Thoughts, Rants & Raves, and Useful Info

Schooling the Uninformed on Taxes, Deficits, Debt & Spending

Ignorance and stupidity, while often misapplied as being synonymous, are not the same!  Ignorance is a changeable state of the lack of knowledge.  Being uninformed does not make one stupid.  Stupidity, on the other hand, is an immutable state characterized by a lack of capability to understand or learn.  Galactic Stupidity is the willful refusal to try to learn or understand, despite posessing the capability to do so - and this, too, is often an immutable state!  These people are known in the book of Proverbs as "fools".

There is no point in addressing my commentary to the stupid.  However there are many people who are ignorant on the topic of economics and taxes... as there are very few sources of true and accurate information with which to educate them!  For this reason, I have taken it upon myself to write several recent pieces addressing these issues

The purpose of this particular article is to serve as a letter directly to those who are ignorant of, but willing to learn, the facts and the truth about taxes.  If you can assimilate the following five facts, you will have a greater understanding than the vast majority of people who are spoonfed the Marxist Pablum of the Progressive Media Machine.  You will then understand why conservatives are passionate on the subject, and you may even become motivated to share this information with others!

1) We did not just pass tax cuts. We retained tax rates that have been in place most of the last decade. We prevented an automatic tax hike.

2) The left complains that tax cuts have to be paid for. As mentioned, we haven't cut taxes, we kept them the same... but that fact notwithstanding, this premise is faulty. Tax cuts don't have to be "paid for." Tax rates are not directly related to tax revenues!! Tax cuts have INCREASED revenues every time they've been tried. Kennedy, Reagan, & Bush all proved this. Reagan's tax cuts DOUBLED revenues. (This is because reducing taxes unshackles the engine of the economy - spurring growth, investment and risk taking - and this leads to job creation and revenue producing enterprise!)

3) Deficits are not a factor of revenues. They are a factor of SPENDING. When Reagan DOUBLED tax revenues, Congress spent $1.84 for every new $1 in revenues... and the deficits climbed DESPITE a doubling of revenue. We're not under taxed. Congress over-spends.

4) Our current Deficit is over a TRILLION a year and has been since Obama took office. Bush's WORST Deficit was in 2003, after 9/11 and the committment to 2 wars. It was under $450 Billion. After the 2003 tax cuts, the deficit was cut in half in 2004, and was 1/3 of the 2003 deficit in 2005. We were headed back to a balanced budget. Then we elected the 111th Pelosi/Reid Congress. In 2007 they tripled the 2005 deficit to around $480 Billion. This was their BEST deficit, and it was 30 Billion more than Bush's WORST. Then Obama was elected in 2008. The Deficit blossomed to over a TRILLION dollars... which tripled the previous worst deficit in history, which occurred under Pelosi/Reid... the year before!

5) Our current debt (as opposed to the annual deficit) is $14+ Trillion. When Obama took office, it was "only" $9 Trillion. In 2 years he managed to increase the national debt by more than 50%! When Pelosi/Reid took the majority in Congress the Debt was only $6 Trillion. In their 4 years, they managed to increase by 2.5 TIMES, the debt that it took the previous 230 years and 44 Presidents to amass. (BUSH was villified for taking our debt from 4 Trillion to 6 Trillion in 6 years. The Dems took it from 6 Trillion to 14 Trillion in 4 years.)

Our problem is not and never has been a matter of under taxing ANYONE. It has always been a matter of irrational spending of money they DON'T HAVE.

The Answer to Life, the Universe and Everything

Fans of "The Hitchhikers Guide…" will recognize the phrase, and will state that the answer is "Forty Two". But when considering today's economic and political atmosphere, I have another answer.

1) The economy is NOT a Zero Sum Game. You don't deprive someone else by becoming successful yourself. You don't make the poor richer by making the rich poorer. You improve the lot of ALL by growing the economy and increasing the size of the pie! A rising tide raises all boats!

2) Tax Rates and Revenue are NOT directly proportional! Cutting Tax RATES doesn't COST the government in revenues! Tax Cuts INCREASE revenues. Proven by Bush, Reagan, and Kennedy! Reagan's tax cuts DOUBLED revenues.

