Debt Free

Quick, say “the Economic Growth and Tax Relief and Reconciliation Act of 2001”. It's quite a mouth full, which is why most people say either “the Bush tax cuts” or “the Bush tax cuts for the wealthiest Americans”, depending on which side of the isle you sit on. Notice “the Bush tax cuts for the wealthiest Americans” is still quite a mouthful. That's really not important right now. What is important is that the economy has actually grown in the intervening 5 years to the point that, even as tax rates have fallen, total tax revenue has actually risen. According to the Congressional Budget Office, in 2003 individual income taxes brought in $793.7B to federal coffers. That figure increased to $927.2B last year.

The Dems like to express tax cuts in how much they cost. The fact is, they don't cost, they save. If they were looking at it from the point of the people actually paying taxes, instead of those spending them, they'd see that.  That is a fundamental difference, and it would be nice if more people stated it that way. Tax increases on the taxpayer should be stated in terms of how much they cost you and me. It's sad commentary that the tax picture continues to be misstated this way. The mainstream(?) media perpetuates the sham by using the “cost” phraseology in lock step with those on the hill.

Think about it this way. If you get a raise, you think about it in terms of how much more you have to spend. It's kind of like Congress. I guarantee the source of those funds, your boss, thinks of it in quite the opposite way. You and I are the source of funds for the federal budget. When tax rates go up, it costs us. When the go down, it saves us, not the other way around.
 
$8,375,365,051,008.48 - That's one huge number. It's our national debt, as of June 14th, 2006. Unfortunately, it's trending the wrong way, due to a government that spends cash like a sex addict in a whorehouse. I know, it's a Republican controlled Congress. That makes it all the sadder. Some of you will say “It's all because of the war in Iraq” Blah!, Blah!, Blah! Quit your whining. As a percentage of the GDP, we're actually spending less than half of what we spent on defense before the Vietnam war(over 9% then to 4% in Fiscal 2005).  We spend that money on various things, the largest of which is Social Security and Medicare. Sadly, interest on the federal debt is the fourth largest line item in the federal budget. People say that the deficit is down and we should rejoice. That only means we are sinking into debt at a slower rate than we were before, not a great reason to celebrate. Real cause for celebration would be an actual budget surplus.

If you ran your finances that way, you'd stay in debt forever too. You would, however, pay for retirement for your extended family, give them some sort of health insurance when they retired, have a really cool stash of great guns and a Hummer, give a ton of money to low income members of the community, and have a huge credit card bill. The interest on that bill alone would pretty much guarantee you'd stay impoverished forever, and it doesn't bode well for the future financial health of the United States either.

Too many people actually do live a version of that scenario, but substitute cool vacations, new plasma TVs, and  BMWs. That propelled outstanding consumer debt in this country to a record $2.17T at the end of 2005, according to the Fed. That is over double what it was just 10 years earlier. We're building a really nice house of cards. Let's hope it doesn't all come tumbling down. Do your part and try to reign in your credit card balance. You'll thank yourself in the future.