Thursday, February 26, 2009

Doing the Math

The Wall Street Journal points out some incovenient numbers (H/T: Powerline) for President Obama & his promises to pay for all this outrageous new spending through new taxes on the richest 2% (increasing taxes on the highest income earners to 42% over the next couple of years).

From the article:
But let's not stop at a 42% top rate; as a thought experiment, let's go all the way. A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. That's less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable "dime" of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.


And this is assuming that higher income taxes would in no way affect the behavior of those generating said incomes. Not only that, given our current economic climate, there will be far less earning those high incomes. And given that they'd be required to fork over ever increasing amounts of their income to Uncle Sam, how many older earners would just retire rather than watching their fruit of their labor go straight into the government coffers. Businesses will produce less (since the potential for earnings is lower). Fewer goods and services means fewer jobs.

My only critique of the Journal article is that it doesn't go far enough when it predicts that Obama will have to raised taxes on more than just the "rich". Yes additional tax hikes will become necessary, but, sooner or later, the Democrats are going to realize that the only way to pay off all this new debt is to fire up the printing presses leading to inflation.

Not only will this return us to the stagflation of the '70s, but will most certainly hurt our already tenous relationship with China - one of the chief foreign investors in the dollar. Tom at Radio Free New Jersey has more on that here.

Monday, February 23, 2009

It's starting...

While President Obama falsely accused the Republicans who opposed his stimulus plan as wanting to do nothing, back in January, I actually stated the case for "doing nothing". (actually, I stated the case that doing nothing was better than what he and the Democrats were proposing at the time - and have since rammed through congress at breakneck speed - there are things that are better than nothing, but this is not it).

To this point, we have had rising unemployment, but at least, inflation was low - in fact prices were dropping - that's how the market compensates - and recovers on it's own. Prices can drop to the point that people start buying which in turn gets things going again.

Now that the government has thrown another $800 Billion out there - but for which there were no goods and services produced, this gives us a greater supply of dollars, but the same supply of goods and services. Now that dollars are in greater supply relative to the goods they would purchase, we can expect with certainty that those dollars will be worth LESS relative to the goods they would purchase. In short, this is exactly what inflation is.

To make things worse, since no extra goods and services are being produced to go along with the extra currency, this does nothing to change the rise in unemployment. So now, we not only have people continuing to lose jobs, they will now find that the money they have saved for emergencies like this will buy less food, heat, gas, clothes, etc than it did before. Doing nothing would have been far better than this abomination from the Democrats.

Well - that inflation is starting now and I fear that the "stimulus" bill may have killed any chance for any sort of speedy recovery.

Monday, February 16, 2009

Crazy times...

It's been ages since anything's been posted here, I've been extremely swamped with work and home to post.

Anyway, I came across this extremely interesting video on the pace of technology and civilization.

What do you all think it means?



Did You Know? from Amybeth on Vimeo.