It’s both good economics and good politics. There’s absolutely no reason to strike a deal with Obama on this. Just let the Fiscal Cliff happen.
On January 1, 2013, automatic spending cuts plus Taxmageddon kick in — unless President Obama can strike a deal with House Republicans over spending cuts and taxes.
Obama wants to increase taxes, but doesn’t want to cut spending, with the possible exception of military spending. He certainly doesn’t want to cut or even limit spending on entitlements and welfare programs. He wants those expanded. Obama always wants to spend more. Obama always wants to grow government.
The Fiscal Cliff stops his spending spree.
I’m not the least bit concerned about the automatic spending cuts.
Remember, the Fiscal Cliff is not a Fiscal Cliff for you or me. It’s a Fiscal Cliff for the federal government. It requires the federal government to cut spending across-the-board if Congress and President Obama fail to hit spending cut targets they all agreed to. It requires the federal government to go on a diet.
Isn’t this exactly what we want — mandatory spending cuts?
So this is only a crisis for liberals and Leftists who want no restraints on spending.
Yes, the military will be hit by this. But, frankly, it’s high time we started scaling back our military. Not that I’m against having a huge military if we can afford it. But we can’t.
Right now, 43 percent of the entire world’s military spending is, well, us. We are spending six times more
on our military than #2 China. We are spending 14 times more than Russia. Both Britain and France spend more on their military than Russia.
Russia is really just a Third World country, no longer much to worry about.
There’s no Hitler on the horizon and aircraft carriers are not needed to kill terrorists.
Surely the 11 aircraft carriers we now have are enough.
No other country in the world has more than two aircraft carriers. China and Russia each have one aircraft carrier.
So I’m not losing much sleep over the prospect of scaling back our military some if it also means we have to cut government spending everywhere else by the same proportion.
We need to do this.
The U.S. government now has a $16.3 TRILLION debt and is borrowing 40 cents out of every dollar it spends. We need to cut and we need to cut now. If that means we go from 11 aircraft carriers to six, so be it.
Then we’d only be spending three times more on our military than #2 China.
While we’re at it, let’s also end all foreign aid. We can’t afford that either.
But what about Taxmageddon?
Starting on January 1, 2013, American households will see an estimated average tax increase of $4,223 per year.
Not only will the Bush tax cuts expire, but the patch on the dreaded Alternative Minimum Tax also expires. This will rope another 20,000,000 middle income households into paying the AMT who were never supposed to pay this brutal tax. The FICA payroll tax holiday will also expire on January 1.
The expiration of the Bush tax cuts produces about one-third of Taxmageddon’s tax increases. It’s a myth that the Bush tax cuts only reduced taxes on the wealthy. They also reduced the marriage penalty, increased the Child Tax Credit and the adoption credit, and increased tax breaks for education costs and dependent care costs.
But there’s more, much more.
Taxes on capital gains will go up to 20 percent from 15 percent. Taxes on dividend income will triple for many Americans. Instead of a top rate of 15 percent on dividend income, you’ll be paying whatever your income tax rate is on dividends. So that could be 39 percent under the new rates. And the “death tax” exclusion drops from $5,000,000 to $1,000,000 — with a mind-boggling 55 percent tax rate.
So goodbye family farm, and goodbye family business.
Then, perhaps most crushing of all, most of the 21 tax increases that are embedded in the ObamaCare legislation kick in.
So a tax increase nightmare awaits us January 1.
I say, so what?
If Americans want a gigantic social welfare and entitlement state, they need to start paying for it.
Now, I would certainly prefer there be no Taxmageddon on January 1. But I’m willing to live with it if we also get all those mandatory across-the-board spending cuts.
It would be far better just to have the spending cuts and no tax increases. The tax increases will certainly hurt the economy, probably plunge us into another recession — a double dip.
But I’ll take Taxmageddon if we get all the immediate mandatory across-the-board spending cuts.
I’ve always believed that if Americans had to actually pay for the government they are getting, they would not want this much government.
But politicians have found a way to increase government spending (especially entitlements) without requiring voters to pay the tab. They do this through deficit spending, and letting future generations pay for it — when the current crop of politicians have long since left office.
But that’s immoral. That’s stealing from future generations to pay for today’s government benefits.
It’s time to end this generational theft. It’s criminal that we are saddling babies who haven’t even been born yet with the tab for our benefits. Right now, every baby born in America owes $81,000 on the national debt. It’s time we pay the piper.
This will require brutal fiscal austerity.
But there’s also a big political benefit to going over the Fiscal Cliff and allowing all these automatic spending cuts and tax increases go into effect.
Barack Obama will get the blame.
Taxmageddon will likely push America back into another recession. But that’s, frankly, what America needs. What recessions do is blast the fat out of the economy. We then emerge stronger.
We need to get our fiscal house in order. And that’s painful.
Most Americans won’t like it and will take their anger out on Democrats in the 2014 mid-term elections and the 2016 Presidential Election.
But that’s just a side benefit. It’s also the correct economic prescription.
If you run up your credit card debt so you can live beyond your means, that eventually catches up with you. Then comes the hangover. There comes a point when you have no choice but to dramatically cut back your spending (perhaps even live like a pauper) until you can pay off your credit cards. You must learn to live with less.
That’s what America must do now.
Why not use this opportunity of the Fiscal Cliff to do these two wonderful things:
1) Put America’s fiscal house in order with across-the-board mandatory cuts in government spending; and . . .
2) Let Obama and the Democrats pay the political price for the pain.
There’s really no need to fear the Fiscal Cliff. It’s the tough medicine America needs. We have a $16.3 TRILLION national debt, for Pete’s sake. Soon the debt will be $20 TRILLION. And then we’ll be Greece.
The mandatory spending cuts will make us stronger in the long run.
The House GOP position should be no more increases to the debt ceiling. There’s nothing to negotiate. The debt ceiling should not go up again, period, ever. There’s really no reason to meet with Obama to talk over any of this. Just let it happen.
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