Jim Rogers - Central planners' policies are punishing the prudent in favor of rescuing the irresponsible

I read the following by financial commentator Jim Rogers and it really fits with what I think has been happening for the last couple of years:

To Rogers, the bigger danger that concerns him is the hollowing out of the 'saving class' resulting from this situation. Central planners' policies are punishing the prudent in favor of rescuing the irresponsible. This has happened before in world history, and the aftermath has always had grievous economic, social -- and often human -- costs:

Throughout our history – any country’s history – the people who save their money and invest for their future are the ones that you build an economy, a society, and a nation on.

In America, many people saved their money, put it aside, and didn’t buy four or five houses with no job and no money down. They did what most people would consider the right thing, and what historically has been the right thing. But now, unfortunately, those people are being wiped out, because they are getting 0% return, or virtually no return, on their savings and their investments. We’re wiping them out at the expense of people who went deeply into debt, people who did what most people would consider the wrong thing at the expense of people who did the right thing. This, long-term, has terrible consequences for any nation, any society, any economy.

If you go back in history, you'll see what happed to the Germans when they wiped out their savings class in the 1920s. It didn’t lead to good things down the road for Germany. It didn’t lead to good things for Italy, which did the same thing. There were plenty of countries where it wiped out the people who saved and invested for their future. It’s usually a serious, political reaction, desperation in some cases, and looking for a savior and easy answers is usually what happens when you destroy the people who save and invest for the future.

- PeakProsperity.com

The United States all of a sudden has no shortage of irresponsible people. Nothing is anyone's fault anymore. Too many demand free money and more from the Government. And all too often Liberals and even Conservatives are giving it to them, in exchange for votes at election time.

Don't get me wrong, some people do legitimately deserve assistance, but way less than we are supporting now. And none of these people are going to help build a better country. It is the saver who invest and it is investment that drivers our country and others to an ever better future. It is also savings and investment that improves the welfare of many. Take the 'evil' oil companies. If they really were making so much money and were such cash cows, why not say 'me too' and put some money into these corporations? You can do direct investing in ExxonMobil for as little as $250. Is that too much money, well that is the point of saving. You save until you have enough to buy what you want. Point to someone who has no money and I bet I can point to their way too expensive sneakers, sunglasses, clothing, car, gadgets, vacations, etc... that they also don't have money for but somehow manage to get anyway.

Worse, many of them are liable to have children that will also require support for most of their lives. The Democrats are counting on this, because these people will continues to be their base voters for years to come. 

This is also why the Democrats are pushing to legalize illegal aliens and provide them with a 'Path to Citizenship'. Many of these illegal aliens are 'High Needs' parents. It does not mean that there is something wrong with their children or that their children need special care. Instead, it is the parents that need to be told and reminded about everything about being a good parent to their children. This was as explained to me by a pediatrician in Washington, DC. My kid's first pediatrician. This was during a checkup where she was advising us that she was leaving because she was being burned out due to all the high needs parents she had to deal with. It just so happened that these 'high needs' parents bills were being paid by tax payers. Even the co-pay. It was not that the parents did not have $10, $15 or even $20 to pay for the ability to take their kid to the doctor. It was simply because if they did have to pay anything, they would not take their kid to see a doctor. 

This is the heart of the problem. And this problem will only grow until we stop paying out like a broken ATM.

Go hear to listen to the entire Jim Rogers Interview on Peak Prosperity.

nextgeneration.tv - Michelle Fields: The National Debt Is Unfair to the Next Generation

This video was highlighted on Instapundit:

This nation has a spending problem that is placing a massive debt load on younger generations. Hear why this is so unfair as Next Generation Correspondent Michelle Fields talks about our national spending problem. - Video Link

I look forward to seeing more from this new initiative. I do believe that the other side started talking about 'fairness'. So lets talk...

The website is http://www.nextgeneration.tv/

Tweet: " If getting employer benefits without paying union dues is BAD, why is getting government benefits without paying taxes GOOD? "

This is a great tweet:

If getting employer benefits without paying union dues is BAD, why is getting government benefits without paying taxes GOOD?  - Twitter

There is absolutely no audit or accountability on all of the money and services being handed out to a good portion of the population. Sure, there is the occasional story about Government employees buying all sorts of items for personal use on Government credit cards, but that is only the tip of the iceberg. How many people are working under the table and collecting Government benefits? How much fraud is out there? How many people simply are eligible to collect some kind of Government handout because instead of leaning forward and trying to find work, they lean back and grab the remote...

