William Larsen

Can Anyone Just Say No?

As our elected representatives debate and pass legislation with the intent to stimulate the economy, I would like to offer this bit of knowledge. The national debt as of September 30, 2007 was $9,007,653,372,262. As of September 30, 2008 the National debt was $10,024,724,896,912. The budget deficit was $1.017 Trillion!

How much is a Billion Dollars? Sounds like a lot of money. To put this into perspective, $1 billion of taxpayer’s money to bail out an entity is equivalent to $10 out of each American Families pockets. The $825 Billion stimulus package is $8,250 per family. The $810 Billion bank bailout cost each family $8,100. Fannie Mai Freddie Mack was about $5,000 per family and the amount is even larger.

Some politicians say that our children will have to pay it back or that we will have to pay higher taxes in the future. Who are we kidding? The budget surplus was in 1957, 52 years ago. Every single year since 1958, our elected representatives have spent more than they took from us in taxes. We never paid a single penny in interest, but borrowed the money to pay the interest on the national debt. In fact we have not paid one penny towards the money borrowed since 1957, but our representatives have borrowed on top of this.

They say that for every $1 dollar of stimulus, it will increase the GDP by $1.57. This sound good, but let us look at the $1 dollar we borrowed. First, from past observations, this is never paid back and we pay interest. This means that the $1 in 1957 has cost us $11.04 in interest and has not been paid back. If w take the $1.57 in increased GDP, and raise the tax to repay the $1 borrowed, we need to tax 67% of the incremental increase in GDP in the first year or raise taxes even more.

Ronald Reagan cut taxes, Bush said no new taxes, Clinton raised a few taxes, Bush Jr. cut taxes and Obama is trying to provide tax incentives and tax credits. Past history does not support the notion that higher taxes will be used to pay back borrowed money that increased the national debt. So who is going to pay this borrowed money back? I can give you a hint. Just take a look at the shape our economy is in. We are paying for the sins of our predecessors through a lowering of standard of living, jobs being out sourced and inflation.

We cannot borrow our way out of this mess anymore than we can spend our way out. We got to this point through too much debt. As I stated in the Debate with Souder and Montagano, I was against any bailout. Now Souder is saying anymore bailouts are bad. If you give them a buck, they will take all you have.

posted by William Larsen @ 10:54 PM