I feel the answer is to both raise taxes and cut spending. No one wants to see taxes raised but I do not see how we can even start to reduce the deficit without doing both. Being a democrat AND an American I’m willing to do my share but expect the government to show they are also willing to help out too.

It’s unfortunate that Obama used the phrase “Spreading the wealth around.” A better phrase to use is “investment.” Republicans want wealthy people to invest their money in order to make … more money. Obama needs wealthy people to invest more of their money in government in order to provide better services: roads, schools, hospitals, etc. And raising taxes will be cheaper than borrowing the money from China, Japan, and Saudi Arabia with interest.

An earlier caller commented that we should be focusing on cutting the deficit. Is it even possible for our country to cut the deficit while we are on a fractional reserve banking system? Shouldn’t we increase the reserve requirements for our banks?

Since each president brings his partisans into government, I think we need to look at the perspective within each party in addition to the specific proposed policies of these candidates, which change with the political winds.

Dick Cheney famously said, “Ronald Reagan proved deficits don’t matter.” This kind of thinking has been so evident in Republican policy-making of the last eight years. No matter what John McCain says, how can we trust Republican leadership to behave differently if they remain in power?

Tax and invest! Remember, the GI Bill which provided 7 times the economic benefit than it cost; we must support education for long term financial strength. We must transform our energy system and repair our transportation infrastructure. Start there — energy, transportation, and education investments — then move to other areas.

Joe Steiglitz, no slouch where economics is concerned, thinks the war is going to cost us $3 Trillion. Reducing that expense will go a long way to reducing deficits.

No one said it better than Justice Oliver Wendell Holmes: “I like paying taxes. With them I buy civilization.”

Tom is wrong about Japan which has TRADE surpluses but even bigger relative government deficits than the USA.

It’s too bad that Bush didn’t introduce the concept of the country “sacrificing” for the wars he initiated. If he had, the public would already have accepted that in hard times, sacrifices are necessary and the candidates could afford to tell the truth about the sacrifices necessary to slowly fix the economy. As it is, both of them have little choice as politicians but to promise the impossible. And then, when the new president is inaugurated, he will have to either adopt policies that will please no one or else let the country slide into even deeper debt and economic problems. It is really all very sad.

As a a European, I keep marveling at the level at which Americans have been convinced that taxes are bad!! I mean travel abroad and look at how people live with lesser levels of stress, not having to worry about health care, education, enjoying premiere public transportation. Why do Americans think they do not deserve it or are not entitled to it?

I would gladly trade higher taxes to not have to worry about all this nonsense, especially as a mother of three, and suffering from a chronic disease.

Living one step away from health-care-caused-bankruptcy does not seem that idyllic to me. It is a pretty sad state of affairs that need not be.

We need to start demanding more accountability for our government’s spending. For example, I am appalled by the amount of money we spend on our military – forget dollar figures because when we’re talking hundreds of billions of dollars, it’s meaningless to most of us – but U.S. military spending is about as much as all other countries in the world COMBINED.

Meanwhile teachers are buying their own supplies for their classrooms. How does this strike you? Is that OK?

Why are we not addressing these kinds of facts (Tom?) and putting them out there so people can begin to understand WHY we pay so much in taxes, yet receive so little from our government?

The Republicans’ old argument on taxes was that it discouraged economic activity, thus leading to fewer jobs and ultimately, lower tax revenue and thus deficits. After the deficits we have had in the Bush administration, and the considerable loss of jobs, I’m of the opinion this theory is not sound.

Tax cuts and budget cuts are inadequate!

Inelastically demanded goods & services: healthcare, military defense, insurance, real estate/ housing/ rent, litigation, schooling, and fuel are overpriced relative to wages!

Raising wages is an unreasonable strain as the money is simply not there. Rather, the solution is to lower the prices of these overly financially parasitic industries.

The loan/ credit crises are for the same reasons:
(1) The fact that people need loans to pay for price-gouged goods & services because they don’t have the money AND
(2) Loans are accepted at face value & reinvested by banks in the process of money creation – our economic engine which is based on (1) The fact that people don’t have money!