3) Deficits are a function of SPENDING not Revenues. When Reagan's tax cuts doubled revenue, the Tip O'Neal Dem Congresses spent $1.84 for every $1 in increased revenue! Reagan got blamed for huge deficits (which were MINISCULE compared to today's deficits!) but he submitted BALANCED budgets. They were famously declared "dead on arrival" by Tip O'Neal, and Congress spent themselves silly!

4) You can't tax and spend your way into prosperity – especially when you're 9 Trillion (OOPS, that's a 2 year old figure… Current number is over 14 Trillion) in debt! Winston Churchill one observed, "We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle."

Rev William J. H. Boetcker published a pamphlet in 1916 known at "The 10 Cannots". Often misattributed to Lincoln, these 10 statements embody a tremendous wealth of wisdom and truth:

• You cannot bring about prosperity by discouraging thrift.
• You cannot strengthen the weak by weakening the strong.
• You cannot help little men by tearing down big men.
• You cannot lift the wage earner by pulling down the wage payer.
• You cannot help the poor by destroying the rich.
• You cannot establish sound security on borrowed money.
• You cannot further the brotherhood of man by inciting class hatred.
• You cannot keep out of trouble by spending more than you earn.
• You cannot build character and courage by destroying men's initiative and independence.
• And you cannot help men permanently by doing for them what they can and should do for themselves.

WHY are Progressives so obsessively adamant about raising taxes on the "wealthiest Americans?

Answer: The left REALLY DOES BELIEVE the Zero Sum Game myth.

 

In their view, there's only so much sand in the sandbox. You can't pile up a lot of sand in one corner without depriving the rest of the sandbox

By this logic, if you succeed beyond a certain point, you're DEPRIVING someone somewhere of the opportunity to make a decent living! FAIRNESS DEMANDS that they smooth out the sandbox! And since it's a "zero sum game", by making the rich poorer, automatically and magically they improve the lot of the poor!

 The fact is that the economy is neither zero sum, nor is it static. It expands or contracts based on the BEHAVIORS of the participants! Innovation, invention, provision of needed services, advancement of knowledge, investment in new ideas etc all generate NEW wealth. It is not simply a matter of shuffling around a limited money supply.

 

 When you ENCOURAGE these activities (by reduced taxes and reduced regulation and government intrusion) you UNLEASH the engine of the economy to churn and burn and heat up… and to grow and expand. Conversely, when you hamstring the economy with overregulation, overtaxation, and excessive intrusion – you put ankle weights on the runners that drive the economy and you experience contraction and slowdown. This discourages risk taking. This discourages business expansion and job creation.

Equal Opportunity does not guarantee equality of outcomes. Still, whether your share is a large slice or a small slice of pie… if the economy grows, the pie gets bigger and everyone gets a bigger piece of pie!

McCaskill and Pitchforks: Dissecting the Sentences

Missouri Democratic Senator, Claire McCaskill, has been cited as one of the more vulnerable Democrat senators facing re-election in 2012. Unsurprisingly, ever since the Mid-Term elections of November 2010, she had been making a concerted effort to appear more moderate. But that ended recently as she spoke about the effort to extend the current tax rates for ALL Americans, including the top earners. As she spoke, she lurched violently to the left!

Here are her comments, verbatim:

“I’m trying to figure out how anyone in America can take the Republican Party seriously about deficit reduction. I’m trying to figure out how anyone can keep a straight face and say they’re for deficit reduction while they insist on a permanent tax cut for the wealthiest Americans… completely unpaid for.

Now, they want to say this is class warfare. Well… y’know, in a way it is. Because we’re fighting for the middle class. We are fighting for the middle class. Frankly, the middle class hasn’t had enough champions in America.

Seventy percent of American don’t itemize deductions. That big-old complex tax code… It’s been written for wealthy Americans. The ones that itemize deductions. And then you get to the very very top… where a lot of these peoples income is all about dividends and capital gains, and not even ordinary income; and they have all kinds of ways that they can use the tax code to avoid paying taxes.