Liberals are claiming that to work in a union shop you need to pay union dues, otherwise you are not paying your fair share. Well what about the large portion of the population not paying taxes? Everyone is claiming that the rich, who are already paying large sums in taxes, are not paying their fair share. Well what about everyone else? If their fair share really 0%?

Ace - 'What Does Let It Burn Mean?'

Ace over at Ace of Spades blog masterfully explains the strategy/philosophy of 'What Does Let It Burn Mean?'

“Let It Burn” is about inaction. There’s no point in trying do anything that avoids going over the fiscal cliff/sequestration. Remember, the deal that got us to this point was agreed to by House Republicans, Senate Democrats and signed by Obama. That’s as bi-partisan as it gets. I’ve heard from squishy low information voters, Obama and the media that “bi-partisan problem solving” is the Holy Grail of politics. Well, here it is. Will it lead to massive disruptions? Yes. That’s the point. The current system is rigged against conservative. We should play no part in its perpetuation. If you can’t win the game, concede and start new one. That’s the heart of Let It Burn. This isn't some petty "I lost so I'm taking my ball and going home" tirade. This is what people want. It's simply not sustainable. If we can't stop them, we don't have to continue to enable them either. - Ace of Spades

Go read the whole thing.

The first weekend after the election I was talking with a friend who knew I wished that the results would have been different. I explained that it is OK as in time my position will be proven correct once the Government runs out of ways to borrow and take an unsustainable amount of money for ever increasing spending. Her comment back was that it sounded like my plan was to let it all burn down. I corrected her by stating that my plan was to elect a President willing to try and fix the country's spending problem. It was my expectation that the country was going to burn down under the weight of uncontrolled spending.

As Ace's piece argues, the sooner the better. The population needs a harder lesson. Thinking that other people can pay your way is fine, until you run out of other people. We have hit that point.

2.3 Percent Tax on Medical Devices To Kill Thousands of US Jobs

Keep in mind that the US Government's definition of 'Medical Devices' that will be subject to a 2.3% tax on gross sales includes even such generic items such as rubber gloves. Even better, the tax applies to products that are are also used in veterinary medicine.

So vet visits are probably going to go up as well. And since this is a gross sales tax, regardless of profit or loss, it seems that some medical manufactures are thinking twice about having their manufacturing in the US:

According to the Treasury Department, the medical device companies actually stand to benefit from the law. Though the 2.3 percent tax hits the industry, the department argues that the millions of new health care customers insured as a result of the law will increase the demand in hospitals to order more equipment -- in turn boosting medical device companies' profits.

That’s not how the industry sees it. Stephen J. Ubl, president of the Advanced Medical Technology Association, said this week in response to the IRS rules that the tax could cost thousands of jobs – and is already causing companies to lay off workers and cut back on research and development.

“While Washington talks about a fiscal cliff, this tax could push us off an innovation cliff, costing as many as 43,000 jobs and hurting the ability of medical technology companies to find tomorrow’s treatments and cures. It should be repealed,” he said. - Fox News

Sure, you can say that it is only 2.3 percent, but this is out of a maximum of 100%, any more and the business involved is operating at a loss. Out of that 100% revenue total needs to come all of the expenses of the business from raw materials, salaries, manufacturing, research and so on. And lets not forget that if you manage to make a profit, you need to pay taxed before passing those profits to the shareholders, who then pay taxes on this same profit again.

As I have said before, President Obama and the Democrats hate your job. This is just one more example where they are doing nothing to protect these jobs or the industry as a whole, which I would dare say is probably a global powerhouse of development and innovation and at the end of the day a source of massive amounts of tax revenue both directly from the corporations as well as from those who back these companies and eventually profit from them.

Update: 11 Dec 12
 Surprise! Senate Democrats are calling for a delay in implementing this job-killing tax:

In a letter to Majority Leader Harry Reid, 18 Democrat senators and senators-elect have asked for “a delay in the implementation” of the Obamacare medical device tax. Like most of the significant tax increases in Obamacare, the medical device tax is scheduled to take effect on Jan. 1, 2013, conveniently after the 2012 presidential election.

Each of the 18 Democrat signatories voted for or supported Obamacare in the first place. And now they want a sweetheart exemption from one of its most onerous provisions. Even in Washington DC, that shows a lot of gall. - ATR.Org (Click to read the list of Democrat Senators signing the letter)

There is one way to delay the tax, delay ObamaCare!

US Government Borrowing $4.8 billion Per Day

As some conservative blogs have been pointing out, what is not sustainable cannot continue forever.