I would gladly trade higher taxes to not have to worry about all this nonsense, especially as a mother of three, and suffering from a chronic disease.

I agree but in US culture raising taxes is somewhere on a continuum between eating dogs and having a colonoscopy. It’s incredible that Americans are uninterested in the simple fact that stuff has to be paid for.

Neither one of our major candidates have the guts to address this basic issue. I expect such irresponsibility from McCain, given his party’s record of fiscal recklessness. But Obama is obviously intelligent enough to grasp the basic math, yet the more he talks about “change” the more it becomes clear that he’s not even willing to commit chump change to fixing the deficit.

Anyway, this is what the American public wants, and they demonstrate this by eagerly voting out-of-office any candidate who suggests raising taxes.

In the past, some snarky American would have chided you because your high tax nanny-state has also produced high unemployment – 8-10%. But the US will be 8% by the end of Q4 and probably 10% by Q2-Q3 of 2009, but WITHOUT the social safety net and health insurance the Europeans enjoy. Then we’ll see who’s chiding whom.

The Republicans old argument on taxes was that it discouraged economic activity, thus leading to fewer jobs and ultimately, lower tax revenue and thus deficits. After the deficit’s we have had in the Bush administration, and the considerable loss of jobs, I’m of the opinion this theory is not sound

As I’ve pointed out before, politics is theater. Logic and analysis and numbers are less important than perceptions, symbolism, themes and social affiliation.

Obviously the GOP theory about taxes and economic activity is bogus. We had a huge tax cut a few years ago by George Bush and yet not only did the deficit go UP but we’re about to enter the worst recession/depression since the 1930’s. And McCain wants to cut taxes even more.

But even though it’s bogus as an economic theory, as POLITICS people love it! The theater part has been so successful that any state or national candidate who proposes tax increases is committing political suicide. The GOP may not win many elections this fall, but they have sure defined the rules of the game!

Tax-cuts to business DOES NOT stimulate the economy, nor does it create new jobs; it only stimulates the CEOs’ bank accounts. It’s the same trickle-down FAILED economic policy.

Want to stimulate the economy? Create jobs DIRECTLY. Such policy ASSUMES that business is moral and values workers over profits.

These companies pocket the tax-cuts, out-source, and move overseas to increase their profits even further.

It’s the same scam as “letting the markets run themselves,” assuming greed does not exist. Foolish.

If only we had a presidential candidate as erudite as Maya MacGuineas!

Why would the United States have any better luck than those newly homeless who borrowed beyond their incomes and lived it up? Or are we as a nation that stupid?

Do we still even hope to get lucky? Like maybe win some money on a reality show? Or maybe get a new credit card in the mail, just in time? Maybe Jesus will come by with his rapture and we will never have to worry about paying our debts back.

Where are the people demanding a fix to the situation, people willing to make real sacrifices? All I see is people on both sides still trying to get something more, for free!

MOHAMMED N. RAZAVI, DALEVILLE, AL 36322

“But Obama is obviously intelligent enough to grasp the basic math, yet the more he talks about “change” the more it becomes clear that he’s not even willing to commit chump change to fixing the deficit.”

“Too muche of the American Wealth that is
supposed to trickle down to the American Workers
in the form of jobs and and other benefits, actually
trickles out to other countries where they enjoy
explosive improvements to their standards of living
while we get poorer each day.

To see this doesn’t require “intelligence enough”, it
requires barely any intelligence at all. Yet this
dead argument is still dragged around like the dead
body, “Bernie”, in that movie “Weekend At Bernie’s”.
Obviously, because some people can still be fooled
about it, the argument still has utility.

Because this country is a Democracy, we all enjoy a
stable material and sociological context in which to
grow businesses, communities and the kinds of quality
lives that make it all, not only possible, but worth
while in the end. That costs something and at the end of the day, you can be sure that it’s about the
distribution of income. Our paychecks are Not the last
word on how that will pan out, unless you want to see
labor unions back.