This is about leveling the playing field, for what has always made our country different than everyone else. That is a strong, vibrant middle class. And I will tell you this: If they think it’s ok to raise taxes for the embattled middle class because they’re going to pout if we don’t give more money to millionaires… it really is time for the people of America to take up pitchforks.

And all those people that are out there in the Tea Party that are angry about the economics of Washington; they really need to look at this. They need to pull back the curtain and realize that you’ve got a republican party that’s not worried about the people in the Tea Party; they’re worried about people that can’t decide which home to go to over the Christmas Holidays. They’re worried about the people who think they may take a jaunt to Europe for the new year. They’re not worried about those people who are packing those town halls. Cause those folks are the middle class.

So yes, we’re going to continue to fight for the middle class. We’ve net cut taxes $400 Billion in the last 8 months. Targeted like a laser on the middle class and small business. And we’re going to continue to fight for that middle class and for those small businesses. Throughout the end of this year, and all through next year, and beyond.

But please quit taking these guys seriously about the deficit. What a joke!”

See video at: http://lonelyconservative.com/2010/12/claire-mccaskill-if-we-dont-raise-taxes-take-up-pitchforks/

How anyone can listen to the entire statement without choking is beyond me – I had to take it in small chunks. But let’s dissect the statement, a phrase or a sentence at a time… because there are very few instances where 2 or more sentences are strung together without a massive error, lie or misdirection!

“I’m trying to figure out how anyone in America can take the Republican Party seriously about deficit reduction. I’m trying to figure out how anyone can keep a straight face and say they’re for deficit reduction while they insist on a permanent tax cut for the wealthiest Americans… completely unpaid for.

Ok, so she can’t see how Republicans are serious about Deficit Reduction. Let’s not even spend much ink on the fact that the deficit was TRIPLED in Obama’s first year… or the fact that this TRILLION Dollar Deficit is only the first of MANY Trillion Dollar deficits, projected out as far as the eye can see!

Claire thinks that one cannot support lower taxes and be consistent with calls for reduced deficits. I could write an entire piece on this myth alone, but lets examine this presumption she adheres to.

First, she is relying upon an economic myth foisted upon the American population. The myth that tax RATES are directly proportional to tax REVENUES. They are emphatically NOT! Raising tax rates has historically put a damper on economic growth, and rarely results in significant gains in revenue. But more importantly, tax rate REDUCTIONS have universally stimulated the economy and resulted in INCREASED revenues. This is provable every time it’s been tried. It happened under Kennedy. It happened under Reagan (whose tax cuts DOUBLED federal revenues!!) It happened under Bush. Therefore, reducing taxes doesn’t COST… it PAYS!! The concept of “paying for” rate reductions is a lie.

Deficits are NEVER a factor of insufficient taxation. They are not a function of revenues. Deficits are a function of SPENDING! As mentioned, Reagan DOUBLED revenues after his tax cuts. But all you’ll hear about the Reagan economic policy is the so-called “Reagan Deficits”. The fact is that these were the Tip O’Neal deficits!!! The Democrat Congress at the time, under the leadership of former Speaker Tip O’Neal, spent $1.84 in new spending for every $1 in new revenue generated by the tax rate reductions!

Reagan submitted balanced budgets to Congress. They were famously declared “dead on arrival” by the Tip O’Neal House.

Now, they want to say this is class warfare. Well… y’know, in a way it is. Because we’re fighting for the middle class.

Well, I’m glad she actually admitted it! It IS INDEED class warfare. This feeds another Democrat propagated myth: The myth of the “Zero Sum Game”. This fallacy posits that the economy is a closed system. That in order for someone to have more, someone else must have less. Thus anyone who succeeds above a certain point is depriving someone else of a decent living… and fairness demands a redistribution to “level the playing field”.

But the economy is NOT a zero sum game! You don’t make the poor richer by making the rich poorer. You make EVERYONE more prosperous by growing the economy! You may get a smaller slice of the pie than someone else, but by growing the pie, you still get more pie! Or, as Reagan said… a rising tide lifts all boats.

