BACK TO SCHOOL

Take notes. There will be a quiz.  🙂

I was watching/listening to Joe Scarborough’s “Morning Joe” TV show about two weeks ago while getting ready for work. They were discussing why revenues are an important part of improving our country’s financial health. Yes, the former Florida Republican Congressman agrees with President Obama on this issue.

Naturally, the conversation turned to taxes with the left and right leaning guests debating. During that debate, I heard Pat Buchanan ask, “Can someone please tell me how increasing taxes in a bad economy helps to create jobs?”

Much to my amazement, no one answered his question.

Picture a middle-aged man, standing at the sink in his bathroom, looking into the mirror while simultaneously shaving and yelling at the television in another room at 7:15 in the morning.

“Seriously! None of you guys can answer that? You’re just gonna to let that go? I can’t believe it! Put me on that show! I’ll answer it!”

Yup. That would be me. Sad, I know, but true.

After a few seconds I regained my composure, sort of. Truth-be-known, I was still grumbling about it under my breath while driving to work.

Since no one on Scarborough’s show would (or could) answer Pat’s question, I will. God knows I had plenty of practice working through it that morning. But unlike TV, where everyone is trying to say the singular clever sentence that will be carried through the rest of the news cycle, I’m going to lay it all out.

To my Republican family members and friends: please read with an open mind. This is not about politics, it’s about our country.

Knowing Our History 

Over the past several decades, arguments that raising taxes on the rich and regulating industry hamstrings employment have been disproven time and time again.

These concepts were shredded in the 1930’s under Roosevelt, in the 1950’s under Eisenhower and in the 1990’s under Clinton. Yet, for some inexplicable reason, the discussion continues nearly a century later. When I ask anyone for some evidence that illustrates lowering taxes and de-regulating industry somehow creates jobs, they have no evidence. Furthermore, there is no history that backs these theories.

We know we must invest in our country if we want this experiment in freedom called America to be successful. We created a Constitution which provides for a government that sees “…to the general welfare of the United States.”  This clause includes assessing and collecting taxes and then using that revenue on behalf of the union, “…to assist national needs in agriculture or education, provided that the spending is general in nature and does not favor any specific section of the country over any other,” according to Alexander Hamilton, whose assessment of the clause is predominant in case law.

Our Government’s Responsibility

In order to get our economy back on track, we must get the middle class back to work. When the private sector fails to do so, as it has done for the last decade, government must step in, as it did two decades ago. Now I know this seems like socialism to some of you, but I promise you, it’s not. We have only one socialist (government-run) program in this country – the Military/Veterans’ Administration. Our government trains, houses, feeds and pays our soldiers. It also builds hospitals, pays the doctors and staff and all other related expenses. Social Security is an insurance program and Medicare and Medicaid are reimbursement programs. Neither is socialism.

We (the government) can create middle class, private sector jobs by investing in our country’s infrastructure, technology, research and development and education. We subsidize (invest in) the states so they can rebuild their roads, bridges and public buildings by contracting private companies to do the work. We invest in technology, much like we did in the 1990’s, to help develop businesses in new areas heretofore untouched and we invest in scientific research that helps us with education, healthcare and agriculture. All of these investments create millions of jobs in the private sector. These new employees are paid by private employers, not the government. As this cycle begins to take hold, government involvement ends.

Ulitmately, these investments by government result in thousands of small, unrelated, private businesses (like the restaurants my parents owned and operated) expanding because more people are working and therefore have money to spend on things like going out to dinner, or a vacation, or a house, or a better education for their children, and so on. As these small businesses hire more people to meet the demand for their goods and services, they also add to the employment numbers, which helps to create an even larger middle class. As the middle class starts to prosper, everyone up and down the income ladder benefits.

Meeting Our Obligations

The return on our investment is always far greater than the initial outlay of funds due to the tax revenues generated from the jobs created. Add to this the revenues that come in from jobs created solely in the private sector and we have a large net gain that helps get our finances in order. It allows us to provide the safety net for our seniors and those less fortunate by making sure Social Security and Medicare/Medicaid are solvent for future generations. It also eliminates our deficit spending as well as reduces our debt. Once the inital investment is recouped, there is no need for the government to continue to invest at the original level. The jobs created through building, re-building, repairing, inventing, researching and developing will continue to grow because demand for newer, better, and more inovative ideas will always be there. Any further investment would come in the form of grants, funding for additional research and development and small business loans, all of which are already in the annual budget.