There’s a huge payback for the taxes that we pay and that payback isn’t even close to being fair when the
simple math is done. The American people have moved
before and will move again to re-adjust the system.
“Joe the Plumber”, under Obama and the American People,
will have customers + jobs + money to spend on his
services. And he’s going to have his own business a
whole lot sooner if I can afford to hire him. Do
the math. (Say hi to Bernie for me).

“The Republicans’ old argument on taxes was that it discouraged economic activity, thus leading to fewer jobs and ultimately, lower tax revenue and thus deficits. After the deficits we have had in the Bush administration, and the considerable loss of jobs, I’m of the opinion this theory is not sound.”

Good guess. I’ve looked at this issue and there is NO evidence that this is true, yet Republicans keep repeating it and they are not usually challenged.

There are two recent examples where GDP growth accelerated after tax increases: Reagan increased taxes in 1982 and Clinton increased taxes in 1993 and growth accelerated. But despite these observations, they continue with this flawed mantra.

Why would the United States have any better luck than those newly homeless who borrowed beyond their incomes and lived it up?

Because the government can legally print money. The homeless people cannot. If you buy a (hypothetical) 1 year Treasury Note for $1000 at 3% interest. The government can print the money it needs to pay you back your $1030 when it matures. Granted, by printing money they dilute it, so the $1030 they give you might only be worth $900 in spending power, but hey, it’s legal.

Where are the people demanding a fix to the situation, people willing to make real sacrifices? All I see is people on both sides still trying to get something more, for free!

But that’s American culture! It’s not just the government – ordinary Americans are up to their ears in debt – credit cards, car loans, balloon mortgages; huge corporations are leveraged to the hilt – look at GM or Fannie and Freddie. So where are those people? They’re busy trying to kite together enough money to make the next minimum payment on their credit cards, or busy moving their cars around to avoid the repo man.

I think there’s, like 9 people in the whole country who believe in paying-as-you-go. I’m one of them; I assume you’re another; that means there are 7 more out there someplace.

“Joe the Plumber”, under Obama and the American People,
will have customers + jobs + money to spend on his
services.

Doubtful. BOTH McCain and Obama are proposing policies which will DRAMATICALLY increase the deficit, from its already insanely high levels. With our failing economy, not to mention the fact that this recession is worldwide, the Chinese, the Indians, the Russians, etc, will either be ininterested or unable to buy up the mountains of Treasury securities that are, and will be, issued to fund this debt. But neither candidate has the guts to admit this – they both seem to think the the tooth fairy is just going to leave a few trillion dollars under the government’s pillow.

There are two recent examples where GDP growth accelerated after tax increases: Reagan increased taxes in 1982 and Clinton increased taxes in 1993 and growth accelerated. But despite these observations, they continue with this flawed mantra.

But why shouldn’t they? Politically, it works. People WANT to believe that lowering taxes will somehow result in MORE money to spend on government programs. It’s a much more appealing proposition than the idea that if we want national defense, or health insurance, or a bailout plan, we actually have to come up with the money to pay for it! So I don’t understand why you say their mantra is “flawed” – it’s not politically flawed, and they’re a political party, not a bunch of economists.

“So I don’t understand why you say their mantra is “flawed””

Because it’s factually flawed and I happen to believe that there should be some semblance of honesty in political campaigns. You are obviously so cynical that you think it’s OK to seize power through deceit and that the ends justify the means. I think it’s reprehensible.

“People WANT to believe that lowering taxes will somehow result in MORE money to spend on government programs.” Not everyone. In fact, I bet you can’t substantiate that even most of the electorate feels this way. Consevatives want to cut taxes so they can “starve the beast,” not to raise more revenue to pay for more programs. So exactly who are these “people?”

“it’s not politically flawed, and they’re a political party, not a bunch of economists.” Well, I think William F. Buckley and the other founders of the conservative movement would disagree with your cynicism. Buckley was famous for his belief that he could win arguments against liberals based on the merits conservative idealogy and without resorting to lies.

