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Friday, October 09, 2009

ROBERT HALE:  TIME FOR TAXPAYER TO BAILOUT?

Are doom and gloom stories of the next crisis about to change life “as we’ve know it” ever going to cease?  Not likely, these crises generally provide great benefits to those promoting them;  Global warming, global cooling, food shortages, the population boom, to name a few.  In the end the predicted disasters don’t seem to materialize.  At least not the disasters we’ve been told will befall us.  More often than not change brings huge benefits to virtually everyone.

This column isn’t an attempt to strike fear of some new crisis.  Its intent is to inform readers what our elected Federal officials have and are doing with our earnings and our financial future. 
The “Mid-Session Review – Budget of the U.S. Government – Fiscal year 2010”, isn’t exactly bedtime reading.  It is sobering.  The U.S. taxpayers (you and me) are currently more than $11 trillion dollars in debt.  The number is so huge most people can’t comprehend it and thus simply ignore it. 

To understand the enormity of the numbers think of a dollar as one second.  A million seconds is 11.57 days.  A billion seconds is 31.71 years.  A trillion seconds is 31,709.79 years. 
To pay off today’s federal debt each person in the U.S. would have to plunk down $35,947.71.  A family of four would have to come up with $143,790.85.  Could you do that? 

What are our elected officials’ plans to deal with this debt?  They’re planning to increase it an additional $10 trillion dollars to $21 trillion by 2019.  This will increase individual debt to $67,593.28 and that of a family of four to $270,373.13.  However, more than half of the U.S. population pays no Federal income taxes.  Thus for those paying taxes the responsibility is
approximately $135,000 and $540,000 respectively.

Prudence would lead a rational person to stop increasing debt and reduce it.  Instead our elected officials are proposing to almost double our debt over the next ten years.  In 2009 interest on the Federal debt will be $173 billion.  Projected interest on the debt in 2019 is $829 billion! 

Official projected individual income tax collections for 2019 are $2,114 trillion; more than double the $904 billion projected for 2009.  In 2019 almost half of individual income tax collections will be needed to pay interest on the debt, up from less than 20% today. 

These figures assume voters don’t put a stop to this irresponsible deficit spending.  It also assumes there are countries willing to continue lending to a country spending far beyond its means.  Those that have money generally don’t lend to spendthrifts and irresponsible borrowers. 

When the money flow dries up, it is then that consequences follow.  Eventually the money will dry up.  That day may have arrived and if not today, it will be soon.  So what are the consequences? 

No company and no country is too large to fail.  For those who disagree they need only to look back - GM, AIG, Enron, Washington Mutual and the whole host of entities no longer with us.  Nor are the Greek, Roman, Egyptian, Prussian, Ottoman, or Spanish empires with us.

The most prudent thing to do is to stop deficit spending now, not tomorrow or next year.  Every dollar of additional debt will make the consequences significantly worse and the recovery more difficult.  It is clear our elected officials are unable and unwilling to fulfill the duties they have to those they represent.  Instead, like the gambling addict they believe they can win it all back at the next table.

This leaves us in an unenviable position.  We can stay on a plane, out of fuel, diving straight to earth and hope it will defy the laws of gravity, or we can put on a parachute and get off.  The first option provides no chance of survival.  The second does. 

In political terms it’s time for responsible citizens to take back control of their country.  It’s time to stop deficit spending and live within our means.  This requires budgeting to pay off debt and discarding all programs that require borrowed money to fund.  It takes discipline and responsible leadership – something our current elected officials lack. 
For those who disagree, explain how an $11 trillion dollar debt with plans to increase it another $10 trillion shows discipline or leadership.  It doesn’t take a rocket scientist to figure out one doesn’t’ pay off debt by doubling it.  Where does government get money?  Only from taxpayers. 

Think about it.

If we continue to incur debt and fail to control spending, say a prayer and prepare for the crash.

Click here to email your elected representatives.

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