Taxes, benefits and the deficit

Kicking the can down the road

Barack Obama and the Republican leadership reach a deal on taxes that leaves leftist Democrats and tea-partiers fuming. And the deficit keeps growing

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Richard Michael Abraham

The U.S. Can Kick The Can Down The Road To Ultimate Insolvency

As a business man, I can't kick the can down the road.

A business man or woman in the free capital markets needs to make it or break it day to day.

Otherwise, if we go to our Uncle for a loan, the loans never end, we get weaker and weaker and sooner or later, our business fades away in insolvency.

And so, the U.S. Government with its deal making tax deficits, stimulus, borrowing, kicking the can down the road will get what it deserves.

A collapse, a 2012 campaign issue and the Republican obstructionists will sweep into power, and the can will just get kicked further down the road to ultimate collapse.

The famed economist, Keynes, is not here to fix it, and even if he was, there is no solution for corruption, market manipulation, poor fiscal policy, lack of final demand.

Richard Michael Abraham, Founder
The REDI Foundation


Honestly, no one can argue that the repubs, dems, and an appathetic public are to blame for the deficit. However, for any liberal to even speak of fiscal irresponsibility when under this administration the federal budget has ballooned to nearly 3 trillion in two years is criminal.

Therefore why would spend heavy leftist be against tax breaks? Answer because they see a greater opportunity to further plunge the country into debt. $800 billion could be spent on pie-in-the-sky projects like Obamacare, education (because we all know the more money you throw at a problem the better the results), higher more federal worker (increasing our future obligations), and in general giving more to those who don't earn it.

Take Walmart for instance, there are plenty on the left that wants Walmart (a private company) to be made to pay its employees more because minimum wage (which the government set) is not enough to support a family. News flash get several jobs, get educated, join the military. Our government wasn't founded on the principle of equal pay for everyone only equal opportunity for everyone.

Richard Michael Abraham

Economists Mostly Soothsayers










Richard Michael Abraham, Founder
The REDI Foundation

Peak Oil Trader

The farse of the current two party system has never been better displayed. What deficit? Bernanke said he would monetize $600 billion in debt, it took them a month to spend it. We are saddled with debt, public and private debt in the US is over $60 Trillion, just interest on that at 5% is $3 Trillion or 20% of GDP. We must end the bankocracy, end the debt, and restore the Republic. Here is one man's journey from Liberal Democrat to Radical Libertarian, a very good read with a good plan of action

Dave D

Republicans are not actually interested in the deficit; they are interested in tax cuts no matter what. They still cling to the failed "Starve the Beast" theory, which posits that if tax cuts are sufficient eventually government spending will be cut. Well, instead folks simply think their services are free, as debt is used to finance them. To use an example, if President Obama had required a tax to pay for the recent surge in Afghanistan, folks might have balked. Only when you are asked to pay for your government services can you have a serious debate about whether they should be provided.

U.S. Federal spending has increased every year since 1970. There is no reason to believe this will change, particularly considering the aging of the population (5 workers per retiree in 1960 will is about 3 today and 2 by 2040). So a tax cut just increases the deficit, to the tune of about $300 billion per year or 2% of GDP according to CBO estimates.

Ultimately, the U.S. must decide to fund its government, which is well on its way to 25% of GDP vs. the historical 20%. We can do this now, or wait and pay even higher taxes later, plus interest and inflation. It is also unethical, as George Washington pointed out, to burden future generations with the burden you should bear.

I was embarrassed for my country that my President made this choice. It was not our finest hour.

Richard Michael Abraham

President Obama's inexperience costs Americans $900 Billion Dollars

President Obama's failure to raise the tax issues and extension of unemployment benefits in August-October, 2010, where the Democratic Party would have had more leverage represents a $900 Billion Dollar mistake.

This mistake highlights President Obama's shortcomings and lack of negotiating experience.

Now, his back against the wall, he had to settle for less and a humbling reversal of his campaign promises.

No matter what the outcome, President Obama comes out looking more and more like a President alienated from the American Public and now, even his party Democrats.

Of course, his spin masters will put out the message that he negotiated a $900 Billion Dollar stimulus package, but that will fail to hold true for two reasons:

1. The tax cuts have not measurably helped the economy since 2001-2003.
2. Shrewd affluent and wealthy recognize it's just a two year reprieve and will not increase their job creation investments.

On top of this, adding to the deficit, creating more debt borrowing, and the FEDs easy money QE2 will not keep down interest rates, or create jobs, but will absolutely lead to inflation.

President Obama's lack of experience and judgment is beginning to show serious economic casualties.

Good intentions are simply not enough.

Though I voted for President Obama, the change and hope I thought would come about, is greatly diminished.

