Do We Realize How Deep The Doo-Doo Is?

[Guest]

You all know that I have said that maybe increasing income taxes might be a necessary element of producing balanced federal budgets and beginning to pay down the $11 trillion national debt (and growing). So I decided to figure out how much taxes might have to be increased to begin to help. Unfortunately, it looks like increasing income taxes won't help much at all.

Our total federal tax receipts are in the range of $2.4 trillion per year. Of that amount, only about $1.1 trillion comes from personal income taxes. Corporate income taxes contribute another $375 billion or so. Then there's FICA payments for Social Security that are around $900 billion, a large proportion of which we actually pay out in Social Security benefits. The remaining $250 billion or so comes from exise taxes, estate and gift taxes and import duties.

So it looks like all we would have to "work with" are the individual and corporate income taxes to begin to make a dent in deficits and the national debt.

Let's just say that a 10% across-the-board income tax increase was placed on both individuals and businesses. What sounds like a pretty aggressive tax increase would only bring in an additional $150 billion per year...peanuts compared to the federal budget ($3.6 trillion recommended for 2009) or the $11 trillion national debt (before a lot of the stimulus and bailout spending is added).

The small amount that would result from a pretty aggressive tax increase wouldn't even put a dent in our interest bill. In fiscal 2008, our government paid $412 billion in interest to those holding Treasury bonds, bills and notes. Heck, an additional $150 billion in tax revenues would only cover our interest expenses thru the first two months of 2009! (Interest payments have been $148 billion thru the end of February, 2009.)

A quick look at these numbers suggests we're in a lot deeper doo-doo than I thought or most people probably realize. Just to balance the budget would take a combination of reduced spending or increased taxes totaling about $1.2 trillion. If a 10% increase in income taxes was part of that, there would have to be a cut in government spending of over a trillion dollars a year! In terms all us corporate types understand, that would require more than a 25% across-the-board cut in the federal budget.

What can be said other than...Wow!

While all the arguing about AIG, bonuses, earmarks, Dodd amendments and yadda yadda is going on, the U.S. is sinking deeper and deeper into debt that now appears we have no way of repaying for decades to come. If the Chinese suddenly turn off the spigot that we've come to depend on when we auction more and more and more Treasury IOU's each month, our way of life is going to come to a screeching halt...big time! The entire stimulus, save the banks, save GM, restart the economy, and blah, blah, blah is all done with borrowed money. If suddenly the lenders zip up their pocketbooks, we'll find out exactly how well the free market system can cause economic recovery, because that's going to be the only alternative!

I really can't suggest how we get the attention of all those politicians who seem to be more intent on keeping the public in the dark than addressing the problem. Now I'm beginning to realize why since the Iraq War began paying for it was always handled by several special appropriations each year. That way the total spending by the government was always kind of disguised. It wasn't until a week or so ago when the $3.6 trillion budget including everything was presented by President Obama, were most people able to realize what our total spending really is--and how flagrantly we are spending beyond our means.

I'm disturbed by this and while I hope no one here gets too upset, I hope you are as well. Something really does have to change.

[Guest]

Glad you posted this. I think there are many people, including myself, who have been bringing this up someplace every day. We can not afford all this pork, national health care, stimulus packages, bail outs etc. What is the answer? The US government will print more money and devalue the currency. Inflation will go through the roof. It will rob everyone of us of our investments and savings. Think about your investments that are paying for your retirement. I will use $100,000.00 to keep the math easy. Just multiple it by the number of 100K's you have. The stock market has reduced most of your investments by 25% to 40%. Say 30% average so your 100K is now worth 70K. Inflation over the next 3 years at the current COMMITTED spend will have to be in the range of 23% a year because the money will have to be printed. This is using your numbers. In 3 years your 70K will be worth only 21K of buying power. Now how will you pay for retirement with that? You can't. You have now had your wealth destroyed, and you have to depend on the government to survive. It's called wealth redistribution. Seems we were made a campaign promise about that. Those who have something have lost almost everything and those who had nothing have lost nothing. Please everyone, go read Karl Marx. He lays out the blue print to destroy a nation and our leadership is following it chapter and verse. And sadly we were told that was the plan, but either no one believed him or refused to accept it. Is this the change and hope you wanted?

[Guest]

You know I have read many similar posts on TOTV and you can almost feel the angst that many people have about what has been going on since Obama took office just 2 months ago. Let's face it folks, we're stuck with this 'program' for the next 4 years.

The only thing we can do as individuals is bombard our representatives with faxes, calls, and whatever protests are available to us; no civil disobedience please :) The best thing is when you vote, vote all of these spending maniacs out of there -- Donkeys or Elephants !

