Congress and the Super Committee will fail unless we raise our voices.

It is time for the sensible people to stand up and be counted. The supper committee will fail unless we are heard. There are a lot of angry people on both the far left and far right. They both have some valid points. We have run up to much debt but we have also allowed to great of an imbalance in the distribution of wealth in our nation. Our problems were created over years and can not be solved simply or quickly. Getting us on the right track and correcting these imbalances will take hard work and co-operation. We swang to far right when the Republicans dropped the ball and squandered the first surplus we had in decades. The economy was in a shambles when this administration took over. Instead of concentrating on the Economy to much time was spent on the health care bill. People were upset and then we swang to far left in the next election putting the far right in control. They are more interested in shrinking the government at all cost than anything else, and this is hurting our economy even more.

Balancing the budget is a long term process. For all those arguing about the country’s fiscal problems it is all of our faults. Both the Democrats and Republicans are to blame. More importantly the voters, particularly the sensible voters in the middle that let the extreme elements take over. We need to stop these huge swings of the political pendulum and work together. Too many people dismiss the extreme elements as crazy and don’t think they can get their representatives elected. But they did. They are will organized and vote religiously. To the right if you really want a balanced budget look at the last time we had one. The Democrats were in control. (Clinton). Bush passed the tax cuts that go a long way toward contributing to the current mess. Revenue increases has to be part of the equation. Are accumulated deficit is not just a spending problem, it is also a cutting taxes problem. To the left, we can not give away unlimited social security, Medicare or welfare. There have to be limits and we as nation need to make tough choices and decide what those limits are. If you are not part of the solution you are part of the problem. You need to do more than post comments online. If you want to be part of the solution check out the pledge at http://truefiscalconservative.blogspot.com/p/pledges.html If we all sign the citizen pledge, it will force the politicians to sign the politician pledge and we the people will get the country back on the right track by forcing both sides to come together.

How the Wealthy actually benefit the most from a tax increase

There is this myth that we would be picking on the richest Americans if we raise their taxes a small percent. It is not worth spending much time on the illogical statement that if we increase their taxes three to five percent they may actually quit working and creating jobs. Really, does anyone in their right mind think they will walk away from a $1,000,000 dollars in revenue just because they have to pay another $50,000 in taxes! People do not understand percentages. While $50,000 is a lot of money to many Americans it is only 5 cents per dollar. How doe loosing one nickel for every dollar they make cause them to want to give up the rest of their money. They will not walk away from their millions just to spite the rest of the country. It is important to note that most wealthy American are currently paying less nickels per dollar in taxed per dollar than the average American. It is also true that they used to be taxed more than what is being asked of them today and they did not walk away or quit their jobs.

Now let’s look at how the rich benefit most from many services the government provides.

The government maintains roads and an interstate transit system (something lacking in a large portion of the world). The poor person that does not own a car benefits little from that system, the middle class person that drives to work or on vacation benefits, but the people and companies that own fleets of trucks and need the roads to get their goods to market benefit the most.

Likewise our government employs air traffic controllers and the Federal Aviation administration to keep our skies safe. The poor, that can not afford plane tickets, only benefit to the extent planes do not fall out of the sky and land on their heads, since they own no cars or homes. Middle class people benefit because it makes it easier to take vacations and visit family and friends. Rich people and companies with private jets or the need to get their employees and goods places quickly benefit the most.
While there are several examples I will end this post with the thing the wealthy benefit most from. It is a stable government leading to stable markets. When we have large losses in the markets due to the government’s inability to get our fiscal house in order it should be clear who is hurt the most, and conversely who benefits the most. If we don’t get our fiscal house in order those who have the most to loose will loose the most.  So when the stock market falls 50% the poor loose nothing because they own nothing. The middle class losses tens and sometimes hundreds of thousands of dollars in their retirement accounts. However, the wealthy and the corporations loose millions and billions. Even if they own their own companies and to not trade on the stock market they loose a lot of money if we fall into a depression. If no one is working then no one can buy their goods, and their factories stand idle. The rich can only get richer if there are people that have money to buy their products. This is why the wealthy people have a vested interest in making sure we have a stable government and put our fiscal house in order. Asking them to pay more to save them billions in economic losses does not seem like it is asking too much.

Does raising taxes on the Wealthiest Americans kill jobs?