P.S.
Stop being such a jerk.

Actually, President Bush and now his followers, Senator McCain and Governor Palin, have the relationship between tax rates and job creation EXACTLY BACKWARDS — which perhaps explains his “jobless recovery.”

The higher the marginal tax rate, the greater the incentive a business has to add jobs. Let me repeat: the HIGHER the tax rate, the GREATER the incentive for a business to add jobs.

Business, (and small business owners like myself are especially sensitive to this because it so immediately affects our lifestyles) evaluate tax deductible expenditures in terms of the after tax impact on the business. If I want to hire someone for $40,000 (including benefits and other employment costs) I get to deduct those employment costs from my taxes. If my marginal tax rate were 50%, the after tax cost of creating this job would be $20,000. I would spend $40,000 by creating the job, but I’d save $20,000 in taxes – so the after-tax cost to me is only $20,000. If my tax rate were lower, say 10%, the after tax cost would be $36,000, and if my marginal tax rate were 90%, the after tax cost of adding this job would be a mere $4,000.

So the higher the tax rate, the greater the incentive for a business to add jobs. No wonder job creation has been so weak under Bush.

Not inly that, the higher taxes can be invested in our future improving port security and electrical grid, repairing our bridges and increasing the next generation’s education and competitiveness. I guess tha makes it a twofer.

As is typical these days, the Joe the Plumber story was completely misrepresented. How can someone with Ashworth’s smarts screw something up so simple. Clue: reflexive liberalism = don’t think through the facts as presented. Naturally, we had to be informed that Joe doesn’t have a plumbing liscense. Newsflash: Joe said this, and that he doesn’t need one for the residential work he does. So, that’s irrelevant. But, you know, it’s irrelevant to the discussion anyway, so it’s just a cheap shot. BTW, Massachusetts residential designers do not need to be lisenced. Why? Better deal for the consumer, as determined by the consumer – otherwise, you can bet your bottom dollar that the special interest groups would have insisted. Next Up? Tom states that Joe doesn’t make $250,000. Long & trivial discussion about how much Ohio plumbers make. Guess what? Joe didn’t say he made $250,000 as a plumber, but hoped to someday buy a company that would yield him such profits (BTW, Tom, profits are different from revenue). Now, that was clear from just listening to 15 seconds of the discussion between Obama and Joe. Let me know when this gets difficult to understand. Since we’ve been helpfully informed that Joe is $1,200 behind on his taxes, and doesn’t have a lisence that he doesn’t need, maybe in fairness of painting Joe’s picture, Tom’s staff might have done a minute amount of research to find that Joe grew up without the breaks in life (his family spent some time on welfare) and that Joe is a single dad. But, that might shine some sympathetic light on Joe – not on the agenda. It’s really quite pathetic when the left has to resort to the politics of personal destruction on some guy whose neighborhood Obama went thru, and had the temerity to ask the Messiah a challenging question. If I wanted brain-dead analysis, well, yes, I guess I would tune into the Main Stream Media. Note: this was a bad day for Tom. He’s usually pretty good, but everyone has bad days.

Part II –

The “socialism” aspect of the discussion. Can the analysis of Obama’s “current” tax plans and so forth. Try to peek under the lid of his record. Nope. Too smart for that stuff. We prefer the sirens’ sound. One wonders where the left’s vaunted brainpower comes into play.

Because it’s factually flawed and I happen to believe that there should be some semblance of honesty in political campaigns. You are obviously so cynical that you think it’s OK to seize power through deceit and that the ends justify the means. I think it’s reprehensible.

Cynicism has nothing to do with it; neither does “should”. We cannot discuss our political system (or anything else – physics, botany, economics, electronics, etc) without a commitment to coldly and unemotionally gaining a clear-eyed understanding of it. “Should” and “OK” have no place in such analysis, any more than they do is describing the atomic weight of carbon.