Investment-wise, just get your assets out of the stock market and into IRA cash reserves. At least that way you will stop the bleeding. The other thing someone else brought up quite correctly is the inflationary punishment we will take on our buying power because the dollar will become almost worthless before these next 4 years expire. Buy gold coins and have the place you purchase from hold them for you so that you don't have to pay taxes on them until you take them into your possession (Fidelitrade - not associated with Fidelity but used by them - is a good source for gold). Open up a brokerage account and funds can be transferred without you having to pay any taxes as well. Gold can only be purchased directly or through a brokerage account.

Anyway, we all feel your pain, but this is my best advice for weathering this sunami.

PS: Just to back up my devalued dollar theory - today I read where we are heading toward a one-world currency. Obama is a global/UN guy, so don't poo-poo this happening. Here is a portion of what I read: "A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar," the story noted. "Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.

A story in yesterday's Moscow Times is creating quite a stir in particular. At the April 2nd meeting of world leaders in London (the G20), the Kremlin is reportedly set to propose a new global common currency system to replace the U.S. dollar as the international currency of choice.

[Guest]

Kahuna......I am also glad you posted your assessment. In an old Dirty Harry movie one of the great lines of all times was spoken by Harry Callahan (Clint Eastwood). He said, "A man has to know his limitations." It's kind of the way I feel posting in an economic/financial thread because the only financial background I have is Economics 101 and 102 in college. I do read a lot, but, I admit I am sometimes confused by the staggering, ever shifting and irritatingly elusive numbers. You helped put it into perspective.

I read today in tomorrow's Australian Wall Street Journal that the Obama economic team has an apparent answer to the dilemma you identified and articulated. Bernanke says our government is going to buy $300 billion in U.S. Bonds, not Gary the singer. Further they are going to absorb $750 billion dollars in mortgage related assets, you know, the ones that many say are at the root of the economic crisis.

But, don't worry....be happy.... fear not, it won't be raised through taxation. Our government is going to crank up the printing presses, actually I think its done electronically, and create about $1.2 trillion new dollars. Penn and Teller would be proud of this magic illusion. Such a simple answer....why didn't TOTV's own pundits come up with that one.

But wait a minute, didn't I read something about inflation in my old Economics 101 class? Hmmmm......I wonder if inflation is a good thing? The Chinese and other U.S. debt holders might be a little miffed at getting paid back with cheap dollars....you think?

Maybe it's a flash of genius after all. Maybe they can just print a little more and cover those who lost considerable investment assets.

From a bunker deep in the heart of Sumter Landing.....have a great evening in the Villages.

[Guest]

Great posts by all !!!

What scares me, and VK among others think I overplay this, is that this script being followed was so predictable.

It is the way...lets just say of the organizers...create chaos, create the need and then supply the answer.

CABO mentions inflation. It is bound to come.

Obama has proposed cutting some payments to PRIVATE insurers on Medicaire Advantage. This with inflation will strap many seniors....now guess what the solution will be....MORE GOVERNMENT. This IS the plan, and has been the plan.

Look at all the "strings" attached to the stimulus plan. It makes the states beholden to the federal government after a few years.....ie., unemployment benefits.

Maybe I am blinded, but during the primary I read so much about President Obama, his life, his training and his real beliefs that I had no problem in saying during both the primary and campaign that this.....well, actually I never thought it would be quite so quick....was going to happen. His idealogy ALONG WITH our congressional leaders made this and make this inevitable.

He is a charming man with a gift of oratory not often seen, but there is nothing in his ACTUAL record that would indicate that anything but what is happening would happen.

I believe his entire administration, unless we get rid of the incumbents in 2010 (both parties) which I just do not imagine happening, will be that of "creating" the chaos, telling us how bad it is and then having the federal government step in to save the day.

When I say we have the "perfect storm" I mean we had a congress led by Pelosi, Reid, Dodd, Frank et all just waiting and President Obama was all they needed. He has, in them, the perfect leadership to insure the chaos, the panic, the bad news and then support his steps toward the federal government being the "savior" !!!

[Guest]

How do you say "domestic enemy of the United States Constitution?"

Yoda :cus:

[Guest]

My question as always is, How does one or us, make our wants heard? If you go by the election or any elections which are decided by the people, nothing seems to be wrong. I mean after every election that I can remember or hear people talk about, the comments are the same. " we should of done this, or nothing will change"
There has to be something that can rattle the Big Chiefs TeePee!! I agree with everyone that post here, and I keep saying this one statement everyday when I watch the news or politcal shows. "That Aint Right"!!!

I dont know if anyone here has seen the Movie, Head of State with Chris Rock. But if you watch it and watch what makes him popular, that is what we need. Someone that will stand up and tell the world when it comes time to give a huge bonus to a company that got my money to bail them out

THAT AINT RIGHT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


:faint:

[Guest]

History has shown that when you cut taxes, revenue to the government actually goes up. Of course every time that happened they spent it all and more.