This is an important question because it could be a defining issue in the next election. The most recent polls seem to indicate that over 70% of the population agrees with raising the tax rate on people making over $250,000 a year. There are many wealthy people that have also come out and said this is a good idea. So why are so many people not affected by the tax opposed to it?

Nobody likes taxes and most people agree we have a terrible system that needs to be fixed. But this debate centers around question does increasing taxes on the wealthiest American going to kill jobs?  We can not allow people to make claims that raising taxes on the wealthy kill jobs without forcing them to supply some facts and examples of just how many jobs it kills. The Republicans claim this in one line statements but never back it up with any evidence. If they have evidence they need to demonstrate how raising taxes on a professional athlete, pop star, or the CEO of a publicly traded company kill jobs. I do not see how taxing these people a couple of percent more will cause them to lay off people or drastically change their spending habits. Really, how may people do a professional athlete or pop star employ? Are they going to fire their agent of gofer because they have to pay a little more in taxes?

The people that make the claim that taxing the wealthy kills jobs like to fall back to the story of a small business owner, “Joe the Plumber.” Small business owners represent only a small fraction of the country’s richest people. Less than 7% of the population has over a million dollars and less then 10% make more than $250,000 a year. Most people that have more than a million dollars are not running small businesses. If they are running a business at all it is not small. That being said I still need someone to explain how raising the small business owner’s taxes kills jobs. Some people think if they say it often enough it is true and they do not have to prove it.

But let’s look at how a small business works. They are in business to make a profit, so they only hire people that are going to add to the profit of their company.  Let’s say all of the sudden they have pay another $6,000 in taxes. (I get this number by assuming a 3% increase in taxes on an additional income of $200,000 above the $250,000 that is not subject to the higher tax rate. This means the small business owner’s income would be at $450,000 putting him or her in the top 5% of all American wage earners.)  Now being in the top 5% clearly indicates he is in a better financial position then the majority of the country, which is fine. What I want to know is how does laying off one of his employees help him with his net income? Let’s say the total compensation cost of that employee is $60,000 but he produces $70,000 worth of revenue. (Remember if he was not producing more revenue than his salary he would not be working in the first place.) So how do you solve your $6,000 additional tax bill by loosing a $10,000 profit earned off the back of the employee?  If he fires the employee he will have $10,000 less in revenue but his taxes only go down $3,100. He now has $6,900 less in net income! The only way he avoids that is by assuming all that work himself (hard to believe since most small business owners already work 60 plus hour weeks) or he can pass the work on to his other employees, to whom he must pay overtime, eating into his profits. Anyway you look at it laying someone off does not help him with his $6,000 additional tax bill. Clearly the additional tax does affect how much he the owner will take home. So the real question is how much will this additional $6,000 in taxes affect his spending habits? Remember he is making $450,000 a year.

What really causes small and large business to lay people off is not having enough people to buy their products or services. The more people we can get back to work the more our economy can grow. Do not let people convince you that something is bad just because they say so. Don’t let them convince you with simple one liners. Ask the tough questions. Ask them to provide specific examples to back up their claims, that taxing the wealthy at the rates they used to be taxed when the economy was booming is a jobs killer. Make them provide logical well thought out answers instead of over used talking points
 

What would happen if Congress were to prepare breakfast together?

A simple analogy to the way congress is currently behaving is to imagine what would happen if they were given a couple of eggs to share for breakfast.

The Far left would want to make a huge omelet, spend more money and invite more people and turn it into a banquet. They would insist on having bacon because they really want to add pork to everything they do.

The Far Right would insist on giving one of the eggs to the rich, and want the other one poached. They want limited breakfast just like our founding fathers. They to would insist on Pork, but would want ham just to be different. They would not agree with anything their colleagues on the left wanted as part of the breakfast, even if it was something they used to like.

The Left would refuse to eat with the right. The Right would declare that they would rather not eat then eat with the left. Then they would crack the egos over each others heads and we would end with a mess.

Sound familiar?

Check out a video representation of a Congress making breakfast  

Does the Government need to create jobs?

This is an appropriate topic for Labor Day Weekend. This is an important holiday and we should all celebrate the American workers for the long hours they put in at their jobs. Their hard work and dedicated service is important to preserving our way of life. It is through their hard work that we prosper and grow as a nation. We should also take this time to consider all those Americans out of work that are earnestly looking for jobs.

As a True Fiscal Conservative I do not believe we can solve our long term financial problems unless we lower the unemployment rate. All True Fiscal Conservatives agree with this. We may differ on the best way to accomplish it, but everyone agrees we need to lower the unemployment rate.

