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Saturday, January 12, 2013

Fostering Dependence

The Economic Collapse Blog wrote up a response to a report that 128 million Americans get some sort of federal assistance each month. That a LOT of Americans. Nearly 42% of the population. A dramatic increase from only 94 million in 2000. The blog author poses this question which many Americans ask themselves:
Overall, more than 70 percent of all federal spending goes to what they call "dependence-creating programs". It is the most massive wealth redistribution scheme in the history of the world, and it continues to grow at a very rapid pace with each passing month. But can we really afford this? Of course we never want to see a single person go without food to eat or a roof to sleep under, but can the federal government really afford to support 128 million Americans every month? If millions more Americans keep jumping on to the "safety net" each year, how long will it be before it breaks and it is not there for anyone? 
Without question, the economy is terrible and Obama's response is making it even worse for the middle class - adding to the class divides, actually.  New taxes and regulations hit the middle class proportionally worse than the upper class, while the welfare class avoids them by getting tax-free handouts.

This disproportionality comes as businesses pass along their tax increases in the cost to the consumers (mostly middle class) and that the FICA tax is pertinent on only the first 110k of income but nothing beyond. Then Obamacare strangles businesses and affects unemployment and more people go on the government dole just as Obama planned, as I believe many of us begin to realize. He wants a compliant majority voting base, happy to get freebies (to them, not us) forever by assuring a liberal majority from now until kingdom come.

The future looks bleak, with a president who has hijacked our economy and radically increased spending and forced the private sector to shrink, resulting in record numbers of Americans leaving the labor market, all while the public debt burden per person (taxpayer burden) is twice what most of us make in a year.

Yet there is a way out. It would be quite simple for Congress to force Obama into a balanced budget by simply allowing us to hit the debt ceiling, as explained at RedState (that link). What does hitting the ceiling do?
When we reach the debt limit we can only spend what we take in; quite a novel, radical idea in Washington. Of course, how the revenue gets spent gets complicated, but one thing is certain. Upon hitting the ceiling, the executive branch chooses how revenue is allocated. The US government would only default if the President ordered the Treasury Secretary to not pay our debts. It’s practically impossible. It’s less likely than seeing a fish ride a bicycle. CBO estimates the US government will take in $2.6 trillion this year. It costs approximately $220 billion to service the debt and prevent us from defaulting–just 8.5 percent of revenue. In other words, if we hit the debt ceiling, we still have plenty of money to pay the essential bills.
In fact, according to the CBO, we have enough to pay all “mandatory spending” (Medicare, Social Security, veterans benefits, debt payments, etc.) and defense spending, plus have more than $300 billion to use for “discretionary” spending. That’s right. Not only could we run all absolutely essential functions of government, we would still have $300 billion to spare.

Obama’s math doesn’t add up, yet the President and his buddies in the media have convinced people that the government will “default” if we hit the debt ceiling. They say our economy will tank. Explain this: How is a balanced budget bad for the economy? I mean, God forbid we only spend what we take in…
Yes, Obama plans to add new spending. Yes, Obama wants to raise taxes (again). Yes, Obama wants to increase the burdens on American businesses and families... but we don't have to let him.

I pray that the Republicans in Congress and even fiscally responsbible Democrats will take this option seriously. It is the only option we have to stop overspending and hand our grandchildren decades of irresponsibility. Only then can we begin to turn the economy around (eventually) after government spending levels are cut back down to size and maybe even restructured and reformed to have less overhead and bureaucracy (also called modernization and increasing efficiency, if we want to draw a private sector analogy to a federal government behemoth) and we reach equilibrium. The road will not be easy, even turning around now. Supposing we can. But it will be easier now than later with even more spending and debt to curtail. Maybe we can then we can focus on getting people off welfare and back to work, the way welfare was restructured in 1996.

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