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Real Answers™
gh145
Copyright: © 2011 Gary Hardaway
670 words

WARNING:  TSUNAMI APPROACHING

By:  Gary Hardaway

Folks, we’ve got a problem, a federal spending problem. We’re borrowing and spending money so fast that the national debt is evolving into a giant tsunami that’s going to sweep us away.

 

We also have a leadership problem. The president of the United States refuses to join in the battle against runaway spending and soaring debt. He has no plan, no budget proposal to bring government under control. Seven months into fiscal year 2011, the recent hastily arranged budget, despite much posturing by all parties, resulted in a measly 1/3 of a billion “cut.” Both the president and Congress have failed to execute their fiscal responsibility. Both lack courage and conviction.

 

How bad is this failure? In 1995 we owed our creditors 5.25 trillion dollars. Today the amount is over 14 trillion, almost triple 1995. In budget year 2007 we ran up a total of 160 billion in additional debt, an average of 13.3 billion per month.

 

That sounds like an awful lot of money, and, in a sense, it is. And yet it represents chump change compared to this year. In February the government borrowed $230 billion – 70 billion more IN ONE MONTH than the entire year of 2007. Roughly if that rate continues we will borrow 15 times as much money this year than we did four years ago. 

 

But, to be fair, we’re told by experts who are supposed to know these things that this year’s deficit will not keep climbing at the February rate but slow down, so that the final total will be approximately 1.65 trillion. Friends and countrymen, that’s 10 times the 160 billion of 2007. TEN TIMES.

 

The President has made one suggestion, sure to please many: raise taxes on the rich ($250,000 income per year) to 39%, instead of the current 25%. He noted that 39% was the going rate during the Clinton years. (The president, using perfectly good deductions, paid 17% on his 1.7 million 2010 income). OK, let’s think about this. Let’s make a deal.

 

Let’s agree to this tax hike IF we also return to Clinton-level spending. In 1998 the U.S. government spent 1.66 trillion. Spending for 2011 is coming in at about3.5 trillion (roughly). If we axe 1.9 trillion and raise the taxes on the rich, we just might make ends meet.

 

I’m almost ready to say, let’s do it. But the president refuses to cut spending. He wants to keep shoveling trillions into entitlements.  

 

Moreover, raising taxes alone will barely affect the sea of red ink. The “rich,” the upper 50%, already pay 97% of the total tax bill. The bottom half pays 3%. And 40% to 45% don’t pay any taxes at all. The Golden Goose and the Cash Cow don’t have enough funds to underwrite the trillions and trillions needed to balance the budget.

 

Then there’s another factor that history teaches us to consider, though it’s hard to calculate precisely.

 

When people get hit with higher taxes, they quickly adjust. Some leave the country. Many more find legal tax shelters. Perhaps some will illegally cheat by false reporting. Some may simply quit doing business and retire. Entrepreneurs who stay in business will probably hire fewer employees. In general, higher taxes always cause smart people to behave in ways that will lighten the load – just as the president has done by listing legal deductions.

 

We must relearn the value of financial discipline and stewardship. Our ancestors had a quaint saying: “Who goeth a borrowing goeth a sorrowing.” They were right. As Ralph Waldo Emerson put it in similar stilted language, “Wouldst thou shut up the avenues of ill, Pay every debt as if God wrote the bill.”

 

In the Bible we find a sobering warning: “The borrower is servant to the lender.” An Old Testament servant was often a slave. Debt can collapse our Constitutional republic and deliver us into slavery, perhaps to Chinese masters who hold vast amounts of our IOUs.

 

No matter how we slice it, we have to stop wild, catastrophic spending and borrowing  – or go broke.


Gary Hardaway, a regular contributor to the Amy Internet Syndicate, directs Summit School of Ministry in Bellingham, WA.

"Real Answers™" furnished courtesy of The Amy Foundation Internet Syndicate. To contact the author or The Amy Foundation, write or E-mail to: P. O. Box 16091, Lansing, MI 48901-6091; amyfoundtn@aol.com

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