People that believe the government should just stay out of the private sectors way and let them create all the jobs are being short sighted. They are not dealing with the reality we are currently facing. Corporations are sitting on a mountain of cash and making record profits. There is no incentive for them to change what they are doing. They are in business to make a profit and will and should act accordingly. The reason they are not hiring many people right now is because they can create all the product that is currently demanded with their existing work force. While they would love to sell more, so they can grow and hire more people, they are in chicken and the egg scenario. No company is going to put their profits at risk to kick start the economy.

Recessions are cyclical, they happen; it is a part of the capitalistic system. The government can and should mange them, to try and prevent them from developing into a more serious depression. While we need to look at ways to get rid of our long term accumulation of debt, that is a long term issue that will only become worse if we do not get more people back to work. In this scenario a jobs program is warranted. Any jobs program should be limited in duration and designed to get as many people back to work as quickly as possible.

How you can help get out Country back on track.

It has been a week since we started this blog and we already have couple of hundred page views, seven yes votes and 11 people clicking the like button.. Not a bad start. Some people have asked how they can help get our politicians to work together. There is strength in numbers. So if you agree with the pledges you can help by voting in both polls on this blog and clicking on the like button. But you can have the greatest impact by spreading the word. If you agree it is time for sensible people in the middle to take control of the country encourage you friends and family to sign our pledge. As you comment on other blogs or news post please encourage people to check out this blog and join the moment and signing the pledge. Post in on any social media group you belong to. Together we can get our country moving in the right direction again.

Response to the beer or meal analogy to our tax system

Dear Not always PC I want to thank you for taking the time to be the first person to comment on this blog, please come back often. We have been having a few issues with the comments section so I am answering you in a post. Besides I think this is worth reading by all readers. If you are not familiar with the simple cyber tax analogy please read Not Alawys PC’s comment to the Warren Buffet post or click on the link at the bottom which shows the original post and a funny parody.

Unfortunately I think you are missing the point of what a true fiscal conservative is. If you are truly fiscally responsible you consider all options to bring spending in line with revenue. Some times that means cutting spending sometimes that means taking on a second job and sometimes that means both.

Too many people confuse smaller government with being fiscally conservative or cutting taxes being fiscally conservative. Those are ideologies but you can not budget anything correctly if you do not look at what you spend and what your revenue is.

It is okay if you are for a smaller government but that is not the same thing as what we are talking about. We are talking about bringing spending in line with our revenue which means you need to look at both. Obviously the more government spending you get rid of the less revenue you need, but, as has been seen in the past, and as I will discuss in future post, most people are not ready to give up enough of the services the government provides to get to where we need be.

While your view may be that we need less revenue because you don’t want the government to provide many services you need to be realistic about what can pass in congress. More importantly you have to examine the cost of all the things you accept the government hast to provide, a military? roads? I am sure even those that advocate for smaller government can think of a few other items they want. Once you do that if you still think we can pay for all the things you want and pay off our debt you need to convince enough other people to give up things that they cherish. This is an up hill battle since the majority of the population is okay with raising some revenue to pay for the things they value. A true fiscal conservative is more interested in balancing the budget over the long run than he is in shrinking government. If your primary concern is shrinking the government you are a conservative, but you are not fiscally conservative because getting spending and revenues to align is not your top priority, shrinking the government and cutting taxes is.

Almost all credible economists and every bipartisan commission that has looked at this issue in the past say we need to look at both, spending and revenue.

As for your suggestion Warren Buffet or anyone else just donate more to the government to solve our problems it just won’t work. There needs to be shared sacrifice. We know we can not run our government based of volunteer contributions. We have a hard enough time getting people to be honest on the taxes they do pay.

I agree the tax code is way to complex and we need to simplify it, but we will save that for future post.

I want to address the story you shared. It is very entertaining and it has been around for at least 10 years, sometime it is a meal other times it is beer. The latest version attributes it to a Professor of Economics at the University of Georgia by the name of David R. Kamerschen, Ph.D. Sorry the story was not written by him. These simple stories are circulated around the internet to whip up frenzy at the base of either party. Often they are said to have come from some important or well educated person in order to give them credibility. If you like the story and want to use it to prove your point please at least be honest about where it came from, and if you don’t know say you don’t know. If you are not sure check it out first at a reputable site. I find Snopes to be very reliable at dispelling urban legends. http://www.snopes.com

Here is the link to the article about the origins of this story. http://www.snopes.com/business/taxes/howtaxes.asp

Some people call these simple stories for simple minds. I think they are simple stories that people want to believe so much because it is easy and supports their narrow view of the world. It is easier to accept them than to look at the real facts and make the hard choices. This is what this blog is designed to do. Get people to come together to solve our problems by listening and considering all options instead of yelling and relying on simple talking points that are never backed up by facts or empirical evidence. Spamming stories like this is part of the problem not part of the solution. If you want something simple to hold onto here it is.

