As January 1 approaches, I cannot believe how Pres. Obama and his administration are pushing America towards the touted Fiscal Cliff, all because he wants those earning over $250,000 to pay higher tax rates. He constantly refers to them as “millionaires.” I’m not sure what new math he is using, but last time I looked, there was a $750,000 difference between “millionaires” and those earning $250,000.
But in an attempt to prove some point, he continues to push.
Come January 1, 2013 if something doesn’t give here’s what we have to look forward to…
- The Bush –era tax cuts will cease and taxes will rise for all
- The two year cut in the Social Security payroll tax will expire, adding more increase in the tax load
- The Alternative Minimum Tax(AMT) will not be adjusted for inflation, so millions will experience still another rise in taxes
- Medicare payments rates to physicians will be cut
- Extended unemployment insurance will expire (which I question the length of anyway)
And with no action, the defense sequester goes into effect with one of its outcomes reducing the strength of America’s response capabilities throughout the worldSo, what will be the likely result? It is predicted that these impacts could take upward to $500 billion out of the economic engine of our nation. Spending will likely be reduced by many households thus directly shocking the health of the economy. More will likely be laid off and many contracts will likely face threat of cancelation. And when spending is down, there is less reason to produce more goods, and that effects company’s health and slows the economy further. The Congressional Budget Office predicts that unemployment will climb once again to above 9%.
And all this is occurring while there is basically no addressing of the real problem…SPENDING! Money continues to be “invested” in green companies that fail, entitlements continue to expand, new arms of government are launched (i.e. The Consumer Protection agency), and on and on the spending goes. I have found in my own family that it is extremely unhealthy to spend more than what comes in. And, the way to get out of a problem is not to max every credit card, and once that is accomplished…go out and get some additional credit cards! What about that does Washington and Mr. Obama not understand?
And even surprising sources say this is not the way to proceed. “We have to cut spending,” says former Clinton Chief of Staff Erskine Bowles. Bowles told Face the Nation that even if the president got his tax rate hikes, we’d still have trillion-dollar deficits as far as the eye can see. Raising tax rates won’t solve our debt problem.
All that is being sought is more money to grease the machine of ever increasing big government. How tragic. All we have to do is look no further than Europe and Greece to see how that scenario plays out. I may not be an economist or politician, but I believe even Ray Charles could see where this train is headed.