Whatever Happened

To Our Debt Ceiling?

The Social Security and Medicare Trust Funds probably would have shown a small surplus, or at least broken even, this year but for the two percentage points reduction in the FICA (payroll)tax which was tacked on to the bill extending the President Bush era tax cuts at the request of President Obama. It is the FICA tax money which funds the Social Security and Medicare Trust Funds which, in turn, pays the retiree benefits. Now, beginning this year, our Treasury Department will be forced to borrow more and more money to redeem more and more IOUs from the Trust Funds in order to pay those benefits over the next ten years. That borrowing will amount to approximately $2.5 trillion. Does that sound familiar? That is almost exactly what the Debt Ceiling Bill proposes to cut from our budget (spending) over the same period of time. It appears that their intention is to cut other spending enough to cover the extra borrowing needed to redeem those IOUs representing the money (borrowed?) already spent from the Social Security/Medicare Trust Funds. (Check earlier postings on that subject) To us, not being economist, that adds up to a flat zero on all counts. Otherwise worthless.

And now to all the talk about taxes, especially on big Corporations and some millionaires and billionairs. Who could possibly feel sorry for those, so called, "fat cats" and not want their taxes raised? We have never been fans of highly paid athletes and Corporation CEOs etc., but the taking of their income by raising taxes will hurt the very poorest people the most. It has been proven, remember the "Stimulus Package", that the private sector can create jobs at a fraction of the cost to our Federal Government. For ever four jobs lost by the private sector because of higher taxes the public sector (Governments) can probably create about one job and most likely that would be in the government. Aside from that, major Corporations are not privately owned but have millions of stockholders. Every dollar lost to higher taxes will be passed on to those stockholders, which includes not only individuals but Retirement Fund of all kinds, from some of the smaller companies all the way up through the Federal Government. Individuals who collect dividends, many of them retired, from stock in big companies such as General Electric, big oil companies etc., probably will be subject to the paying of income taxes on those dividends. Revenue lost to the higher taxes on "Big Business" will result in lower income and less taxes paid by stockholders. Who can best handle the money? If you believe that President Obama and Congress can spend your money better than you can then you should let your choice be known or if you believe you can do better you should also let your views be known.
As for General Electric and probably others, not paying any income taxes in this country, raising the income tax rates probably won't change that. It will take a major overhaul of our taxing system to close the loopholes that allow special breaks to certain Corporations. We should scrap the income tax and Internal Revenue System and replace them with a fairer and simpler tax. What do you think?

To us,the most puzzling part of the budget cut proposal is the ten or twelve member panel which will attempt to come up with further cuts in spending. If they can't agree on a plan or if both Houses of Congress doesn't vote for their plan then there is to be an automatic trigger which will force across the board cuts but will do more cutting in defense and medicare. What kind of democracy allows twelve people to decide what programs will be cut and by how much?
Thanks for your time and input. Stay tuned. - William