I claim two things to be accurate:

1. Human beings make political decisions with far more influence from emotion, identity, symbols, and other social cues than they do from facts and figures. This has been extensively researched and the data is very clear (and I’ve cited some of it, and plenty of sources, on these forums).

2. American voters are highly tax-phobic. The evidence for this point of view is the abject fear displayed by almost all politicians about proposing tax increases, and the lengths they go to to avoid even the APPEARANCE of raising taxes. Obama has been very careful to point out, over and over, that he’s not raising taxes overall (infact NPR reported a few days ago that his plan is revenue-negative).

Despite the fact that we have a huge and growing deficit, how many major politicians can you cite who are running and winning on a platform of overall tax INCREASES? How many are proposing to keep taxes the same or to lower them?

Well, I think William F. Buckley and the other founders of the conservative movement would disagree with your cynicism. Buckley was famous for his belief that he could win arguments against liberals based on the merits conservative idealogy and without resorting to lies

Yes, I know. Back in his “Firing Line” days he and I exchanged some letters. We disagreed on some points, but he was always classy and polite – unlike you.
Anyway, William F Buckley is dead. He had serious reservations about the Iraq invasion and criticized Bush as a “lower-case c conservative” who didn’t live up to his erudite standards. But guess what – Bush succeeded in getting us into Iraq without having to resort to facts. Bush succeeded in almost all his other goals – the Supremes, the huge budget deficit, the evisceration of the Bill of Rights, and the bailout, all by using emotion and imagery, and NOT facts.

In science, engineering, and academia facts are great; in politics they are overrated.

Business, (and small business owners like myself are especially sensitive to this because it so immediately affects our lifestyles) evaluate tax deductible expenditures in terms of the after tax impact on the business. If I want to hire someone for $40,000 (including benefits and other employment costs) I get to deduct those employment costs from my taxes. If my marginal tax rate were 50%, the after tax cost of creating this job would be $20,000. I would spend $40,000 by creating the job, but I’d save $20,000 in taxes – so the after-tax cost to me is only $20,000. If my tax rate were lower, say 10%, the after tax cost would be $36,000, and if my marginal tax rate were 90%, the after tax cost of adding this job would be a mere $4,000.

So the higher the tax rate, the greater the incentive for a business to add jobs. No wonder job creation has been so weak under Bush.

Your argument makes sense, or at least as much sense as any of a half-dozen competing and different ideas about tax policy. BUT let’s face it: virtually every major policy proposal can assemble a serious, learned, prominent group of economists to support it.

And anyway, if so many “small business owners like yourself” agree with you then why do most CofC organizations disagree with you?

Dear Sheila,

I can only assume that you’re pining for a 75% marginal rate – that calculates to be a 50% increase in savings. But, why stop there? Let’s see, a 80-90% margin (not historically unheard of) would yield…even better!

Dear Ernie,

I must observe that Obama’s record has never represented change. Rather, it has represented entrenched interests (the Chicago political machine, the most liberal voting record in the Senate from a senator – Obama – from the most liberal neighborhood in the entire country; maybe tied with Cambridge). Some courage.

“Cynicism has nothing to do with it; neither does “should”. We cannot discuss our political system (or anything else – physics, botany, economics, electronics, etc) without a commitment to coldly and unemotionally gaining a clear-eyed understanding of it. “Should” and “OK” have no place in such analysis, any more than they do is describing the atomic weight of carbon.”

Your problem is that you cannot differentiate fact from opinion. It is your OPINION that political parties should lie to get into power. There’s no analysis there, just pure subjectivity. When you and I have debated things that are based on facts, you’ve always been wrong.

And again, your high regard for your analytical skills fails you. Put these into two groups: physics, botany, electronics, economics, and politics. Hint: the first three are hard sciences and two are social sciences. The former can be approached using the scientific method of strong inference and the gathering of facts, the other two cannot. Again you use a bad analogy.

“We (you and Buckley) disagreed on some points, but he was always classy and polite – unlike you.”

You mean like the time he threatened to punch Gore Vidal in the face? I think I’m in good company calling someone a buffoon when they obviously are one.