Making sure we have a thriving middle class is the only way to keep our country strong, safe and united. In addition, this creates opportunities for many of those who would otherwise “fall through the cracks” by providing early childhood care, a decent public education, low-cost financing for college and good employment possibilities after graduation from high school or college.

The Truth About Tax Cuts for the Wealthy

If it was true that tax cuts for the so-called “Job Creators” really created jobs, why were there only one million private sector jobs and 2 million public sector jobs created from 2001 to 2009 when the tax breaks for the top 2% were at their lowest since 1945? In the previous decade, 23.1 million jobs were created, when taxes were higher on the same income group.

Why is it fair to allow hedge fund managers and CEO’s of large corporations – that make millions every year – to only pay a tax rate of 15%, while the rest of us pay anywhere from 20-35% in federal taxes on our income? Most everyone reading this does not fall in the top 2% of income earners. So why would you be supportive of a system that exponentially rewards our wealthiest citizens while the rest of us see higher living costs (as a percentage of our income) and stagnant wages? It doesn’t make sense.

The idea that we can’t afford to invest in our country is ludicrous. When the ultra-wealthy and the large corporations paid much more in taxes, we were in great shape (i.e. the 1930’s, 1950’s and 1990’s) and everyone prospered. Now that those revenues are not being collected, look where we are: state governments shutting down; lending for small businesses at a stand-still; unemployment at 9% because there is no demand for goods and services; home foreclosures at an all-time high; teachers, firefighters, first-responders and policemen being laid off; programs like food stamps and unemployment benefits being slashed; roads and bridges crumbling; public buildings in desperate need of repair. Even with the tax breaks the Obama administration has given to small businesses as incentives to hire people, there is no reason for these businesses to add more employees when there is no demand for their products.

Get people back to work and demand for goods and services goes up, putting even more people back to work. It’s a ripple effect that benefits the entire economy. Get rid of the tax loopholes and subsidies for the wealthy so that those who have denied our government its revenue over the last ten years, can start paying their fair share, and we can be out of this mess in the next ten years. 

The Envy of the World or…

The quality of any government is judged by the health and welfare of the country it governs.

We can be the America that is the envy of the world, taking care of our elderly and providing opportunities for the less fortunate and mentally or physically challenged to help lift them up. We can be the America that continually improves its infrastructure, invests in R&D, and is a leader in new technologies, medicine and education. We can be the America where ‘can’t’ is not in our vocabulary and we meet our challenges and obligations together, knowing we are “…indivisible, with liberty and justice for all.”

Or, we can be the America that continues to allow our politics to divide us and eventually become the country the rest of the world used to envy.

The quiz has only one question: What kind of America do you want to be?

Sincerely,

www.MichaelKontras.com

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IT’S YOUR TURN

This one turns into a rant quickly.

The current political discussion about our government’s financial “crisis” is loaded with useless dialogue – okay…  crap. This “problem” was intentionally created and therefore easily fixed, but none of our congressional leaders will tell the truth about it. Instead we’re told that we all have to sacrifice in order to “…get our fiscal house in order.”

No we don’t – at least not most of us.

You don’t need to be a Pulitzer Prize winning economist to understand the simple solution to this contrived fiscal issue.

Let’s apply the K.I.S.S.* method, shall we?

Every business has two basic elements: money coming in and money going out. The goal: more money coming in than going out. Simple.

Our government is a not-for-profit business that provides services at a far less cost per person than any for-profit company can, for the obvious reason: it doesn’t need to make a profit – just break even. Again, simple.

As our population grows and expenses increase (money going out), so must income (money coming in). Cutting expenses alone, does not improve the financial health of government or any business, for that matter. That’s an amateur’s solution. What must be done to offset expenses is increase income. In the case of government, there’s only one basic source of income: taxes. But these tax increases need to come from those who can most afford it, not the rest of us. The ultra-wealthy had a great ride for the last 30 years so it’s time for them to “man-up.”

The truth is we can easily get out of this mess in the next 5-10 years by taking the tax rates on the top 2% of wage earners back to the 1990’s levels – a measly 3.5% increase. Income to the government: $4+ trillion. Bingo! Budget deficit balanced and debt reduction begins.

But why stop there? Here’s another $399 billion in income for the government:

1.)   Reduce Pentagon spending by the amount that went unaccounted for to private, no-bid military contracts. $9 billion alone went missing in Iraq from October, 2003 to June, 2004, under Paul Bremer’s watch. No audit has been done on the Pentagon in the last 20 years. Imagine what a good forensic audit would expose.

