23 Aug 2012

Romney / Ryan Get My Vote

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Oh I know I just pissed off about all of my friends, but I’m allowed to have an opinion, and mine is that President Obama’s “Hope & Change” has failed and it’s time for a change.  Obama himself said that if he couldn’t change things in 3 years that he would be a 1-term President.  Let’s hope so.The Congressional Budget Office announced yesterday that if things don’t change soon, we will have yet another recession.  I’m not sure we can go through that again, especially so soon.  To be honest, I don’t think we ever really came out of the last one.

I saw some clips of Paul Ryan’s visit to Raleigh yesterday, and I must say, I was impressed.  His (and Romney’s) financial idea’s are right on target.  We just can’t continue to spend money we don’t have!  It’s plain and simple.  We’re broke.  Our bank account is overdrawn to the tune of TRILLIONS of dollars.  We need to get a businessman in there that knows how to balance a budget and get this country back on it’s financial track.

Now I know that many of my liberal friends will say “but look at all the social things they are against…he’ll take away our rights to (insert complaint here).”  Trust me, I get it…I really do. I’m not thrilled about that part of the platform either.  I’m a Libertarian, which means I am socially liberal but fiscally conservative. It’s kinda like being Mr. Spock of Star Trek…half human, half Vulcan…sometimes the two philosophies clash.  So my philosophy is that we MUST get this country FISCALLY sound again before anything else.  All the social issues won’t mean a damn thing if this country falls…there won’t be any country left.  We MUST get our economy rolling, we MUST remove roadblocks to entrepreneurs and businesses and allow them to expand and start hiring people again.  Once the country is solvent again, we can look at the social issues, but until then, those have to take a backseat in my opinion.  Are they important to me?  Of coarse; however, if we don’t get the economy back, and get people back to work, there won’t be a country left to enjoy the benefits of those social issues.

So that’s my opinion…like it or not.  Like Dennis Miller says:  “It’s just my opinion…I could be wrong.”

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One Response to Romney / Ryan Get My Vote
  1. First, Obama hasn’t been responsible for the budget for 4 years yet. The 2009 budget was in place in 2008. Independent fact-checkers say that he first year of that trillion+ dollar deficit belongs to the previous administration, and a liberal blogger went so far as to cut $140B (expenditures from the stimulus and other Obama spending) out of the 2009 budget (Bush’s last) and add it to Obama’s spending. It still turns out that Bush’s last year’s deficit was worse than any that Obama has had.

    Now, I’ll try to reach back into my macroeconomics classes and explain some stuff.

    Where does that deficit really come from? We lost over 8 million jobs in the waning Bush years and early Obama years. A loss of 8 million jobs translates to about $200 billion dollars in lost taxes and added spending. (I base that on a loss of $10,000 per job loss in tax revenue and $300/wk in unemployment benefits. I don’t think those are unreasonable assumptions, but they are assumptions.) Add to that other expenditures based on income that have been in place since long before Obama became President, and you’ll see that between 1/4 and 1/2 that deficit is not due to any social agenda at all. It is due to laws that exist to ensure that people can have a safety net and due to the worst economic downturn in this country in 80 years. Those expenditures automatically rise in bad times and automatically fall in good times. The last 5 years have been REALLY bad times. No president – Republican or Democrat – can control those expenses. Keep in mind that those are merely expenses to the government and don’t account for the detriment that those lost wages and lost taxes do to the overall economy. We’re coming to that.

    This was at a time where we were still paying for two wars on credit and realizing that the huge tax cuts initiated under Bush (which accounts for about half the rest of the deficit) had actually led to a LOSS of private sector jobs. Had it not been for an increase in public sector jobs by about a million while Bush was president, we would have had a net loss in jobs under his administration. How’s that for the small government conservatives – less private sector jobs, more public sector jobs. Check the bureau of labor statistics if you don’t believe me. (bls.gov)

    Supply side economics doesn’t work. Here’s why. When you remove money from the system, the economy contracts. Rich people don’t spend all the money they get. When they get more money through tax cuts, they save a good portion of that money. Poor people and middle class people, on the other hand, spend a great deal higher percentage of their income. So if you give a couple rich people $1 trillion to split, you’ll see a very small percentage of that pumped back into the economy. If you give that $trillion to 75 million families, though, a much higher percentage will be spent.

    Since we’re a consumer economy, our GDP is tied directly to spending. The top 5% save roughly 40% of their income. While the bottom 5% save almost nothing. And the fewer and wealthier people who share that $trillion, the worse for the economy, as the savings will go up exponentially. So giving the money to the top 5% would actually put only about 60% of that money into the economy, while giving that money to the rest of the country would put over 90% of it into the economy. (I’m not suggesting that the government should hand out checks like they did under Bush. I’m pointing out the economics of the situation… by the way, those checks helped with the recovery in the early 2000s.)

    That money doesn’t just go into the economy once, however. Economic activity creates more economic activity. Economists call this the multiplier effect. Spending money causes other people to spend money. It also causes inflation. But there’s a sweet spot between spending enough to help drive the economy and saving enough to help keep inflation down. That’s what economists and public policy wonks argue about – where’s the sweet spot. Some want more savings to keep inflation down. Some want more spending to drive GDP up. So when only 60% of the money gets put back into the economy because the top 5% want to save more, that hurts GDP and causes contractions. When too much money and economic activity are present, we get high inflation. Right now, we have very low inflation. This suggests that the economy could handle more capital.

    So to the point about taxing the 1%ers… Here’s the thing. When people who save 40% of what they make have to pay a couple more percent in taxes, not only does it add to the revenues of the country, but it also adds to the amount of usable capital in the economy. And when that capital is used for whatever – road projects, F-48 futuristic fighter jets, research grants, mars rovers, teacher and fireman salaries – it has that multiplier effect. So while the actual amount may be relatively small in comparison to the deficit, the economic activity it creates, helps drive our economy higher and create more revenue. That’s actually the argument that supply-siders make about tax cuts for the wealthy. They claim that if people have more money to spend, they’ll produce more economic activity. They’re partially right. The problem is that they give the money to people who are actually least likely to spend it.

    Economics is very complicated, and it’s not an exact science. It’s no sin to struggle with it. Hell, I just have a cursory knowledge of it myself. But what is unforgivable is to listen to one news source and take it as the gospel. Maybe watch and read some unbiased news like CNN and National Journal, then use Politifact and Washington Post’s Fact Checker to see where the candidates and pundits rank. Check out Fox and MSNBC on occasion, too, to see where the partisan pundits stand. While I think the fact checkers tend to be too conservative, a neoconservative friend of mine claims that they’re too liberal. That probably means they’re actually a decent, well-reasoned source of information. They catch people of both parties lying and stretching the truth. They also catch them truthing sometimes. Just keep an open mind.

    One last point, the CBO estimates that Obamacare, as it’s written, will DECREASE the deficit by over $200B over 10 years. So when you talk about the expense of Obama’s social agenda, then consider that his signature law actually CUTS the deficit, it makes me think that you don’t actually understand his social agenda.


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