(CNSNews.com) – The federal government ran a deficit of $292 billion for the first two months of fiscal year 2013 – October and November 2012 – amounting to $4.8 billion of borrowed money each day. “The federal budget deficit was $292 billion for the first two months of fiscal year 2013, $57 billion more than the shortfall recorded in October and November of last year,” CBO said in its Monthly Budget Review Friday. - CNSNews.com

That comes out the the US borrowing $160 a day per American (at 300 million Americans) or $640 a day for a family of 4 including weekends. so for each week, the Government is borrowing $4,480. At this rate, the US Government will borrow over $58,000 per American in 2013 which totals over $230,000 for a family of four. Keep in mind, this is not what they plan on spending per American, that total is much great. This is only what they have to borrow because tax revenue is not enough to pay for all their spending. 

Just one more example of why this is s spending problem not a revenue problem. After all, how can you possibly keep up this level of spending when the Government is spending more per person that 98% of the population earns

Howard Dean: "The Truth Is Everybody Needs To Pay More Taxes, Not Just The Rich"

I have said it before, the rich do not have enough money to pay for all the Democrats spending demands. At least one prominent Democrat is willing to admit this:

The only problem is -- and this is initially going to seem like heresy from a progressive is -- the truth is everybody needs to pay more taxes, not just the rich. And it's a good start. But we're not going to get out of this deficit problem unless we raise taxes across the board, to go back to what Bill Clinton had and his taxes. And if we don't do that, the problem is the pressure is going to be on spending even more. - Real Clear Politics

Click the link and watch the interview. Howard Dean admits that the country would actually be better off if we go over the 'financial cliff' and return to the Clinton era tax rates for everybody, because that is how you really increase Government tax revenue.

Increasing taxes on the rich only solves 8% of the deficit problem. President Obama and the Democrats are silent about the other 92% of the solution because they have no intention of solving the problem.

Obama to Republicans - Eliminate the Debt Limit Now, Spending Cuts Later, Maybe

In an earlier post I covered Treasury Secretary Timothy Geithner's proposal/demand that Congress simply eliminate the debt limit.

Treasury Secretary Timothy Geithner said the U.S. “absolutely” should get rid of the debt ceiling as soon as possible.

“It would have been time a long time ago to eliminate it,” Geithner told Bloomberg TV on Friday. “The sooner the better.” - HuffPo (Found at Hot Air)

As it turns out, this is the demand that was made today to the Republican members of Congress as part of the fiscal cliff solution talks.

House Republicans said on Thursday that Treasury Secretary Timothy F. Geithner presented the House speaker, John A. Boehner, a detailed proposal to avert the year-end fiscal crisis with $1.6 trillion in tax increases over 10 years, an immediate new round of stimulus spending, home mortgage refinancing and a permanent end to Congressional control over statutory borrowing limits. - NY Times

The 'deal' includes no cuts to Government spending. Only a suggestion to discuss cuts sometime next year. The offer is so ridiculous that Republican Senator Mitch McConnell burst into laughter. Unfortunately, this meeting confirms my belief that the Democrats have no intention of dealing with the Nation's debt problem.

Geithner’s visit to his office left McConnell discouraged about reaching a “balanced” deal on tax hikes and spending reductions designed to prevent a shock to the economy in January. “Nothing good is happening” in the negotiations, McConnell says, because of Obama’s insistence on tax rate hikes for the wealthy but unwillingness to embrace serious spending cuts. - Weekly Standard

So there you have it, Obama and the Democrats are unwilling to commit to any real spending cuts, outside of cutting spending for the Military. They have already run the country for four years with no budget. Now they are demanding to be able to run the country with no limit on spending.

Like I said before, they have no intention of solving the debt and deficit crisis. If they did, they would know how high the debt would grow before a plan of increased revenue and decreased spending would eliminate the deficit. Of course they might have even more plans for increasing spending. Perhaps legalizing the illegal aliens and giving them Obamacare benefits. That would surely increase Government spending.

Keep in mind that raising taxes on the richest 2% will only solve about 8% of the deficit problem.  This demand is confirmation that President Obama and the Democrats have no intention of solving the debt problem. 

They plan to run up the debt as far as it can go.

Senator Dick Durbin (D-IL) Lies: 'Social Security does not add one penny to the debt. Not one penny.'

So the latest story concerning the fiscal cliff the US is facing is news that some Republicans in Congress are thinking of being flexible when it comes to their 'Grover Norquist' no tax increase pledge. However, I think this issue brought out a huge lie pushed by Democrats in general but said by Illinois Democrat Senator Dick Durbin. He said that

 'Social Security does not add one penny to the debt. Not one penny.' 