And by the way Peter, if “should” has nothing to do with it, why did you write this – “But why shouldn’t they? Politically, it works.”

First, I never believe what a candidate says; that’s corn for the cattle. I only look at his record. I know who is the first candidate not to accept spending limits since the public funding for presidential campaigns began, and I know which candidate has accepted the most money from Wall Street.

Government spending is supposed to be counter-cyclical. Cutting taxes, including cutting taxes for the rich, is a great way to stimulate the economy—under certain circumstances and with certain limits. In a downturn, deficit spending is appropriate. In an upturn, the government needs to save and undo previous tax cuts. Bush was right to cut taxes for a couple of years. His mistake was making stimulus a permanent thing.

We just had 8 disastrous years of an unthinking knee-jerk right-wing demagogue. I hope we don’t now choose 4 years of an unthinking knee-jerk left-wing demagogue.

“But guess what – Bush succeeded in getting us into Iraq without having to resort to facts. Bush succeeded in almost all his other goals – the Supremes, the huge budget deficit, the evisceration of the Bill of Rights, and the bailout, all by using emotion and imagery, and NOT facts”.

So why don’t you do something to promote running a fact
based government? Don’t you think that the truth serves
us all equally well or just Gods chosen? Why do you
think that the facts do serve the truth where Science
is concerned but the facts do not serve us where
politics is concerned?

I have the answer; Where the facts do not serve the
rationales that support your greedy amoral grab for
power, they are easily dispensed with – by your
party and the likes – and don’t give me this “Both
sides are equally flawed argument “. You will happily
concede fault where the sum of it is Zero culpability.
The rest of what’s wrong? – is ours alone.

It’s pretty transparent to the most of us what you
are all about. It’s BORING man. Some Liberals are
having fun with it for awhile because it’s such a
pleasure to watch you come undone.

21 October 2008

onpoint@wbur.org

Taxes?

Both Political parties, as they always have, are continuing to demonstrate a complete lack of understanding of even basic Economics. They are doing nothing productive with anything that they propose to do with taxes, and simply continuing to play the Tax Shell Game. In that game, we the United States Citizen is ALWAYS the LOSER.

Best Regards

Dwight Smith
The Only Ongoing Nonpartisan Presidential Campaign ! ! !
http://www.MySpace.com/dwightstanfordsmith
E-Mail: dwight-s-smith@juno.com
Post Office Box 1960, Ann Arbor, Michigan 48106-1960

Posted by Sheila”Business, (and small business owners like myself are especially sensitive to this because it so immediately affects our lifestyles) evaluate tax deductible expenditures in terms of the after tax impact on the business. If I want to hire someone for $40,000 (including benefits and other employment costs) I get to deduct those employment costs from my taxes. If my marginal tax rate were 50%, the after tax cost of creating this job would be $20,000. I would spend $40,000 by creating the job, but I’d save $20,000 in taxes – so the after-tax cost to me is only $20,000. If my tax rate were lower, say 10%, the after tax cost would be $36,000, and if my marginal tax rate were 90%, the after tax cost of adding this job would be a mere $4,000.

So the higher the tax rate, the greater the incentive for a business to add jobs.”

Well you certainly proved you have a rather myopic aka “stupid” view on marginal taxes.

Firstly you assume all costs of employment are deductible. pretty big “if” but i’ll go with it and simply prove you wrong nevertheless.

Let’s use your example of a 40,000 a year employee net cost.
90% marginal ratetaxes 36,000 costs you $4000 after taxes.

Now lets take a 10% marginal rate.
4,000 in taxes, 36,000 after tax cost.

In both cases it takes $40,000 in revenue provided by the employee to breakeven for the business.

With me so far?
Here is the liberal pucker factor.
Let’s say the employee provides $80,000 worth first year.
At 90% rate first 40,000 are subtracted for breakeven then 36,000 in takes leaving only 4,000 in profits.

At 10% marginal tax rate leaves 4,000 for taxes and 36,000 for profits.