Seventy percent of American don’t itemize deductions.

That’s true! But not because they’re not ELIGIBLE to do so! Many people pay more in taxes than they have to, because they DON’T go through the trouble to itemize. EVERY HOMEOWNER should consider itemizing… but so many people just want to just get thru the oppressive tax process – especially if they’re going to get a refund by just taking the standard deduction… that they’ll file a quick and easy form! But this is a function of ignorance, and laziness and not some conspiracy to aid the rich!

And then you get to the very very top… where a lot of these peoples income is all about dividends and capital gains, and not even ordinary income; and they have all kinds of ways that they can use the tax code to avoid paying taxes.

I’m guessing she forgot that most Senior Citizens (those who aren’t COMPLETELY dependent on the Government Social Security dole) are relying on “dividends and capital gains” to pay their bills and keep food on the table! Not everyone receiving dividends and capital gains is a top-hat and monocle wearing moneybag.

This is about leveling the playing field, for what has always made our country different than everyone else. That is a strong, vibrant middle class.

Yeah. That “leveling the playing field” I mentioned with the Zero Sum myth. This is a primary tenet of the Socialist and the Communist. Redistribution of Wealth. “From each according to his ability – to each according to his need”. She wants to expand the middle class by pulling the wealthy down into it!

If they think it’s ok to raise taxes for the embattled middle class…

THEY DON’T! The GOP wasn’t trying to raise taxes on ANYONE! They were trying to PREVENT AUTOMATIC INCREASES! If NOTHING were done, EVERYONE would suffer a massive Obama Tax Hike. Even Obama didn’t want that! But the GOP was adamant that the current rates… the rates that had been in force since 2003… should be allowed to continue for everyone! There is no reason to impose a massive Obama Tax Hike on ANYONE, including the upper incomes! This was the basis for the debate.

…because they’re going to pout if we don’t give more money to millionaires…

How is preventing a massive tax increase and retaining current rates equated to GIVING money to ANYONE? What kind of leftist stupid-speak is it that presumes money EARNED and BELONGING to the earner is actually property of the Government, and is GIVEN to anyone? How is MAINTAINING CURRENT TAX RATES somehow a gift to the wealthy?

…it really is time for the people of America to take up pitchforks.

REALLY, Claire? I thought it was those evil Tea Partiers calling for violence in the streets!! (Sarcasm) Can you imagine the uproar if Glenn Beck or Sarah Palin made such a statement!!

And all those people that are out there in the Tea Party that are angry about the economics of Washington; they really need to look at this. They need to pull back the curtain and realize that you’ve got a republican party that’s not worried about the people in the Tea Party; they’re worried about people that can’t decide which home to go to over the Christmas Holidays. They’re worried about the people who think they may take a jaunt to Europe for the new year. They’re not worried about those people who are packing those town halls. Cause those folks are the middle class.

One must remember that the upper income earners are the driving force behind job creation in this country. They are business owners who hire people. When they are successful, they expand their businesses and hire more people. They are consumers who buy things that middle class people have jobs to produce. They patronize services performed by middle class workers. I wrote recently about the unintended consequences upon the middle class that were inflicted by the class warriors of the 80s who passed a punitive tax on luxury yachts. When the wealthy stopped buying yachts and found other places to spend their money, it was the industries, businesses and services that were depending upon the yachting community that suffered. Boatbuilders lost jobs. Marinas closed. Restaurants near marinas suffered. You get the idea. In the end these middle class workers who were directly hurt by the tax lobbied Congress LOUDLY and ultimately this punitive luxury tax was repealed as a miserable failure and boondoggle. Enough time has passed that most people have forgotten this chapter in our economic history. It is therefore appropriate to remind you.

So yes, we’re going to continue to fight for the middle class. We’ve net cut taxes $400 Billion in the last 8 months. Targeted like a laser on the middle class and small business. And we’re going to continue to fight for that middle class and for those small businesses. Throughout the end of this year, and all through next year, and beyond.

But please quit taking these guys seriously about the deficit. What a joke!”

