Tax Cut Voodoo

Magical thinking is the belief that facts can be changed by repeating words or phrases that are not based in reality.  In this case it’s that cutting taxes will cure our financial problems.  Ask any Tea Partier, tax cuts will solve the financial problems of the United States.  Big businesses will use that money to expand and hire more American workers, money will be spread around and everyone will share in the wealth.  All this if we just cut taxes.

Unfortunately, the reality is that big businesses have had tax cuts and still do have them and none of these outcomes are happening.  Unemployment is still high, businesses are still shipping jobs overseas and citizens are losing their homes in record numbers.  This is the actual result of tax cuts. Still, there are a lot of folks in Congress are sprinkling dried toad powder into bowls of stumpwater, chanting their magical spell: Tax cuts will save the nation.

In the past I have asked senators and congressmen who’ve contacted me for my support to explain the tax cut magic to me.  None of them have answered me.  And I’m not surprised because when you really start looking at the system, it makes no sense.

1. The biggest employer in the United States IS the United States.  If the Federal Government stops spending, jobs are lost.
2. When jobs are lost, those who lose them are no receiving incomes.
3. People without incomes are not getting tax cuts.
4. If folks aren’t getting tax cuts (or incomes, for that matter) how are they going to spend?

And in an economy where no one is spending, no one is making money.

Then, when you have tax cuts, state and local governments have to let employees go.  These people live in communities where grocers, auto repair shops, plumbers, electricians, contractors, lawyers, doctors, farmers, teachers, shopkeepers, funeral home directors and other businessmen and woman live by making money providing goods and services to the people in their community.  With their customers out of work, these people stop making money.  And under these circumstances, who is going to expand, even if they are getting tax cuts?

Meanwhile huge corporations who built their wealth on the backs of hardworking Americans are treating their employees like first wives who got them through college then leave them behind for a more attractive, cheaper workforce.  Except these corporations aren’t paying their child support. Tax cuts won’t be spent in the United States.  Tax cuts these companies receive go to India and Thailand and China.

So my question is, when based in reality and not wishful thinking, how do tax cuts actually help our country at this time?  In a recession or depression, spending money is the only thing that helps.  And the only folks with the where with all to do that is the federal government.  The Roosevelt Administration put into place programs to employ workers such as the Works Progress Administration and the Civilian Conservation Corps.  He also put regulations on banks that maintained integrity in our financial systems until the Reagan Administration.  When Reagan started dismantling our carefully crafted safeguards, the result was the great Savings and Loan failure beginning with the Penn Square bank in Oklahoma City.  Further dismantling has been done until the thin line between corporate banking and personal banking disappeared.  The loss of limits created an environment in which speculators and unscrupulous investors made mortgage loans into snatch and grab schemes and defrauded Americans out of billions of dollars.  This loss of regulation, the “gud fer bidness” attitude of the Bush administration left Americans out in the cold.

So now we’re being held hostage, being fed a thin gruel of “tax breaks” as the ultimate nutrition for the country.  Look around.  Tax breaks won’t help the citizenry.  They won’t have an effect on those of us in the most need.  They will only help those who are already draining this country dry. And where will they put their money in off-shore accounts and investments.

Spending in the United States is bad mojo.  But if you really believe in magic, maybe tax breaks will help.  And maybe Santa and the Easter Bunny will will bring us gold from the end of the rainbow.

Balance the Budget

Republicans and Democrats are fighting like dogs over a bone to have their way in the Great Budget War of 2011.  Democrats agree that we spend too much and that cuts must be made to programs.  Republicans are barking, “BALANCE THE BUDGET! NO NEW TAXES!”  In a perfect world that would be wonderful and productive.

However,  expecting to balance the US budget like we balance our budgets at home is just naive.  It isn’t like balancing a checkbook.  It’s much more complex.  Our economy is a world-class and what we do affects markets worldwide.  If we default, other countries don’t get their money.

Those countries are entitled to their money, so instead of the money they just take possession of that amount of the US.  That’s how bankruptcy works.  You default on your loan, the bank takes your collateral.

And that’s how China gets control of the United States of America.  We give it to them.

Right now the US Dollar is the world’s currency.  If you want to buy oil, you have to purchase US Dollars to do it.  Asia, Europe, Australia and folks on all other continents must purchase dollars from us to buy oil, wheat, technology, and other commodities.  This keeps us in a position of control in the world economy.  This is determined by the International Monetary Fund (IMF).

Recently, though, Dominique Strauss-Khan the head of the IMF was arrested in New York on charges of sexual misconduct at his hotel.  While this was being worked out, he was removed as head of the IMF and Christine Lagarde was put in his place.  Will Lagarde be as staunch a supporter of the dollar as Strauss-Khan was?  Let’s hope so.  Because if our dollar loses it’s place in the world’s markets, our economy will plummet to third world country status.  And just like that we’ll be buying Chinese Yuan to buy oil and gas.  An prices will skyrocket.