be a simple calculation on my part, that has virtually nothing to do with politics; in fact, if I had political goals in mind, I would completely reverse course and surrender to the Democrats.  Is there a compromise that puts American on better footing going forward, looking longterm?  Short term, the tax increases will hurt.  Liberals can fool themselves all they want, but there is NO economic theory in which raising taxes during a recession helps create jobs.  Whether you are from the Austrian School or Keynesian, tax increases during a slow economic period stagnates economic growth.

But long term, if we got some entitlement reform, the tax increases, as painful as they would be, would be worth it.  But right now, Obama has only put the pain on the table, and nothing to gain.  At which point, why even bother?  Democrats’ calculation is that this would be so politically bad for Republicans, they will fold.  I say hell with it.  If the American people want to follow the path of other failed nations (Greece, Spain, Portugal) by raising taxes and spending with no fiscal reforms whatsoever, let them vote the GOP out in 2014.  I would rather go down swinging.

I am not a reactionary at heart.  I am pretty down to earth, look for practical solutions, am willing to compromise for the greater good, even at times it pains me to do so.  I was not the type that would protest in college, would get all riled up at the simplest insults, would be looking for my next cause to get fired up about.  So calling for us to ignore Mr. Obama’s proposal, walk away, and say hell with it?  It is not in my nature.  But at some point, a line is crossed…and that line seems to be hardening in the sand as I speak.  So if liberals really want to follow this path to fiscal ruin, I have only one answer.

Let it burn.

This was cross posted at Neoavatara.

Greed and Envy

How did we get to the point where we think we have a right to the fruits of someone else’s labors? What is it that makes us think it’s okay to take just a little more from “the rich,” as if that will solve all our problems? What is it that makes one person look at another and think, “You don’t deserve to have that”?

Greed and envy.

Merriam-Webster defines greed as

“a selfish and excessive desire for more of something (as money) than is needed.”

That’s all well and good, as far as it goes, until you try to define what is “excessive” or “more…than is needed.” Many folks today have come to believe that if you have a lot of money–whether earned or inherited–and you want to keep it, that constitutes greed. Millionaires and billionaires, they tell us. They need to pay more! Never mind that the taxes that are supposedly targeted at said millionaires and billionaires actually start with people earning $250,000/year…there are people out there who have more money than they need, and they don’t want to give it up.

Our friends at Merriam-Webster also define envy for us:

“painful or resentful awareness of an advantage enjoyed by another joined with a desire to possess the same advantage.”

Those evil rich! They have too much! They’re greedy! They don’t deserve that money! That money should be shared with the less fortunate! And how do we go about possessing the advantages of others…”sharing the wealth,” if you will? We could steal it from them, but that would be wrong, and we don’t want to wind up in jail. The solution: We hire the government to do it for us through taxation. Taxation is legal, and we don’t get our own hands dirty. We’ll pump it into government services…you know, all the things that have worked so well for us up till now.

Where does that leave us? We have now decided that the “rich” are greedy, that they don’t deserve what they have, that we want it, and by golly we’re going to get it. There’s just one question left: How much do we take? Let’s ask Bill Whittle:

Oh.

The rise of Golden Dawn in Greece. A sign of things to come?

socialism

One of the great lessons one can learn is from their mistakes. Throughout the course of events in history, we have ample evidence to observe mistakes and not make them ourselves or not repeat them.

The recent elections in Greece saw the uprising of a political party “Golden Dawn” which in any other time in history would not be more than a few thousand people in total in a country of twelve million.

Golden Dawn is the Neo Nazi party.

In the recent elections held in Greece, Golden Dawn managed to get around 7% of the vote, securing 18 (out of 300) seats in the Greek parliament. Almost half a million people voted for them.

The question obviously is why? Why would the country that offered so much culture and innovation (in ancient times), the country that is considered to be the birthplace of Democracy, decide to vote for Golden Dawn. We all know very well the devastation that came with World War II and what the Nazis did to those that opposed them.

To understand the why we need to look back in the early 80s and the political scene at the time.