Richard Michael Abraham, Founder
The REDI Foundation


What I've witnessed from my brief experiences in campaigning, particularly with regard to Democratic policies, is twofold: first, the antipathy toward government is extraordinarily high at this time, either because of "failed stimulus" (i.e., misinformation, in my opinion) - meaning: the government, anathema at most times, is not doing "enough" at this time to help families who are struggling; secondly, there is a subconscious resentment of Barack Obama (i.e., a "black man") himself, particularly among the older generations - perhaps some/most of Gen X, and most likely a majority of older generations. The latter, especially in combination with "single-issue" voters (i.e., pro-gun, pro-Christian voters) is driving the "heartland" of America to the GOP, despite it being against their supposed philosophy and likely self interest.

Admittedly, for those who drive GOP policy, especially the "Tea Party" "movement" (read: the Koch family), they are playing their cards smartly. In effect, they're modeling the anti-Obama movement after the Obama movement. Glenn Beck, as much as I personally loathe him, is effective at what he does (i.e., instill paranoia). American democracy, save the Citizens United case, is now a battleground of grassroots v. grassroots campaigning.

As a so-called Millenial, one who will (hopefully) be alive in fifty-plus years, I worry about the debt, but not at this time - even understanding the potential effects of the debt burden. Personally, I believe the Bush tax cuts were mostly harmful overall, save those who benefited from them (top 2%). I believe most of my generation understands that entitlement programs are a long-lost dream, but we still believe in their efficacy. The problem is, as some comments suggest, finding the politicians who stand up for what is necessary instead of what is politically expedient. The successful candidate, particularly for my generation, is the economically conservative, socially liberal/libertarian; whichever party captures this ground will have sure footing going forward, at least, that is what I hope.


Real happy with your new republican congressmen? I guess you forgot that you drink coffee nowadays...


Who won or who lost out of this tax negotiation will certainly magnify within the next two years as predicted that more American jobs will be created asthe GDP will gain at 4% in average in the coming days. If that happens then the bi partisan cooperation is indeed worthwhile.

Harry Sterling Heights

Yes, the 99 weeks (and not extending it, is terrible for those families), and the Unemployment should be addressed.
The bigger problem is that No Politician, newspaper, TV reporting, brings up what is really causing the deficit. The 'wars" that we are engaged in. They are Costing Trillions-Yet no one speaks.
By the way I was a Recon Marine in Viet Nam in 67-68. I am not a pacifist. I am saying we tax payers are lining the wallets of the top 5% of Americans (politicians, industrialists, Wall Street).
One remedy for the "wars”, pullout convention and only keep ,Green Beret,Rangers,Seals,Recon Marines and artillery.
Can still "Win" at a much more cost efficient business model.
The reason we aren't conducting the "wars" this way is beacause the top 5%,would not be making millions upon millions of dollars each month,with Our Tax Payers Dollars......


History has had a way of teaching us that "finding common ground" and "compromise" have been part of the process all the time. Government has to work and the alterntive to that could be forboding.

Criticism of President Obama by my fellow Republicans for his move to The Centre makes me think of the seducer, who dismisses the damsel for reasons of moral character, after having spent a considerable amount of time enticing her to succumb to his wishes.

May I suggest the reading of The Framing of the Constitution by Max Farrand and Jefferson and Hamilton, The Struggle for Democracy in America by Claude G. Bowers. If you examine the poitical beliefs of The Founding Fathers, you would wonder how this republic could ever have been formed, say nothing of having been sustained.

Benjamin Franklin was very old during The Constitutioal Convention, and according to one source, slept through much of it. He would awake from time to time when arguments became severely loud and would then mention the good points on both sides of the argument. They would "find common ground" and he would go back to sleep. At one point, when The Convention was about to break up, Franklin (the least religious of the delegates) suggested prayer. They all did so and America has a Republic.

Interesting! I understand that both President Obama and Sarah Palin read The Bible and pray everyday. I understand! If either of them are like me, they need all the help thy can get.


A month ago, the Economist referred to "permanent extension of the middle-class tax cuts, plus a temporary extension of the upper-income tax cuts" as a plausible compromise, and called a second stimulus (i.e. deficit spending) "a cogent answer to the immediate problem of the stuttering recovery."

Three weeks ago the Economist said that "If taxes rise or spending falls immediately, the economy could slide back into recession, as happened in Japan in 1997." Since then, unemployment has increased, so taxes on the wealthy should be raised? I'm having a little difficulty squaring that circle...

And, as far as the "expensive consolation prizes" go, don't tax credits for education help encourage retraining workers in obsolete fields? Won't business investment write-offs speed up the rebalancing phase of the recovery?



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