Keep it Simple

If I wanted to improve my family’s financial situation, I would basically have 2 options:

Spend ResponsiblyMake More Money

How can our government improve its financial situation?  Can I make a simple, yet humble suggestion:

Spend Responsibly + Make More Money

Well, it is refreshing to hear that our government will once again have some kind of legal restraint on how they are Spending (see 1st Video). I don’t know all of the details yet, but at least something is there.  So, how can our government Make More Money?  There is a simple way that doesn’t involve raising taxes and doesn’t take an Economics degree from the Ivy League to understand:  Decrease the Capital Gains Tax.  The bottom line is, the lower the Capital Gains Tax has been = the more money the Government has made.  This was referenced in one of the Democratic debates during the last Presidential race (see 2nd Video – Please ignore the captions that pop-up, it is the best video I could find.  Also notice in the video, how President Obama is so caught up in this ‘fair’ thing,  that he won’t even make a logical move that would actually improve the well-being of those he is concerned for.)

Where am I coming from with my suggestion?  The last time our federal budget was in surplus was during the last couple years of the Clinton administration.  Lo and behold, he had:

* Implemented ‘PayGo’ (short for ‘pay as you go’, meaning don’t spend it if you don’t have it)= Spending Responsibly

and

* Wised-up by decreasing the capital gains tax from his previous 28%, down to 20%= Making More Money

President Bush also decreased the capital gains tax (to 15%) but took away PayGo, thus increasing spending by $2.29 trillion in his first term (note: war spending only accounted for $454 billion of thisCongressional Budget Office).  If I made some moves and made an extra $500 per month, you had better bet that I would not then go and increase my spending by $700 per month.

I am glad President Obama is implementing this restraint on spending.  I don’t believe it will accomplish what it could, as long as he continues in his more ‘Robin Hood’/socialistic side.  Wouldn’t it be nice if our governing leaders would just simultaneously and continuously practice our capitalistic system with some common sense moral and responsible restraint.  Thoughts?

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4 comments

  1. I loved the connection that you made that it is not a democrat versus republiucan issue, instead it is a moral/ responsibility issue that needs to be addressed. Every leader should be fiscaly responsible and this kind of socialistic attitude is what led to the demise of the USSR. I hope and pray that this will not be the case for the United States.

    Our sense of entitlement is absolutley astounding and ultimately laziness. I continue to pray that this will be broken and our nations capitalist rooits will continue to be spread and not this covert socialism.

    On a more personal level I would say that it is a lesson for all individuals who tend to try to live outside of their means. This is what I would call greed. Timothy Keller made an interesting point that as Christians we should look at money as something to give away, not as something to keep us up with the Jonses. I believe that our mindset needs to change from this selfish greediness into an attitude of blessing and unselfishness. How quickly would be willing to sacrifice any small blessing that we have financially so that the gospel of Jesus Christ would be furthered. Jesus himself says that unless he can trust us with the small things he will not trust us with the large things. Just a thought for us. Over and Out!

  2. Somewhat back to the drawing board…

    Be weary of blanket statements:

    http://www.cbpp.org/cms/index.cfm?fa=view&id=1286

    “According to the Tax Policy Center, the average household in the middle of the income spectrum received $20 from the 2003 capital gains and dividend tax cuts.”

    Now granted $20 today seems like a lot more money than it did back in 2003 but nonetheless it’s not putting food on the table more than once for a family of four.

    “The average household earning over $1 million received $32,000, or 1,600 times as much.”

    I’d like to use this blanket statement to make an observation: We’ve been cutting taxes for the past 30 years and our infrastructure, heath care & education systems have been on a steady decline ever since. At some point we need to pay for our present (let alone the future).

    dwmorrison: I’d say not all leaders have the luxury of being fiscally responsible during crises. FDR sure wasn’t fiscally responsible and his government’s spending lead us out of the Great Depression, through WWII victory and put us on a solid economic footing that lasted more than a generation. That’s a lot more to show for being fiscally irresponsible than our last president.

    Also, you can’t really put the fall of the USSR on a ‘socialistic attitude’. Attitudes don’t end Empires. I’d say it had a lot more to do with that whole arms race thing (http://en.wikipedia.org/wiki/Cold_War) and that decade long war in Afghanistan.