At the time there were two and a half parties. There was the Communist party which would get at most 5-7% of the vote. And then there was the Socialist party (PASOK) and the Conservatives/Republicans (Nea Dimokratia). The balance of power was half and half.

When the socialists came into power in the early 80s with the promise of fair share and redistribution of wealth, they did just that. They created the largest entitlement program there was and as a result they got reelected. In 1987 the debt was through the roof and when the Conservatives came into power, tried to increase taxes and cut spending and reduce the debt. Naturally the people got used to handouts and that government did not live long. The Socialists came back into power and the same thing started over again.

In the late 90s you could not understand which party stood for what. They were both different sides of the same coin.

So with all that entitlement mentality came the time to pay for it. No jobs and no future for the young generation. To understand the situation, let’s look at a young man/woman that wants to become a Math teacher. Since all schools are state owned, once he/she graduates, he/she has to wait until he/she gets appointed. The problem is that there are not enough schools for Math teachers to teach on. As a result there is a waiting list i.e. he/she has to wait for someone to retire, so that the person ahead of them can get appointed, then another person retires and he/she gets appointed. In the early 90s there was no real reason to pursue becoming a Math teacher since the waiting time would be over 40 years, at which point would be the time to retire.

After 2000 things got worse. More debt, more corruption. People got used to hiding money from the Government so that they don’t get taxed an arm and a leg. The more you can hide the more you have for yourself (while of course Government officials and their peers enjoy lavish lives).

The biggest aspiration of Greek people is to kiss butt and get hired in the public sector. It is a steady job and you are set for life. In the meantime, you can see 35 year olds, still living with their parents because they cannot afford to move out. The tax code had been carefully structured in such a way, that there is no way for someone to be legit. One part of the code would contradict another, so even if one wants to be legitimate and follow the rules, they can’t. That of course results in corruption, tax evasion etc.

With the latest shamble regarding the monetary union and how they wanted to get rid of Greece from their organization (due to the debt), people had enough of the two parties. They are desperately trying to find someone who will end the corruption and put the ones responsible in jail and jump start the economy.

Here comes Golden Dawn.

Let’s forget for a moment (just for a very brief moment) where these guys are coming from (i.e. Nazism). Their message somewhat resonates with a lot of people even here in the US.

  • Everyone speaks Greek, nothing else
  • End corruption
  • Start enforcing laws
  • Prosecute thieves and make them return what they stole (see politicians)
  • Greece above all

It doesn’t seem that bad does it? Those are pretty legitimate messages that many people would agree should start happening here or in any other country.

People are willing to compromise on the Nazi part that Golden Dawn represents, for the reasons outlined above. This shows amply how desperate Greek people are. One only has to read history regarding Austria and how certain villages had huge unemployment numbers, no light at the end of the tunnel and going nowhere fast. Here came Hitler and despite the fact that he represented something vile, people accepted him willingly with open arms.

Unfortunately the same has been observed in the recent US elections. People know very well that President Obama doubled the debt. They know about the wasteful spending in green energy. They know about the unemployment of 14%, they know about the 23 million people unemployed. They know about the 40+ million people on food stamps. Yet they voted for him because his message was divide and conquer:

  • Mitt Romney is not one of us
  • Forget what happened, we are working for the future

In any other time, people would have not voted for President Obama at all. Yet here we are. People liked what they heard and they compromised on what they know. The accepted the unemployment and the tough times ahead and compromised for a message that resonated more with them. Simple as that.

Golden Dawn might be a radical group, but their message is strong and really appeals to a lot of people. Their scare tactics can be forgiven so long as they produce results. And with all that comes the fear of being beaten on the street because they don’t like you or the possibility of bringing Greece back in 1940.

Notable is the fact that Golden Dawn has distributed groceries to desperate Greeks (milk, bread etc.) on the streets in more than one occasion. Buying votes? What is 99 weeks of unemployment without the need to prove you are looking for a job, food stamps, free phones and free stuff in general, called then?

Take a close look. This is what socialism and corruption ends up becoming and unfortunately this is where we are heading to.