Hanging from the fiscal cliff

As the fiscal cliff approaches, California has showed us that the Laffer Curve is accurate. Despite raising taxes on the wealthy in California, the states revenue actually decreased. As this report became available, don’t expect it to make the headlines or even be covered by the main stream media, it doesn’t fit with the class warfare agenda of the current administration, where the evil rich don’t pay their fair share, even if no one will explain what is a fair share. With some Republicans caving in under the pressure of the impending fiscal cliff, it appears that a drastic fall off of the cliff may be temporarily averted so we can continue our slow descent into socialism. For all the pre-election talk of plans, the administration still has not released a plan, at least one that Harry Reid and the Democrat led Senate will bring to the floor except the chant of tax the rich. Even if Obama gets his tax increase on the wealthy, the taxes collected would only fund the federal government for just over a week. What all of this really shows is that America has a spending problem, not a so called “revenue” problem. Since Obama has been in office, the United States has been operating on a trillion dollar deficit. The United States currently borrows more than $0.30 of every dollar it spends. The federal government collects just over $2 trillion in taxes even though it spends over $3.5 trillion. If you look at all the waste, duplication and fraud it’s easy to see the government needs to curtail spending, not increase taxes. As individuals, we couldn’t run our households on a 40% deficit and no business could stay in business operating like the federal government but yet we allow our government to operate with such frivolity. Congress will soon head home for the Christmas break and one thing is for certain, the taxpayer will be one that ends up paying for the congressional compromise. One thing that is often overlooked by the general public when they hear the tax increases or spending cuts is what they are actually saying. Take for example, President Obama’s $1.6 trillion proposed tax increase, sounds pretty good when you figure the annual deficit is around $1.5 trillion. On the surface, it appears that the tax increase will almost cover the annual deficit. What’s overlooked is while the annual deficit is an annual number, the tax increase is over 10 years, which means the annual increase in revenue is $160 billion, hardly enough to make a dent in the $1.6 trillion deficit, let alone the $16 trillion national debt. Spending cuts are in no better shape and offer no real plan to curb spending. The spending cuts we keep hearing about are really only proposed cuts to projected future spending. Everyone in Washington DC claims they want to fix the problem, the same problem that those in DC created. If they were serious about the problem, we would not be in the situation we currently in. Congress claims they want to balance the budget, but they are the ones that don’t balance the budget. Relying on the government to fix the problems they created is like clapping with one hand. For reference with links, please see my article here.