We need to pay for what we bought in the past and what we buy in the future. If we as a nation don’t want to continue to buy certain things, I am fine with that. But majority still rules and while we can all point to programs we would like to be cut we can also all point to some we cherish. Once the majority decides what we are buying we need to make sure we raise enough money for the stuff we already bought and for those things that we decide to buy. You have to look at both the money coming and the money going out as the part of any solution.


As for your cute analogy this is where it goes wrong. While many people wish that the service our government provided was beer or a good meal, alas our government does not provide that service. In fact it does not provide just one service. The story fails in it’s simplicity for not looking at what benefits everyone receives and wrongly assumes that everyone benefits equally from a strong government. This is where I encourage people to look behind the facts.

Those people that do not like government or the social safety net will be quick to point out all the areas where the poor benefit more than the rich and middle class. Things such as food stamps, Medicaid and unemployment benefits immediately come to mind. And those people are absolutely right, poor people benefit more than the rich and middle class from those items. Again, we as a nation can decide which if any of those benefits we want to continue, and at what level, but once we do we have to pay for them.

Where your story really misses the mark is on the functions the government provides that benefit the rich and middle class more. Trying to keep this simple I will limit this to a couple of examples. The government maintains roads and an interstate transit system (something lacking in a large portion of the world). The poor person that does not own a car benefits little from that system, the middle class person that drives to work or on vacation benefits, but the people and companies that own fleets of trucks and need the roads to get their goods to market benefit the most.

Likewise our government employs air traffic controllers and the Federal Aviation administration to keep our skies safe. The poor, that can not afford plane tickets, only benefit to the extent planes do not fall out of the sky and land on their heads, since they own no cars or homes. Middle class people benefit because it makes it easier to take vacations and visit family and friends. Rich people and companies with private jets or the need to get their employees and goods places quickly benefit the most.

While there are several examples I will end this section with the thing the wealthy benefit most from. It is a stable government leading to stable markets. When we have large losses in the markets due to the government’s inability to get our fiscal house in order it should be clear who is hurt the most, and conversely who benefits the most. So when the stock market falls 20% the poor loose nothing because they own nothing. The middle class losses tens and sometimes hundreds of thousands of dollars in their retirement accounts. However, the wealthy and the corporations loose millions and billions. This is why Warren Buffet and the Wealthy have a vested interest in making sure we have a stable government and put our fiscal house in order. Asking them to pay more to save them billions in economic losses does not seem like it is asking too much.

For a comical take on your analogy please see the post at http://www.viralgrapevine.com/how-tax-cuts-work-by-david-r-kamerschen-refuted-the-real-way-tax-work-removing-the-internet-garbage/

Is Warren Buffet a Socialist?

Last week Warren Buffet came out and said Billionaires and Millionaires have been coddled for to long. He said their tax rates should be raised. Right away some people started the yelling and name calling. One news caster even went so far as to call him a socialist. Really one of the countries most successful capitalist was being called a socialist simply because he challenged the norm? This is what I talked about in earlier post about too much yelling and not enough listening. The most recent polls I have seen indicate that over 70% of the population agrees with raising the tax rate on people making over $250,000 a year. Many of the people that agree this should be done are the people that will pay the tax including several small business owners. Yet there is a faction that will block this effort at all cost.

While nobody likes taxes and most people agree we have a terrible system something needs to be done to raise revenue. We can not allow people to make claims that raising taxes on the wealthy kill jobs without forcing them to supply some facts and examples of just how many jobs it kills. For instance explain how raising taxes on a professional athlete, pop star, or the CEO of a publicly traded company kill jobs. These people that have and make millions are not going to lay off people or change their spending habits because they take in a little less money next year.