    We’re in a lot more trouble than most are willing to admit.

    • Bronder: It is interesting to hear a different perspective and I would agree wiht you that our nation could possibly be in more trouble than we realize. With that being said I must point out a couple things.

      It was not FDR’s spending during the great depression that got us out of the depression, it was clearly a result of a society producing at full capacity for war. There have been several conclusive argumnents made that show that his “stimulus” aka the New Deal did not really majorly contribute to bringing the country out of the worst depression in history. So in that regaurd fiscal irresponsibility has not proven its value.

      Interestingly enough it would seem that the amount of debt incurred and such incredibly high stimulus packages as we’ve seen with the current president haven’t placed us any closer to getting out of this economic crisis than our last president. Seems to me that Obama’s fiscal irresponsibility is far greater then the last president with about the same results.

      I would also like to implore you as to how it is appropriate for governemnts to spend this way, certainly this is not a way any of us would run our households. After all it was this kind of careless debt incurring mindset that caused all of the trouble for the housing markets and bank industries. It simply does not make sense to try to get out of the recession by employing the same tactics that literally got us in this mess. Lowering the CGT has been proven to raise more money and even thought the distribution of wealth is hugely different as supported by your stats, I see no problem with this as we are a capitalist economy theoretically. I should feel no sense of entitlement to someone else’s money.

      Lastly, I would like to point out that while the arms race and war in afghanistan were clearly contributing factors to the fall of the USSR. It was utlimately the attitudes and ideal of the people of the USSR that revolted and overthrew the governmemnt. So yes, “socialistic attitudes” aren’t the only thing that caused the fall, but are a huge contributing factor. Let me point out that the governemnets attitudes and actions made the people sick of the communist ways. If this were not the case then the USSR would still be standing today. I find it interesting that your argument for the fall of the USSR places so much emphasis on external factors and less on the internal and most important factor the power and opinion of the people who cried out for freedom and against opression. I also must respectfully remind you that wikipedia is a fine place of reference but is alot of times off mark and anyone can contribute to its facts and many time sits facts are not totally correct. Alot of times they do not examine all sides of the coin.

  3. Interesting article. I always love to see the realities (numbers) of the middle class due to my 20-30 years as a part of this group (and one group lower ) and my subsequent desire for us to thrive and to be able to live well.

    My observations of the cbpp article are:

    A. They ONLY reference the 2003 capital gains tax (CGT) cut from 20% to 15%, which mind you was also coupled with a lifting of restraint on SPENDING. That was a major part of the context. This wasn’t the case with Clinton. In his second term when he cut the CGT it was in the context of a simultaneous restraint on SPENDING.

    B. Of course projections for keeping that 2003 CGT cut would result in losses over a decade – that CGT cut was operating in the context of increased SPENDING. That was part of my main point: If I made $500 more per month and then also began spending $700 more per month (and using my credit card to make that happen mind you) the projections for my next decade would be a no brainer: losses and deficits.

    C. I want to see the total revenue numbers EVERY time the CGT has been cut. I am not going to accept a ‘blanket statement’ that CGT cuts don’t generate more funds based on supporting data that is only from 2003. Did not the CGT cuts increase revenues when President Clinton cut them?

    Help me find the numbers on Clinton’s CGT cut. Help me find revenue numbers from EVERY time there was a change in the CGT. The second project would then be examining the SPENDING context of each of those fluctuations in light of my theory.

    The bottom line is that the last time in recent memory that we were in an annual surplus, both a CGT cut and a restraint on spending were simultaneously in place. Were they the only factors? No. But I am suggesting that they are major components of making a surplus possible. Government Surplus to me means the more money that can go into programs that help support the efforts of those of us in the middle class and in poverty, who are trying to improve our own station in life. Now, whether or not those funds are actually used in that way – that is a whole other matter!

    PS. President Obama has recently proposed dropping the CGT to 0% on investments into Small Business. According to this cbpp article, he is ignoring virtually all ‘respected’ experts and institutions of economics with his proposal.

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