You can’t demonstrate tax benefits like that, Claire! We may have realized a reduction in revenues – because leftist policies have dragged the economy to a crawl… but there have been no NET TAX BENEFITS.

And if ANYONE wants to get serious about the deficit, the issue is SPENDING, not revenues. As demonstrated every time... Tax REDUCTIONS increase revenues. Tax INCREASES rarely succeed in raising revenues. And Democrat majorities spend nearly $2 for every $1 in increased revenues.

Conversely, spending and deficits have gone DOWN whenever we’ve had GOP majorities!

Early in Clinton’s administration, he refinanced the debt with short term low interest paper. This began a reduction in deficits as interest payments were reduced. Unfortunately this was a political move to make him look good, as he knew he’d have to refinance that debt at a higher rate a couple years later. But in 1996 the Gingrich Revolution brought about a power shift in Washington. For the first time in nearly 50 years, the GOP was the majority in Congress. This began a series of annual reductions in the deficit that ultimately crossed that magic line and we had a couple years of surplus. This was under a GOP Congress, though CLINTON gets the credit! (Of course it’s CONGRESS that has the power of the purse, but that fact is only applied when it benefits the left!)

The surpluses continued until 9/11 and the dot com bust. This was followed by the run up and implementation of the Afghanistan and Iraq wars. There were significant deficits in 2001 thru 2003. Sadly, these are what is touted by the left against the Bush Presidency. But what followed is conveniently ignored.

In 2003, Bush passed the Tax Cuts. In 2004, the deficit of 2003 was cut in HALF. In 2005, the deficit was 1/3 of the 2003 deficit. We were on our way back to a balanced budget.

Then came 2006 and the power shift in Congress. The 111th Pelosi-Reid congress was elected in November 2006 and seated in January 2007.

The 2005 deficit was tripled.

Then Barack Obama took office. And the 2008 deficit was tripled, and deficits crossed into territory never CONCEIVED of before. TRILLION dollar deficits.

WHO are the ones uninterested in deficit reduction? The ones who spent $787 Billion in Stimulus? The ones who gave us ObamaCare? The ones who are trying to give us Cap and Trade?

Who’s the joke, Claire? Or the Joker!

We will not forget in 2012.

Thoughts on the Tax Rate Debate

As the expiration of the Bush Era Tax Cuts looms and Congress debates what to do next, it is perhaps useful to revisit the facts, and some basic understanding of what they mean.

Let’s first establish the fact that the current issue is not one of tax CUTS. We’re talking about EXISTING tax rates that have been in force for a decade. No one is talking about cutting taxes for the rich. The issue is whether to allow automatic tax INCREASES to take place… and whether to shield ANYONE or EVERYONE from these automatic increases.  If these Obama Tax Increases take place, they will represent the largest tax hike in American History!

Conservatives take the position that it is unwise and unproductive (not to mention unfair) to raise taxes on anyone at all during a period of economic turmoil such as we are currently experiencing. Further, it would do damage to the employment prospects of the working classes if more of the income of those in a position to create jobs were to be confiscated in taxes!

Liberals take the position that only the so-called “middle class” deserves to have their tax rates preserved, and that the “rich” (defined as those earning over $250K annually) aren’t paying their fair share and should have their taxes raised.

Before going into the dry economic realities that are embodied in these diametrically opposed positions represent, let me first share a parable which has made the circuit of viral email. It very clearly and accurately portrays our “progressive” tax system in a way even a Liberal steeped in Academia and Leftist Propaganda can understand it!

Suppose that every day, ten men go out for dinner. The bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men — the poorest — would pay nothing; the fifth would pay $1, the sixth would pay $3, the seventh $7, the eighth $12, the ninth $18, and the tenth man — the richest — would pay $59.

That's what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement — until one day, the owner threw them a curve (in tax language a tax cut).

"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily meal by $20." So now dinner for the ten only cost $80.00.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still eat for free. But what about the other six — the paying customers? How could they divvy up the $20 windfall so that everyone would get his "fair share?"