It's really quite simple. If government would cut spending, balance their own budgets and then cut income tax rates, cap gains and corp taxes you'd see the economy come back so fast you wouldn't even believe it.

I've said all along the private sector can bring us back but unless the government stops screwing with things they have no business screwing with it ain't gonna happen.

You can't keep robbing Peter to pay Paul. Punishing success and rewarding failure is a recipe for disaster.

[Guest]

You all know that I have said that maybe increasing income taxes might be a necessary element of producing balanced federal budgets and beginning to pay down the $11 trillion national debt (and growing). So I decided to figure out how much taxes might have to be increased to begin to help. Unfortunately, it looks like increasing income taxes won't help much at all.

Our total federal tax receipts are in the range of $2.4 trillion per year. Of that amount, only about $1.1 trillion comes from personal income taxes. Corporate income taxes contribute another $375 billion or so. Then there's FICA payments for Social Security that are around $900 billion, a large proportion of which we actually pay out in Social Security benefits. The remaining $250 billion or so comes from exise taxes, estate and gift taxes and import duties.

So it looks like all we would have to "work with" are the individual and corporate income taxes to begin to make a dent in deficits and the national debt.

Let's just say that a 10% across-the-board income tax increase was placed on both individuals and businesses. What sounds like a pretty aggressive tax increase would only bring in an additional $150 billion per year...peanuts compared to the federal budget ($3.6 trillion recommended for 2009) or the $11 trillion national debt (before a lot of the stimulus and bailout spending is added).

The small amount that would result from a pretty aggressive tax increase wouldn't even put a dent in our interest bill. In fiscal 2008, our government paid $412 billion in interest to those holding Treasury bonds, bills and notes. Heck, an additional $150 billion in tax revenues would only cover our interest expenses thru the first two months of 2009! (Interest payments have been $148 billion thru the end of February, 2009.)

A quick look at these numbers suggests we're in a lot deeper doo-doo than I thought or most people probably realize. Just to balance the budget would take a combination of reduced spending or increased taxes totaling about $1.2 trillion. If a 10% increase in income taxes was part of that, there would have to be a cut in government spending of over a trillion dollars a year! In terms all us corporate types understand, that would require more than a 25% across-the-board cut in the federal budget.

What can be said other than...Wow!

While all the arguing about AIG, bonuses, earmarks, Dodd amendments and yadda yadda is going on, the U.S. is sinking deeper and deeper into debt that now appears we have no way of repaying for decades to come. If the Chinese suddenly turn off the spigot that we've come to depend on when we auction more and more and more Treasury IOU's each month, our way of life is going to come to a screeching halt...big time! The entire stimulus, save the banks, save GM, restart the economy, and blah, blah, blah is all done with borrowed money. If suddenly the lenders zip up their pocketbooks, we'll find out exactly how well the free market system can cause economic recovery, because that's going to be the only alternative!

I really can't suggest how we get the attention of all those politicians who seem to be more intent on keeping the public in the dark than addressing the problem. Now I'm beginning to realize why since the Iraq War began paying for it was always handled by several special appropriations each year. That way the total spending by the government was always kind of disguised. It wasn't until a week or so ago when the $3.6 trillion budget including everything was presented by President Obama, were most people able to realize what our total spending really is--and how flagrantly we are spending beyond our means.

I'm disturbed by this and while I hope no one here gets too upset, I hope you are as well. Something really does have to change.What terrifies me is you crunched these numbers in the quiet solitude of your retirement home here in TV. Thus, this isn't PhD level accounting and economics and any and all in the Federal govt who are responsible for this countries fiscal security have certainly crunched the same numbers. Where's the outrage and panic? In my business we call this denial... one of the most pathological defense mechanisms one can employ to cope with a crisis. Its a house of cards teetering on the brink of collapse. The Market reflects this better than anything. I'm shocked the Market (Dow) isnt below 5000.

[Guest]

Ironically, there are several sources of federal revenue to pay down on the debt other than taxation of the citizenry, but these sources require less tree-hugging (or equivalent) and more pragmatism.

New Oil leases (off-shore and fedral reserves) are a prime example.

Equalized trade agreements (especially with communist regimes) are another.

I'm sure we can all think of several more such options.

As one learns in personal finance, there's more than one way to balance a budget, and one cannot expect a "raise in pay" from the employer (in this case, more taxes paid by the citizenry) to do it. Spending reductions, new sources of income, and other trade-offs must work in unison to achieve fiscal solvency.

It's really that simple - and requires discipline. However, politicians base their election campaigns on the precept that the public wants everything, and also wants it to be paid for by someone else. Just tell them they can have it all with the "other guy" picking up the tab, and you too can have 15-20-30-40 years as a congressperson!

