The money needed to solve this country’s fiscal problems simply isn’t there.  The problems are too large to be dealt with in any form of the ‘short term.’  Tragically, the American people need to wake up and realize that the government has been promising far too much for far too long and financing it with the forgone opportunities of the current generation and generations to come.  Debt is nothing more than delayed taxation. Someone has to pay for that at some point.  The problem is still fixable, and history (and even some modern examples from Slovakia and Canada) has shown us that reducing government services and spending is the easiest and least+ painful way to solve the problem with legitimate results. The problem has been allowed to get so bad that the only answer is a reduction in services and real tax increases.  By real tax increases we’re going to have to tax the middle class.  People complain all the time about whose fault it is when the problem belongs to everyone in some form. The simple truth is that there aren’t enough rich people to pay for all the demands of the bottom four quintiles.  Demand far exceeds supply on an astronomical scale.  It seems like even today the “Bush Tax cuts argument is still unsettled. I would like to “settle it.” It needs to be settled because the dialogue today is still about letting those tax cuts expire.  If we could somehow take  100% of all dollars earned from every single person who makes $200,000.00 a year or more — we still wouldn’t close Barack Obama’s budget deficit. There would still be a gap.  If such an absurd proposal wouldn’t solve this years problem, a 5% tax increase on the wealthy certainly isn’t going to do much over 10 years.  Not to mention we aren’t even talking about effective tax rates which are an entirely different story:

Let’s take a look (according to the CBO) at the “surplus turn-around” cited by many with regard to our current fiscal state.  The CBO is a great tool for factual historical data, but not for predictions thanks to the ball and chain tied to its ankle with regard to how it is allowed to make budget forecasts using terrible static models and being required to use current law (laws which are written to force the CBO to assume many nebulous things).

  •  30.6% of the turnaround took place in the Bush Republican Years (2001 through 2006) with an annual average of $612 billion.
  •  15.2% took place in the Bush Democrat-controlled years (2007 and 2008) with an annual average of $914 billion.
  •  54.1% took place since Obama became President (in early 2009) with an annual average of $2.167 trillion.
Here’s more bullet highlights from the CBO report from American Thinker:
  •  $8.605 trillion of the $12.03 trillion* turnaround accrued due to Legislative changes such as new spending, new programs and the “cost” of tax cuts. The rest accrued due to economic and technical changes, such as recessions.
  •  20.3% ($1.750 trillion) of the $8.60 trillion Legislative Turnaround is due to the increased outlays and reduced income of the 2001, 2003, and 2004 Bush Tax Cuts of which billions went to expand the Child Tax Credits for the poor and reducing tax rates for the Middle Class.
  •  4.54% ($391 billion) of the $8.60 trillion Legislative Turnaround is due to the cost and reduced revenue of the 2010 Tax Act passed in the Lame Duck session.
  •  3.03% ($261 billion) of the $8.60 trillion Legislative Turnaround is due to tax changes of the American Recovery and Restoration Act (better known as The Stimulus).
  •  Combining the “cost” of all tax changes since 2001 (including the 2001, 2003, 2004 Bush Tax Cuts for the rich, middle class, and the poor; the Stimulus and Lame Duck Session tax provisions), amounts to $2.402 trillion dollars; which is only 27.9% of the Surplus-to-Deficit swing that accrued due to Legislative Action through the last eleven years. Additionally, the $2.40 trillion is only twenty percent of the total Surplus-to-Deficit swing of since 2001.
  •  Some Context: The total $2.402 trillion “cost” of all tax changes since 2001 (which includes changes for the poor, middle class and ‘95% of working Americans’ as Obama likes to say), amounts to an annual average “cost” of $218.45 billion, which is only 15.9% of the average annual $1.368 trillion deficits the US has in the last three budgets (2009, 2010 and 2011).
  •  The Medicare Prescription Drug Program added $272 billion through 2011.

Read more:

The super-committee was tasked with finding $1.2 Trillion in reductions over 10 years, a time period in which we’re scheduled to borrow $10 Trillion.  $120 Billion per year? Out of a deficit that grew from $150-300 Billion under Bush, and $1.2-1.5 Trillion  under Obama?   Government spending has risen by about 7% as a share GDP during the Bush-Obama years, the rise in growth of the government spending to GDP

The big disconnect I’m trying to draw for all of you is that there are substantially more people living average every day lives taking their kids to school in their minivan than there are people driving Porsche convertibles and swimming in Goldschlager. The reality is this:  To get the services you want, someone has to pay for it.  So if everyone is going to get the services everyone is going to have to pay for it.

We’ve been relying on the top 10% of the income earners in this country to finance 70-80% of the income tax revenue for far too long. All this has done is distort our perceptions of how expensive things are.  $15,000,000,000,000 (Trillion) in debt is what we have to show for our ignorance in electing politicians who don’t mind band-aiding the problem past the election cycle. This is money that will be paid back by me, my children, and my grandchildren thanks to the malfeasance of the current and retiring generations support of politicians who don’t mind sticking it to the next generation to pay for the benefits that are quickly becoming a pipe dream.

Now, much of this is due to unforeseen circumstances, like our anti-capitalist healthcare system(topic for another post), the hugely unpredictable demographic shift, and the government becoming involved in many wars which are unnecessary.

Here’s a breakdown of how the current rhetoric on the Bush Tax cuts goes. (From CNN Money)

Following is a breakdown on some of the key measures and their costs, based on revenue estimates from the Joint Committee on Taxation, unless otherwise noted.

Bush tax cuts: $544.3 billion. The package would extend the Bush tax cuts for everyone for two years.

The bulk of that cost — $463 billion — is for the extension of cuts for families making less than $250,000, including two years of relief for 2010 and 2011 for the middle class from the Alternative Minimum Tax.

The rest — $81.5 billion — is attributable to the extension of cuts that apply to the highest income families.

The cost of extending all the tax cuts over 10 years would have been $3.7 trillion.

Again, the REAL cost of the across the board tax cuts comes from not taxing the bulk of the taxpayers. We cannot rely on fewer and fewer people every year to finance services that more and more people enjoy. It is that simple.  The beneficiary base is growing faster than the fiduciary base.