The people that make that claim, with out substantiating it, like to fall back to the story of “Joe the Plumber.” Of course they do not even explain how raising the small business owners taxes kills jobs. They just think if they say it often enough it comes true and they do not have to prove it. But for those of you who do not know how a small business works let me point something out. They are in business to make a profit, so they only hire people that are going to add to the profit of their company. If all the sudden you find you have pay another $5,000 in taxes how does laying off one of your plumbers help you? Let’s say the total compensation cost of that plumber is $60,000 but he produces $70,000 worth of revenue. (Remember if he was not producing more revenue than his salary you would not have hired him in the first place.) So how do you solve your $5,000 additional tax bill by loosing a $10,000 profit you earned off the back of your associate Plumber? The only way that makes sense if the owner is going to assume all that work himself (hard to believe since most small business owners already work 60 hour weeks) or he can pass the work on to his other plumbers, to whom he must pay overtime, eating into his profits. Anyway you look at it laying someone off does not help with his additional tax bill. Clearly the additional tax does affect how much he the owner will take home. So the real question is how much will this affect his spending habits? Remember he is making over $250,000 a year.

What really causes small and large business to lay people off is not having enough people to buy their products or services. The more people we can get back to work the more our economy can grow. Do not let people convince you that something is bad just because they say so. Don't let them convince you with simple one liners. Me good, taxes bad, Ugh! Ask the tough questions. Ask them to provide specific examples to back up their claims, and make sure they provide logical well thought out answers

Citizens Pledge

It has been a couple of days since we set up this blog and we have already received a good number of hits. For those have been here before thank you. We apologize for the time in between post but we spent the last couple of day sprucing up the appearance and adding an about us page, as well as a page that contains only the pledges. To make it easier for people to comment we have added a Facebook comment social plugin.

My first post introduced the Politicians pledge. Perhaps more important is the Citizens Pledge. If enough people agree with and take this pledge the politicians will be forced to work together to come up with sensible solutions. Please review the pledge and let me know what you think.

I pledge to exercise my right and responsibility to vote in both the primary and general elections. I pledge not to support or vote for any candidate that has signed any pledge or made any promise that will prevent them from making the tough decisions needed to make sure out country is fiscally sound. I will only support and vote for candidates that promise to keep an open mind and agree to consider all options. I will only support or vote for candidate that have toned down their rhetoric and have demonstrated an ability to work with all interested parties and compromise when necessary to put forth legislation that will not only pass, but work towards solving our long term financial issues

True Fiscal Conservative

What is a true fiscal conservative?

A true fiscal conservative is someone that believes that over the long run you need bring in more revenue than you spend. It does not mean you have to balance the budget each and every year. If everyone balanced their budget every year, very few businesses would be created or expanded and very few people would ever be able to buy homes. It is okay to borrow to invest if what you are investing will provide a higher rate of return than the interest you pay on the loan over the log term.  Sometime you have to invest to grow. You save in the good years and you dis-save in the bad years.

That being said you need to invest wisely and you can not continue to pile on debt without ever paying some of it down.

So now our country is in a bind and we can not solve the problem by placing blame for what got us here, especially when there is plenty of blame to go around, and we the people never held our elected officials accountable. We must move forward.

We the people need to figure out how to move forward.  We need to elect true fiscal conservatives.  A true fiscal conservative would look at all options to put out fiscal house in order  So any of our politicians that have made a pledge not to cut social security or not to raise taxes, are not true fiscal conservatives and can not do their job. It is okay for them to say they are for more government or less government but it is not okay for them to call themselves fiscal conservatives unless their primary goal is to put our financial house in order, no matter what that takes.

The only pledge a true fiscal should ever sign is the following pledge.

I promise to consider all options and use all tools available to me to make the difficult choices required to make the country in fiscally sound. I will seek guidance from those more knowledgeable than me in economics and will not make my decisions based solely on the guidance of my political advisers. I will work with all others that have a similar goal in mind regardless of political affiliation. I will do so even if it puts my re-election at risk. I repudiate any prior pledges I made and I promise to sign no other pledges that in any way tie my hands and prevent me from considering all options to bring our fiscal house in order. I make this pledge freely and fairly to demonstrate that I have the best interest of the country at heart and to demonstrate that I will keep an open mind when helping to shape the future of our country.

If you agree with this pledge please click the like button and share it with your friends.

 We the people should not vote for anyone that signs any other pledges or makes any other promise that predetermines how they will vote when the tough decisions are made. Their job is to weigh all the options and make those tough decisions. In our form of democracy that requires compromise which can not be accomplished if we elect people that have already told you they will not compromise.