Now tell me which employer is going to be able to hire more new employees next year?

“We just had 8 disastrous years of an unthinking knee-jerk right-wing demagogue. I hope we don’t now choose 4 years of an unthinking knee-jerk left-wing demagogue.”

Just to be clear, this is not the same Michael.

Obama is the most thoughtful candidate for president I’ve ever seen, and I’ve been able to vote since Reagan v Carter.

I think this “Michael” is Peter.

“Let’s use your example of a 40,000 a year employee net cost.
90% marginal ratetaxes 36,000 costs you $4000 after taxes.

Now lets take a 10% marginal rate.
4,000 in taxes, 36,000 after tax cost.

In both cases it takes $40,000 in revenue provided by the employee to breakeven for the business.

With me so far?
Here is the liberal pucker factor.
Let’s say the employee provides $80,000 worth first year.
At 90% rate first 40,000 are subtracted for breakeven then 36,000 in takes leaving only 4,000 in profits.

At 10% marginal tax rate leaves 4,000 for taxes and 36,000 for profits.

Now tell me which employer is going to be able to hire more new employees next year?”

Maybe the one that understands business math and will gladly pay taxes to teach it to our children?

Guys, guys. Many of you are making this topic more complicated than it really is. I don’t think the politicians quite get it, dare I say, even many economists. People, voters, have gotten stuck on the notions that there are only two options on the menu that can improve or worsen the economy:
a) taxes
b) government spending

The current economic problem & solution is very simple.
It has little to do with taxes or budgets. And the injections of money here & there are hackneyed at best. The REAL problem has mostly to do with our cultural assumptions about pricing.

Rhetoric Question:
What percentage of most Americans’ income goes toward their Rent or Mortgage? Are they able to buy all they want or need (reinvest in the economy)? Are they even able to save?

The TRUTH is that people are culturally trained to accept & expect that doctors, lawyers, houses, apartments, cars, & colleges, etc., are supposed to be expensive. People are culturally conditioned to the resignation that the high prices of houses, cars, fuel, etc., are justified by high demand. Sure, you can justify it with classical Supply/Demand Curve charts or by measuring the Price Elasticity of Demand but thank God we’re not charged for the air we breath if that’s the case!

The reason why products cost so much on shelves and why businesses downsize labor during economically hard times is because inelastically demanded goods & services: Fuel, Rent, Real Estate, etc., aka, OVERHEAD, costs too much relative to wages & profits. Most importantly – (and it should not go without noting) – many of these overhead prices are arbitrarily determined!

But people – businesses & consumers, alike – do not feel that they have the bargaining power to negotiate lower prices for those fundamental things that they need most because they are so desperate for them and are trying to outcompete one another.

HOWEVER,
Can you see what is naturally occuring in the economy right now?
Fuel prices are dropping, housing prices are dropping, etc… This is evidence, if not proof, that they were too expensive! The economy is self-readjusting.

The problem isn’t about Fannie, Freddy, or AIG. The problem won’t be solved with finger pointing done by other secretly greedy people who would do the same things if they could. And the problem doesn’t just reside with greedy corporate executives. Rather, the problem also resides in the psyche of the common citizen as well. People are in denial that they paid too much for their homes. But, at the same time, they don’t want to give up easy money that can be made by charging high rent or by asking high prices to compensate for having gotten ripped off themselves when they bought the property…
It is a viscious cycle of greed…

The solution is basically this:
Holding wages as the constant, the ratios of wages to the prices of inelastically demanded goods & services must be readjusted to allow for the aggregate consumption, investment, and wages in other areas – in the greater part of the actual aggregate economy. At the moment, the largest parts of the economy, monetarily, are actually the smallest parts of the economy, proportionately – such as healthcare & military defense.

The prices of inelastically demanded goods & services such as healthcare, military defense, insurance, real estate, housing, rent, litigation, schooling, and fuel MUST be lowered – considerably – because they are causing too much artificial debt & economic drag.

People – and the Government, by the people, for the people – must say “NO” to price gouging.

