Hot Features
Premium
Level up your trading with our powerful tools and real-time insights all in one place.
As my father used to say, opinions are like belly buttons: Everybody has one. Since my friend and co-writer, Tom Frew, reported about the US sequestration yesterday, I thought it appropriate to offer the opinion of one American on the matter. After all, I have a belly button.
First of all, I agree to some extent with President Obama’s comment that the $85 billion in “arbitrary” cuts is dumb. But I disagree that it had to come to this point. Obama is quick to point to the Republicans for causing the government to come to this point. Of course, he is quick to blame the Republicans for everything. The United States has never had such a silver-tongued devil in the White House as we do now. Since he has the bully pulpit, he can glibly obscure the issue that it is not the Republicans who are stubborn and to blame. He is.
Second, the cuts are not simply arbitrary. They were decided upon by Congress as a broad, fail-safe measure two years ago. They do seem arbitrary from the perspective that they are not specific enough. The opposite of specific is not “arbitrary,” so much as it is “broad.”
Third, Obama’s first term economics helped put us in the position where cuts are needed. His concept of spending our way to prosperity exacerbated an already difficult proposition. For example his economic recovery spending was the biggest disaster since 9/11, but the media won’t report it that way. This writer happened to be in a position to see where and how some of that spending was meted out. The single largest Superfund site, run by the government, received millions of dollars, whilst surrounding communities with a desperate need to repair failing infrastructures, were denied. With regard to that site, one needs to ask where the money went. Did it help the economy? The answer is no, it did not. It went into the pockets of the already wealthy contractors. There were no pay raises for the workers nor were many, if any, additional workers hired the last I was aware.
Then there is the money spent foolishly on renewable resource development. Does anyone remember Solyndra? That was $535 million in taxpayer dollars thrown at President Obama’s green dream based more on a sales pitch than adequate due diligence.
The fact is that it is not likely that the specific cuts that the country needs will ever be put in place. Lobbyists will be hard at work in Washington to prevent a loss of funding for their interest groups. In a nation of abundant entitlements, who is going to say, “Here take this funding away from me?” As for spending, someone has got to get it through the President’s head that his credit card has a limit.
The time has come for the federal government to figure out how to pay its own way and stop running up massive debt. It is only when “we the people” see a responsibly run government that some, at least, will be willing to accept reasonable tax increases. We are going to need to see a HUGE reduction in specific wasteful spending by the federal government before we are willing to endure the government putting a greater squeeze on our personal pocketbooks.
The government has the ability to raise revenues through such measures as shutting down overseas tax havens, ending deferrals on overseas corporate income, stopping transfer pricing by corporations, increasing dividend tax rates, implementing a VAT, and a variety of other schemes that will not harm the average tax payer.
Then there is the larger problem that I, personally, have never seen addressed, and I believe may be impossible to address. How does one know if even the “specific” cuts for wasteful spending, for instance, are really done. Creative accounting trumps everything when it comes to spending cuts. The US government itself is the prime example of that.
Frankly, we may all wake up one day and see the US economy collapse. Sure it will have implications for the rest of the world. But a failure to manage our own economy is much more personal to us than the rest of the world. That’s just my opinion, and I’ve got a belly button, so I’m entitled to one.