The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, Then the fifth man and the sixth man would end up being PAID to eat their meal. So the restaurant owner suggested that it would be fair to reduce each man's bill by roughly the same proportion, and he proceeded to work out the amounts each should pay.

And so the fifth man now paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of his earlier $59. Each of the six was better off than before. And the first four continued to eat for free.

But once outside the restaurant, the men began to compare their savings. "I only got a dollar out of the $20," declared the sixth man who pointed to the tenth. "But he got $7!"

"Yeah, that's right," exclaimed the fifth man, "I only saved a dollar, too . . . It's unfair that he got seven times more than me!".

"That's true!" shouted the seventh man, "why should he get $7 back when I got only $2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison, "We didn't get anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up. The next night he didn't show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered, a little late what was very important. They were FIFTY-TWO DOLLARS short of paying the bill! Imagine that!

And that, boys and girls, journalists and college instructors, is how the tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore. There are lots of good restaurants in Monaco and the Caribbean.

Where would that leave the rest? Unfortunately, most taxing authorities anywhere cannot seem to grasp this rather straightforward logic!

Given the fact that 40% of American Wage Earners pay NO income tax, and in fact, some receive back money in credits that exceed any withholding contribution, we can see that the progressive tax structure already soaks the rich and executes a form of wealth redistribution!

Given the fact that the top 1% of wage earners pays almost 30% of the tax bill, and the top 10% pays nearly 60%... how can one argue they don’t pay their “fair share”? Class warfare is simply jealousy combined with the Democrat fostered myth that the economy is a Zero Sum Game. For someone to have more, someone else must get less. This is patently untrue, but the myth feeds the narrative.

The other myth Democrats propagate is that tax rates are directly proportional to revenues. This has been disproven every time tax cuts have been tried! Tax RATES affect economic activity. LOWERING tax rates spurs economic growth, and results in an INCREASE in tax revenues. Kennedy proved this. Reagan proved this. Bush proved this. It happens EVERY time it’s tried. Deficits are never a function of revenues. They are a function of spending. Under Reagan, tax cuts DOUBLED revenues, yet the deficit went up because the Democrat controlled Congress spent $1.84 in new spending for every $1 of new revenues!

I wrote more extensively on this in my article at: http://starboard.blogtownhall.com/2010/07/26/basic_economic_reality_101.thtml  

It is essential to remember that it is the very populace the Democrats seek to slap with punishing tax increases who are the engine behind hiring and job creation. Whether the $250K+ person is a business owner, who will hold off expansion and hiring, or whether (s)he simply won’t hire a maid or buy a luxury item that wage-earners work to produce… jobs are dependent on the wealthy!

Let me give you a real-world example of how taxing the “rich” hurts the middle class:

During the 80s there was a “soak the rich” sentiment that resulted in a luxury tax being levied upon “yachts” – pleasure boats of a certain size that lawmakers deemed out of the reach of the middle class, and a conspicuous luxury “toy” of the hated rich. The class warriors were pleased when this tax was passed. The “rich” would be punished for their extravagance.

But what happened?

The “rich” found other toys for their distractions. Instead of paying the higher taxes for their yachts, they stopped buying yachts.

Boat makers laid workers off. Marinas let workers go. Boat Sellers closed up shop. Boat repair shops lost business. Restaurants near marinas lost business. Once thriving communities, whose economic well being depended on the commerce generated by the yachting populace were all negatively impacted.

Oh, and there was also little in the way of additional tax REVENUE generated by the tax, as so few yachts actually sold!

Who WASN’T hurt? The rich! They simply found other ways to spend their money! But those who WERE hurt complained, LOUDLY, to congress. The result? That failure of a Luxury Yacht Tax was repealed!

Congress must begin to understand that the power to tax is not given them to control people or to redistribute wealth. The constitutional power to tax is only to raise revenue for the legitimate expenditures on the legitimate activities of the Federal Government. And if it isn’t in Article II of the Constitution – it isn’t a legitimate activity!

Raising taxes ANY time is a bad idea. It does not enhance revenue. It puts an ankle weight on those who are the runners in our economy. But raising taxes on the engine of job creation during what could be argued as the worst economy since the Great Depression is SUICIDAL.