And, likewise, there needs to be a more culturally developed & instilled sense of social responsibility in the pricing of those things that are most needed by humans in a civil society whether it be shelter or education.

The Wantmores and Haveless Families

Daily we hear about Joe the Plumber a man who is not a plumber, not a business owner and not a Joe – his name is Sam. Sam, not-a-plumber, wants his money in his pocket. Sam is a Wantmore. Sam wants more for himself than he does for eighty percent of his fellow Americans. I live in New England and there are few people here who make over a quarter of a million dollars per year. Using the 2002-2006 Northeast-Midwest Institute, a Washington-based, private, non-profit, and non-partisan research organization, it takes an average of five out of six New Englanders combined wages to equal slightly over a quarter of a million dollars.
http://www.nemw.org/income.htm
Connecticut 59,634
Maine 42,034
Massachusetts 55,753
New Hampshire 61,187
Rhode Island 49,240
Vermont 48,712

Yet, Joe/Sam is worried about making so much money that he might have to pay a little extra when filing his taxes. The Haveless family would love to be in his position. The Haveless family would like to have insurance, would like to have dental care and would like to have a business that makes over a quarter of a million dollar a year. The Haveless family knows what it is like to live on the edge of making it and losing it. They know what it is like to make the choice between health care and food. The Haveless family does not have the privilege of be encumbered by paying three or four cents per dollar extra in their taxes, like Joe Wantmore. The Haveless family does not have the luxury of choosing between buying a new car or putting their extra money into the stock market or a savings account, because there is no extra money. To me, Joe/Sam Wantmore the plumber has put a face on greed and selfishness. When Joe/Sam heads to the polls, he might want to take a look around him before he steps into the voting booth. Look at the people who are there in the hall with him and count how many of those people are missing teeth. We live in the greatest country in the world and many of our citizens are missing what is needed to chew their food, get a job and live a healthy life. Can we, as a nation, think so little of those in need that the bulk of the national dialog is spent on greed and not need? To quote Sojourner Truth, “If my cup won’t hold but a pint, and yourn holds a quart, wouldn’t ye be mean not to let me have my little half-measure full?”

Bill seems to be a bit sensitive socialism.

What we heard from the two small businesses guys was what is in it for me. So they bet that Obama will stimulate the economy more than McCain.

Look, neither one of them is going to cut taxes, Obama wants to increase Federal spending by $800b with no real way to pay for it. In at least two debates Obama was asked what he would cut from his plan both times he did not really answer the question. McCain wants to cut every ones taxes meaning less revenue. Hell, if cutting middle class taxes is good for the economy wouldn’t cutting every ones taxes be better? More money in every ones pockets hence more jobs…. Neither candidate is making much sense here.

Obama’s plan would give back money to people who do not pay federal taxes and says ya but they still pay payroll taxes. Hmmm what is the other Federal payroll taxes do they pay…SS and Medicare right…So Obama’s stance is that it is good idea not to fund SS and Medicare or that the 5% will pay for everything…neither one is a sounds like a good idea.

Lay off of Joe, Obama asked his opinion he gave it then every one on the left hammers away at him personally. Is this Obama’s change we can believe in stuff? Seems like the same old politics….

Evan Borden wrote the magic words: “fractional reserve banking system.” This may well be the ultimate source of the current financial crisis.

And the current crisis may be the final freezing up of our basically unsustainable money and banking system. Because in a fractional reserve banking system, debt is money, and debt must keep increasing indefinitely. Until it can’t any more. Which is exactly where we now seem to be.

For more on this, and a proposal endorsed by both Milton Friedman and Elizabeth Kucinich for extricating ouselves from the failure of fractional reserve banking, see “Will the Financial Crisis Change the Game?” at

http://whatsnotso.blogs.com/

Who would ever have thought that just by printing fiat money while raising bank reserve requrements to 100% we could pay off the national debt in one year with no inflation?

And get back to a sustainable money and banking system. With no need for the Federal Reserve Bank.