Recovery or Disaster?

I haven't posted in awhile, for a couple of reasons: Mainly I've been too busy, but also I haven't had a lot to write about.

Currently we've got two lines of rhetoric coming at us, once again divided by party affiliation.

The Dems are trying to tell us things really are getting better. They're "Stimulus" is really working, really!! And the only reason things aren't getting better faster is because the Republicans are obstructing and stalling their reform agenda.

The GOP tells us things are really bad, and are set to get much worse. The Democrat "Stimulus" was nothing but a boondoggle of historic proportions, and did much more to hurt the recovery than to help. Now we face unsustainable debt levels that are guaranteed to lead to runaway inflation, made even worse by the massive tax increases planned by the Democrat power base.

As for the obstruction charge, the GOP says we'd be much worse off today than we already are if they hadn't done everything in their power to stop the destructive Democrat/Obama agenda. Besides, they point out, Dems have huge majorities in congress that meant nothing they wanted to do could be obstructed by Republicans; it's the American people that spoke loudly to their centrist representative to keep the agenda from passing.

Rather than get into the politics of the argument, I'll try to approach it with a bit of common sense and economics.

The Democrat government is indeed spending almost twice what they're taking in in taxes. They have no desire to cut back any part of their spending, and would rather increase tax rates. The problem is, even if they raised taxes to 100 percent, it won't be enough to satisfy their voracious appetite.

So they sell bonds to China, and print money to pay for what they can't raise any other way. China's already pulling back and expressing frustration with the devaluation of the dollar caused by running the printing presses around the clock. That's going to raise the cost of debt, because the weaker the dollar the higher the interest rate that will be demanded by those who invest in it.

What also happens, as I can directly attest through just listening to the executives in the companies I consult with, is business is running scared right now. Even businesses that are doing well aren't expanding, because they have a well-founded fear that the Democrats will succeed with their agenda.

Whether Healthcare Reform, Cap & Trade, or simply tax increases, executives believe the regulatory and tax burdens either already imposed or on the way next year will hammer their profitability. So they choose not to invest in expansion. They choose not to hire employees, and make do with their existing staff or use temporary and part-time workers to guard against likely future layoffs.

Sounds like a dilemma. We can't spend our way out of the recession with money we don't have. Besides, I'm convinced the very Keynesian ideas the presidents' policies use are a fiction.

The only way out is to reintroduce sanity to government. Unfortunately, I hold little hope of that happening, and am not even sure this fall's elections will truly change the game.

Pick off the "low-hanging fruit" first. These are easy:
No earmarks, period. Cancel the ones passed earlier this year that haven't already been completed.
Close the Department of Education
Close the Endowment for the Arts, or make it solely privately funded
Scale back the Department of Agriculture significantly
Cancel the rest of the "Stimulus" and pull back the funds
Drop Cap & Trade
Drop Healthcare Reform but start incrementally on only those things that will save taxpayers money
Pass a Constitutional Amendment that basically says, Any taxes or tax breaks passed by the government must be open to all. If there's a tax, everybody pays. If there's a credit or reduction, everybody gets it. In other words, no more "targeted" taxes and no more political favors in the tax code.
Make taxes simpler and flatter. Everybody pays something - no more allowing 50% of the population to pay nothing.
Eliminate all non-essential projects, departments, etc. (Boy are there lots of them)

Yes, healthcare has become the government's biggest expense, primarily because of Medicare and Medicaid. Something needs to be done about that problem. But the Democrat solution of just putting everybody in them isn't the answer. There will never be bipartisan agreement on that point, thus the incremental approach of only common-sense tax saving reforms.

I know, pipe dream.