The bitter pill we MUST take: Cutting spending AND Raising taxes

(Kamal believes we have come to far and must raise taxes, but only after a massive reduction in the size and scope of the federal government.  What are your thoughts? – promoted by Rob “EaBo Clipper” Eno)

[Below is my response to an email thread on the Worcester GOP email list which has the subject line “Dems use scare tactics to control us”. -KJ]

I agree: Spending cuts first — massive spending cuts.  Capital Hill and Beacon Hill both have spending problems.  We all are in agreement on this.

And yes, let’s focus on the people who are not paying taxes and instead essentially “earn” their living by simply voting for and supporting politicians who give them other people’s money and “free” stuff. (TANSTAAFL!)

We have let our government run cumulative deficits for so long that we’re going to need to take some extreme measures to fix our problem; we have a very bitter pill to take, but take it we must.  That pill has in it more tax revenue, likely no more than 20% of whatever actual GDP will end up being when we factor out much of the non-productive paper tiger that is FIRE (Finance, Insurance and Real Estate), and spending must be cut to below that level so we can start paying down our national debt.

As a nation, and a society, we’ve long deluded ourselves to think that debt and credit are the same thing — they are not.  Debt is not directly productive or necessarily contributing to actual production and true GDP; credit is.

Our government, and a great many of our people have borrowed us into a deep, deep hole and the price we paid for that was the loss of much of our industrial and agricultural base, not to mention our jobs.

If we the people stood up 10 years ago when the dot-com bubble formed and burst, the medicine we needed to take already for 20 years [but had deferred] would have been a lot less bitter.  The same is true if we did the right thing in 2007 when the depression we’re in began.  But we didn’t.  We paid attention to American Idol and other meaningless drivel rather than accepting our collective need to fix our nation by firing every single elected official who was not focused on stopping the looting by the TBTF institutions and their partners in crime in government.  This includes politicians and bureaucrats from BOTH major parties.

I can’t readily do as good a job as some others have on explaining the situation as I (and they) see it, so let me recommend that if you have 10 minutes or so, read this blog posting by my friend Karl Denninger of the Market Ticker:

http://market-ticker.org/akcs-…

If you have time, read more of Karl’s writings.

Kamal



Kamal Jain

http://kamaljain.com/ | kamal@kamaljain.com

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