Unemployment Insurance or Stealth Welfare?

As Congress debates yet another extension of Federal Unemployment Benefits, perhaps it is time to examine the system itself and gain a bit of perspective.

No one disagrees that Unemployment Insurance is a necessary safety net – providing a means to continue functioning when a job ends and to allow for a search for new employment. Unemployment Insurance is set up as a STATE run program, providing a minimal income for a set period of time. The maximum payout varies by state, but here in the heartland this maximum benefit is $250 a week. The maximum term of benefits is 26 weeks, or 6 months.

This is true insurance. Premiums are paid by employers thru a tax, and benefits are paid out when circumstances warrant a claim – up to the maximum benefit.

Unemployment Insurance Benefits are not intended to be an income replacement for a job! They are a supplement to allow the unemployed worker some minimal income to allow him to eat while he seeks another job. After 6 months, the benefits are maxed out and expire.

This is a reasonable system. No one will starve while seeking work. And since the benefit amount is based on earned income over the previous x number of months… someone eligible for the maximum benefit will have earned significantly more than that benefit amount while working. There is INCENTIVE to seek to return to work to maintain the standard of living! (During my last short stint collecting unemployment benefits… the sum total of monthly benefits barely paid my monthly mortgage! I was INCENTED to seek another job, as my other expenses ate well into my savings!)

Things get muddled when the FEDERAL government steps in.

During times of high national unemployment, the Feds institute “extended benefits”. This is NOT Unemployment Insurance. No premiums are paid or collected for these benefits. The program is ADMINISTERED by the states but the benefits are simply expenditures of the Federal Budget.

The currently expiring benefits have run through SEVERAL extensions. For one’s benefits to be expiring now, they’d have had to be collecting unemployment thru nearly the entire Obama Presidency!

Remember, McDonalds is hiring, and pays more than $250 a week! If someone has been out of work for 2 years, they COULD get a job flipping burgers for more money than unemployment provides. But WHY WOULD someone who is content to live at that level of income work 40 hrs a week for the kind of money the Feds are giving away for them to sit on their cans?

To be sure, there are people who are NOT content to live on unemployment. Myself, for example! During that last stint of unemployment I mentioned, I was unable to find full time work in my field of expertise, but I DID find and ACCEPT a part-time position! Since I am an IT professional, my part time job nets me, after taxes, significantly more than unemployment benefits pay, though HALF the income I had been earning! I am one of the UNDER-EMPLOYED not recorded on the nations employment statistics… but I am a productive worker, paying taxes and meeting my obligations and expenses – though barely – as I continue to seek a suitable career enhancing position!

The Feds have done enough for the “long-term unemployed”. As they drain federal coffers, they have DIS-incented millions of potential CONTRIBUTORS to the nation’s economy. Workers will not take jobs they consider “below them” when they can continue to collect taxpayer funded subsidy. They will not work 40 hrs at a job that will only minimally improve their lot over what the Feds give them for nothing. They CREATE the long-term unemployment problem!

Necessity is a great motivator. When the benefits expire, these people WILL go out and accept available employment to meet their needs and those of their families. It is time for the mamby-pamby spoiled brat children that make up a goodly portion of the American Population to find out what it is to take a menial subsistence job that is “below them” and be responsible for themselves. The Depression created innovation. The Depression created character. And the children of the Depression became the “Greatest Generation”.

The “Great Society” spawned the “ME Generation”… and these people have become spoiled, lazy, entitled and unproductive.

The Safety Net exists at the State Level. In extreme times, a single extension of an additional 26 weeks might be justifiable. But to extend these benefits ad infinitum is simply the creation of another Welfare program, without calling it so. It is another case of the productive funding and subsidizing the unproductive.

The time has come for Congress to say ENOUGH. There should be no extension of Federal Unemployment Benefits. Congress must begin to show SOME accountability with the tax dollars they appropriate from the productive people of this nation. And it is time for the American People to start being accountable for their own actions, and responsible for their own outcomes.