2.)   Eliminate tax subsidies for oil companies – the top 5 profit earners in the Fortune 500. ($45 billion)

3.)   Remove the subsidies for Medicare Advantage – a privately operated, for-profit program offered by Humana, United HealthCare, Anthem, Wellpoint and other health insurance companies (the top six insurers made a total of $3.4 billion in profits during Q3, 2010) and is not part of Medicare or Medicaid. ($108 billion)

4.)   Create millions of jobs in infrastructure repair and replacement as well as new technologies. From 1993 to 2000, nearly 22.5 million private sector jobs were created thanks to the 1993 Deficit Reduction Act, thus eliminating the budget deficit, and giving us a surplus. ($237 billion by 2000) This can easily be done again. Back then, all the opposition said this would hurt our economy, including the governor of my home state, John Kasich, who was a congressman at the time.

So quit screaming about the unions – they’re not the problem. Only 36.2% of public jobs and 6.9% of private sector jobs are union. Any organization wanting livable wages and reasonable benefits for workers is not what caused this fiscal crisis. As for collective bargaining: taking away employees’ rights to negotiate with employers will only drive wages down, further reducing revenue to the government and creating an even larger gap between income and expenses.

While I’m thinking about it,  leave Social Security alone too. This insurance program is also not a culprit. Not only do we pay for this program while we’re working, those who receive SSI income in retirement have been paying taxes on it since 1984, when Ronald Regan signed the 1983 Amendments to the Social Security Act. We’ve been paying our “premiums” for this “policy” for decades so we’re entitled to the money. A simple tweak of the tax code so that those earning more than $106,800 per year pay their fair share will make Social Security viable for decades. The same goes for Medicare.

We, the vast majority of wage earners in this country (about 98%), have been sacrificing since the 1980’s. We’re done – it’s your turn, 2%’ers. Quit trying to pick our pockets of the few coins we have left and instead, dig into your own.

There’s more than plenty there.

I’m exhaling now.

Sincerely,

www.MichaelKontras.com

* Keep It Simple Stupid

MITCH’S METAMORPHOSIS

Most of us have heard the phrase, “Talking out of both sides of your mouth.”

Politicians are infamous for the tactic – on all sides of the political spectrum. There’s always a majority party and a minority party, each browbeating the other and themselves in the ongoing struggle to remain relevant in an environment toxic with blather. Add punditry and you have so much noise, even I, who enjoys a good political debate, am flipping channels. A little fiction goes a long way towards escape from the all-too-boring, never-ending, non-substantive discussions that regurgitate and re-digest the same nine-second sound bites for days.

At least there’s an end to a “Law and Order” episode.

I continue to be amused by the lack of knowledge many politicians display about the “Information Age.” They still don’t understand there’s always someone watching, listening and now, recording. They continue to reveal their more-than-obvious biases, and then deny the very words that belie them.

Mitch McConnell (R-KY), the Senate’s Minority Leader, is one of these politicians.

Senator; Contradicting yourself from week to week or month to month is something we’ve come to expect. We know you don’t have any real solutions. We know the status quo is fine by you. You have the best of everything life has to offer. But why would you take a stand against the majority party on an issue, only to completely reverse your position  the very next day?

And then post all of it on your website.

The Senate voted 100-0 to protect Medicare benefits on December 3, thus putting to rest any fears that people might have about their care. In an article from the Associated Press, Ricardo Alonso Zaldivar writes, “…amendment by Sen. Michael Bennet, (D-CO) …that no benefits in … Medicare will be cut by the (healthcare) legislation, was approved 100-0.”

On Sunday, December 6, 2009, this was on the front page of Mitch McConnell’s website.

So after a unanimous vote to protect Medicare benefits, McConnell, on his website, continued making the false, fear-based claim that if the Democrats have their way, Medicare reimbursements would be reduced, thus reducing care for millions of elderly Americans. The truth is Medicare Advantage (not Medicare) – which is privately run healthcare insurance and has nothing to do with Medicare or Medicaid but gets subsidized with our tax dollars – would no longer get those subsidies. This is a ten year savings of well over $100  billion, that is now being realized as profits by these insurance companies.

In a rare Sunday session on that same December 6th, there was a discussion of expanding Medicare to those 55 and older. The plan would not only reduce the number of uninsured, but would also strengthen Medicare for those already in the system, thereby assuring Medicare reimbursements would not only remain stable, but could actually increase in some areas, further helping the very same people McConnell was “so worried” about. Here’s his website page on December 7th.

It’s time to retire, Senator.

Sincerely,

www.MichaelKontras.com