What if.

[Bob Hubbard]

What would happen if you couldn't pay your credit card bills for one reason or another?
I suppose the first thing to happen would be, your creditors would not allow you to borrow any more.
You as the credit risk will have to make do with what you have, and that would mean no more credit purchases.
You could (and rightfully so) kiss Sears, Target,Best Buy, Khols, JCP, and any other of the big chains, good-bye, until such time as you are able to keep up with you bills.
In the meantime, you know you must learn to do without, while you are trying to get your financial house in order.
This may take a long time, but what other choice do you have?
Oh, I know, you can inform all your creditors that you are going to personally raise your credit line to cover your expenses.
That way you won't default on your obligations, and you can (with your new line of credit) continue buying, and charging as you have grown accustomed to doing.
Sound a little familia?
How is it the jerks running our government can't get this through their clogged brains?
This scnerial is exactly what the government wants to do.
How, if the country can't pay it's current bills, is it going to pay if it is allowed to "borrow" more money?
As a landlord, I never let one of my tenants get beyond one month's rent late.
My theory is, if they can't pay one month's rent, how the hell are they going to pay two?
Same principal applies to the federal, as well as state, and local governments.
It doesn't take a rocket scientist to understand that you can't keep shelling out, if you don't have the same, or greater amount coming in.
Again, why is this so difficult for the politicians to understand?
This country has gotten itself into deep crap over the years, and it is high time we pay the fiddler.
This time we need to bite the bullet, and take our medicine.
If that means cutting programs , and rasing taxees, then so be it.
This is the ONLY viable, common sense approach to solve the financial crisis.
A federal sales tax would be one way to raise capital.
Lowering taxes, and restrictions on business would create jobs, and in turn those new employees would be paying payroll taxes which could offset the amount of tax businesses would be paying, which would be another form of rasing capital.
Lower taxes on business means they can, and will expand, putting more tax payers into the system.
The products they need to run their business will be supplied by other businesses, which in turn those companies would expand to keep up with demand, creating more taxpayers.
What the hell is so difficult to understand about this principal?
The problem with the jerks in Washington is, they are so hell bent on protecting their sacred cows, that they can't see the forest for the trees, and meanwhile the situation compounds with each day nothing gets done.
Bob.

 

[shagdrum]

The "raising taxes" point is where the analogy breaks down. Up until there, it is all accurate.

At a personal level, if you are living beyond your means, your two options are to cut your spending and to raise your income level though a better paying job, a second job, etc.

The government does not have that second option.

There is no correlation between tax rate increases and tax revenue increases. In fact, very often, raising tax rates leads to decreased tax revenue. There is NO certainty that raising tax rates will raise tax revenue.

To run with the personal finance analogy, it is analogous to investing in lotto tickets as a way of "increasing" your income to pay your bills.

 

[Bob Hubbard]

The "raising taxes" point is where the analogy breaks down. Up until there, it is all accurate.

At a personal level, if you are living beyond your means, your two options are to cut your spending and to raise your income level though a better paying job, a second job, etc.

The government does not have that second option.

There is no correlation between tax rate increases and tax revenue increases. In fact, very often, raising tax rates leads to decreased tax revenue. There is NO certainty that raising tax rates will raise tax revenue.

To run with the personal finance analogy, it is analogous to investing in lotto tickets as a way of "increasing" your income to pay your bills.

Shag, you are correct, the government does not have those personal options available to it, but it does have the option to bite the bullet and once and for all understand this financial mess as a serious problem that WILL cause reprocussions throughoutthe world.
By biting the bullet, the government MUST be prepared to make drastic cuts in spending, not next year, not after the 2012 election, but NOW.
As a senior, I am worried about medicare, medicade, and a possible cut in my social security income, but I am smart enough to understand this may very well happen, and I will have to make some changes in my life.
The government has the option of lowering taxes on business, but for ambiguous reasons known only to them they seem unwilling to proceed on this.
There is no need to raise personal payroll tax on anyone, as by lowering the tax on business , that alone will stimulate economic growth far beyond the point any imediate increase in payroll tak would create.
I do feel a federal 1% sales tak would help.
I can't understand why it has taken the fools running the federal government so long to understand the basic principal of finance.
Bob.

 

[shagdrum]

By biting the bullet, the government MUST be prepared to make drastic cuts in spending, not next year, not after the 2012 election, but NOW.

Agreed. Unfortunately, that is not politically viable...right now.

The government has the option of lowering taxes on business, but for ambiguous reasons known only to them they seem unwilling to proceed on this.

It is an issue of principle on the Left to raise taxes on the wealthy. There is no economic argument for it, simply a moral one. The Democrat politicians are under tremendous pressure from their base to demand tax raises.

Elections have consequences. Unfortunately, the American people chose in 2006 and 2008 to put the party of economic illiteracy and economic wrecklessness into power. We are still paying the price for that mistake.

There is no need to raise personal payroll tax on anyone, as by lowering the tax on business , that alone will stimulate economic growth far beyond the point any imediate increase in payroll tak would create.

With regards to lowering taxes, all things being equal, it is unclear whether the business (and tax base) expansion would be enough to offset the rate drop would create. Would the economic effect be enough to offset the accounting effect? Again, there is no correlation between tax rates and tax revenue.

In a slow economy, as you allude to, it is much more likely that a tax cut would result in a revenue increase, but it is not calculable (especially in the CBO) and, with Dem control of the Senate and the White House, it is not politically viable.

I do feel a federal 1% sales tak would help.

It takes more money out of the pockets of would be consumers; stifling consumption in the process.

By itself, a low sales tax (say, 10%) might be doable, but not in addition to the Federal Income Tax. Besides, in the long run, it only transfers more power and influence to the federal government that we would come to regret later.

Either an national sales tax OR a federal income tax, not both.