[Guest]

"I've said all along the private sector can bring us back but unless the government stops screwing with things they have no business screwing with it ain't gonna happen."
__________________________________________________ __________

DKLASSEN....problem is.....this is the list of names that control the government right now...

Obama...Pelosi....Reid......Dodd.....Frank

Anyone on that list or anywhere in power that you think will stop "screwing with things they have no business screwing with" ????

[Guest]

My question as always is, How does one or us, make our wants heard? If you go by the election or any elections which are decided by the people, nothing seems to be wrong. I mean after every election that I can remember or hear people talk about, the comments are the same. " we should of done this, or nothing will change"
There has to be something that can rattle the Big Chiefs TeePee!! I agree with everyone that post here, and I keep saying this one statement everyday when I watch the news or politcal shows. "That Aint Right"!!!

I dont know if anyone here has seen the Movie, Head of State with Chris Rock. But if you watch it and watch what makes him popular, that is what we need. Someone that will stand up and tell the world when it comes time to give a huge bonus to a company that got my money to bail them out

THAT AINT RIGHT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


:faint:
Get the Hummers....LET'S ROLL!

[Guest]

If I spend spend spend, my checking account will be dry. But then I can get a credit card and spend that - maybe I will use up my limit, but that's ok. See then I will apply for another credit card, see that will solve everything.


Maybe this is starting to sound like Obama's program - What ya think?

[Guest]

to be able to find the dollar amount of benefit in all the stated activity for we the people.....oh I forgot we will get another $600 check from Incle Sam this year:1rotfl:

Everything listed in all the posts is akin to what has been said each day since the election with the difference now we are witness to what a real loose cannon can do in Washington DC and I don't mean just the POTUS.

He is a populist that is doing more for the wealthy and big business than ANY prior President and little or none of the programs...to date anyway....hold ANY promise for improvement in any of the issues being addressed (definition of addressed: give 'em another billion and see if that helps!!)....and there certainly is no benefit on the horizon for we the people.

And just think there are only 3 years and 10 months to go.

Obama and his "gang" have inherited a blank check scenario....called the US Treasury, that has a weak at best titular head, that cannot even hire people to fill the jobs. Backed up by a Congress that has been lying in wait for these past two years, who also have access to and control over even a bigger check book. None are accountable. None are measured. None are doing the job for which they are elected or were elected.

We the people have shown year after year we really don't care what they do as long as it doesn't affect me. Not true you say! Then how do these lecherous, whore mongering, sexual deviate, no tax paying, lying cheaters get re-elected???

Well the key words above are...as long as it does not affect me....that will soon not be the case. How's your net worth these days? Wait until inflation kicks in and some will have to access that shrunken net worth even more.

As I have said many times before if you think we have chaos now, just wait untilo the next oil/energy crisis hits...like an interupted flow of oil from the mis east...unlikely....more likely than any or all the get well plans currently on the docket. Or when the next terrorist attack hits one of our cities....unlikely....it is a certainty.

Either one of the above will tilt this country...there is a possibilty both could happen with the right kind of terrorist planning....so maybe we truly are witnessing the end of the used to be greatest country on earth.

Did anybody notice how well our leaders managed the know debacle of AIG bonuses. A number against the whole so small it is lost in the rounding, BUT, they have all attacked it uh-huh...they got we the people to think they are doing anything but covering theirs and those they benefit backside.

In closing, let's just see how good we the people are...one example...Dodd...after all he has brought down on this country....anybody wanna take bets he gets re-elected?

Good post....disgusting subject....worst of all....ABSOLUTELY NO LIGHT AT THE END OF THE TUNNEL....but they all talk so good don't theybarf

BTK:mad:

[Guest]

Yesterday it was the AIG bonuses
Today it's the Fannie and Freddie bonuses.

Focus everyones anger on someone else so they won't see what the real issue is. As soon as they start controling peoples ability to earn, the end is really close.

Tomorrow it will be control the payments to everyone working on every federal contract. And the next day control everyones.

How many of you want to be told that if you do X job, Y is the most you can earn? I think it's called socialism. And I agree Obama is not a socialist, he is worse, he is a Marxists.

[Guest]

Yesterday it was the AIG bonuses
Today it's the Fannie and Freddie bonuses.

Focus everyones anger on someone else so they won't see what the real issue is. As soon as they start controling peoples ability to earn, the end is really close.

Tomorrow it will be control the payments to everyone working on every federal contract. And the next day control everyones.

How many of you want to be told that if you do X job, Y is the most you can earn? I think it's called socialism. And I agree Obama is not a socialist, he is worse, he is a Marxists.

Good post.....

Dont listen to what he says...watch what he is doing !!!1