His statement was in response to Republican demands that entitlement spending reform be on the table . Basically Senator Durbin is claiming that there is no need to reform Social Security Entitlements because Social Security is not a part of this nation's spending/deficit crisis. Unfortunately, this is not the case and Senator Durbin for sure knows that this is a lie. Zero Hedge explains:

This statement is a lie that is covered over by a dopy accounting system called the Unified Budget. In this magical world, the deficits driven by entitlements are hidden. The reliance on this accounting fiction is a dangerous path for liberals to take. The fact is, SS (and the other government retirement programs for Federal workers and the Military) are running billion dollar cash deficits today and will run Mega-Trillion dollar cash deficits for the next seventy-five years. Every penny of those deficits will result in more borrowing from the public.

These deficits may be “Off Budget” in the magical world of Unified Accounting, but they do add to the publicly held debt on a dollar-for-dollar basis. The Rating Agencies are part of the Cliff discussion (like it or not); those folks are no dopes and they fully understand that Senator Durbin is all wet with his talk of Off Balance sheet debt. - Zero Hedge

If a publicly traded company did this sort of accounting gimmickry, shareholders would eventually lose their investments and people would go to jail. Ironically, Democrat politicians would then be crowing to every TV camera how we need even more laws to prevent this kind of criminal behavior, all the time committing a much larger theft right out in the open.

Worse, the Social Security Trustee report notes that Social Security will run out of money around 2033, unless Social Security taxes are raised (or benefit rules reformed).

Finally, the Trillions of dollars in assets that the Social Security Trust fund has are currently held in the form of US Treasury Bonds. In short, the money was given to the Government and spent. The Government will then have to redeem the bonds as the money is needed to pay Social Security recipients. This means that they will have to get the money from somewhere. Given that the Government plans to run a deficit into the sunset, that means that they will either have to print or borrow the money.

Graphs pictured above were taken from the US Government's own Government Accountability Office. The article is titled 'Federal Debt Basics'. Clearly, this is a topic Senator Durbin and many of his follow Democrats would fail if a grade was given. Unfortunately, it is we who suffer as a result of their incompetence and criminal behavior if they had to be judged the same way that they demand businesses be held to account.

Treasury Secretary Suggests Eliminating The Debt Limit

On Friday I noted that I do not think the Democrats have any intention of dealing with the Deficit and debt problems.

It occurred to me on the drive home today that President Obama and Harry Reid are doing this because it is their intention to bankrupt the Country. They know that the country is on an unsustainable spending spree and intend to ride it out with no intent to fix it. - Link

Now comes an interview with Treasury Secretary Geitner stating that Congress should get rid of the Debt Limit. Basically, this would give the Democrats an unlimited pot to spend from.

Treasury Secretary Timothy Geithner said the U.S. “absolutely” should get rid of the debt ceiling as soon as possible.

“It would have been time a long time ago to eliminate it,” Geithner told Bloomberg TV on Friday. “The sooner the better.” - HuffPo (Found at Hot Air)

Sure you can say that there are limits, but that is hard to do without a budget. Like I said, they have no intention of solving the debt and deficit crisis. If they did, they would know how high the debt would grow before a plan of increased revenue and decreased spending would eliminate the deficit. Of course they might have even more plans for increasing spending. Perhaps legalizing the illegal aliens and giving them Obamacare benefits. That would surely increase Government spending.

Senate Democrat: 'Can't guarantee 2014 budget'

President Obama Signing The Health Care Bill - Link

The Senate is where US Government budgets die. As the story below notes 'The last time the Senate passed a standalone budget resolution was in 2009.'

It is this simple fact that demonstrates how irresponsible the Democrat-led Senate has been. Every year the House of Representatives passes a budget only for it to die in the Senate. The Senate could AND SHOULD amend the parts of the House-passed budget and pass their version so that the two halves of congress could then come together and agree on a budget.

However, the Harry-Reid led Democrat controlled Senate does next to nothing. What they have done is vote down the President's own proposed budget. At least they are on record for that. They are also on record for not being willing to put a price on anything

“There’s a great danger, not just for the Budget Committee but for the whole Senate when we don’t follow regular order with open debate,” Sessions said. “It is very distressing to me that Sen. Reid has, for political reasons, not allowed Senate Democrats to be on record for anything.”

“They don’t need a single Republican vote to pass a budget,” he said.

Unlike most bills, the budget resolution cannot be filibustered on the floor and it takes only 51 votes to pass. Democrats will control 55 seats next year. - The Hill

Of course this is intentional, in that the Democrats and the President have for years been not been attempting to pass a budget, but not even bothering to even mark up a Senate budget bill. Some people may think that this does not matter. However, this is a huge problem for programs attempting to get funding because the continuing spending resolutions are all based on a budget passed when George Bush was President. This leaving emergency and new funding issues to try and find some other way to get funding requests through Congress. Even the Pentagon is running into problems given that they last budget no longer reflects the current realities of the Department of Defense.

It occurred to me on the drive home today that President Obama and Harry Reid are doing this because it is their intention to bankrupt the Country. They know that the country is on an unsustainable spending spree and intend to ride it out with no intent to fix it. Really, look at how Obamacare was planned. They started counting revenue years before expenses, knowing that budget calculations would only look 10 years into the future. This gave Obamacare the appearance of cutting costs. But all the time they knew that huge expenses were hidden outside the CBO estimate. If a private company did this sort of accounting gimmickry people would go to jail. However, this is how corrupt politicians get re-elected.

"Reid takes Social Security off the table"

Democrats for a while have successfully painted Conservatives as political 'extremists'. From everything to abortion to giving tax breaks to the rich. This has been a boon to the Democrats in terms of winning elections. Unfortunately, it also gives them power in terms of messaging our deficit and debt problem. Because if you listen to President Obama and the Democrats in Congress, this is only a problem as far as Republicans don't let the Democrats increase taxes on the rich. 

I have already pointed out that President Obama's Tax Increase Only Cuts Deficit by 7.5%, which leaves 92.5% of the problem unresolved. This means that the rest either has to come from taxing in other ways, or cutting out of control spending. Senator Harry Reid however has decided that any attempt to reduce budget expenses via Social Security will be off the table:

Senate Majority Leader Harry Reid said Wednesday that he will not allow changes in Social Security to be part of the negotiations to avoid a federal budget fiscal cliff, further narrowing the opportunities for savings that could be tapped to close the deficit.

Republicans have insisted that big entitlement programs such as Medicare, Social Security and Medicaid be part of the end-of-year negotiations to head off tax-rate increases and the $110 billion in automatic spending cuts.

But Mr. Reid said Democrats have already made changes to Medicare as part of President Obama's health law, and said Social Security is solvent for the time being and shouldn't be tapped to pay for other government needs. Read more: Reid takes Social Security off the table - Washington Times

Very nice of Senator Reid to take one of the country's biggest expense off the table. Also very nice of him to pronounce Social Security as being solvent when the assests were taken years ago and exchanged for US Treasury Bonds. Not to mention the fact that the President was scaremongering how insolvent Social Security was, that checks would not go out if the debt limit was not increased. 

Look, there are a number of places where the budget can be adjusted to help save the US from financial ruin. It is a fact that Americans are living longer. With that comes increased expenses as retirees collect Social Security for much longer than was ever expected. In light of this, Either Social Security retirement ages should be increased or Social Security taxes should be increased to offset the higher costs of older people living longer. 

Senator Harry Reid however is insisting that Social Security not be changed, instead keeping it operating in a fashion that is completely unsustainable.

Obama's Tax Increase Only Cuts Deficit by 7.5%

One ridiculous demand of President Obama and his fellow Democrats in Congress is that no matter what, the tax rates on the richest need to go up, out of some BS notion of 'fairness'. There is a huge problem with this demand in that it does next to nothing to deal with the Trillion dollar plus yearly deficit.

Congress's Joint Tax Committee estimates that raising taxes on income over $250,000 ($200,000 if you're single) will raise $823 billion over 10 years on a static revenue basis. That includes all revenue from increases in marginal income tax rates, capital gains, dividends, reinstating the phaseouts of deductions for the wealthy and also treating dividends as ordinary income.

That's only $82 billion a year in extra revenue when the federal deficit in fiscal 2012 was $1.1 trillion. So even if Mr. Obama gets his way, his tax increase would only cut the deficit by about 7.5%. And that assumes the tax increase would have no impact on economic growth. If growth slows below its already paltry pace, tax revenue would rise by less than expected despite the higher rates. - WSJ

So all this time the President is raving on about less than 8% of the solution. Of course he knows this as do the Democrats in Congress. For proof of this you need look no further than the last budget signed by the President. This is one reason why budget bills die in Harry Reid's Senate.

Four years is a long time to keep this charade going. However, you can be that it is President Obama's plan to keep the budget musical chairs going for as long as he is in office.It will be interesting to see at what point they run out of ways to borrow and print money.