Monday, August 16, 2010

Our economy = toilet

And our president and congress are doing all the right things to make it worse.

Take for example Pelosi's emergency funding to prevent layoffs of state, municipal and county employees.  $26 billion.  Sounds great, doesn’t it?  This is part of the deluded, self-destructing “put government first” mentality of our national leaders.

Let’s look at this rationally, for a moment – without the gross distortions imposed by special interests.

Which sector demands and consumes tax revenues?  The government sector.

Which sector generates tax revenues?  The private sector.

What happens when the private sector performs poorly?  Fewer tax revenues are generated.

What happens to government when fewer tax revenues are generated?  Government loses its funding and needs to cut back.

What happens when governments refuse to cut back and continue to demand additional revenues?  Either taxes are raised or money is borrowed/manufactured.

In an already bad economy, what is the effect on the private sector of raising taxes or borrowing/manufacturing more money to pay for public sector jobs?  It is debilitating and will cause private sector jobs to contract.

What happens when private sector jobs contract?  Few tax revenues are generated.

And round and round she goes.

Doesn’t this latest government “bailout” seem to be the very worst thing to do?  I think this is considered by the feds as “priming the pump.”  I think it is more analogous to pumping more gasoline into a flooded carburetor.  It drowns the spark and the fuel is not circulating.

What about federal tax laws that encourage overseas manufacturing at the expense of jobs here at home?  We have a fraction of the manufacturing jobs we had twenty years ago.  And we wonder why we don’t have jobs here?

Wouldn’t it be infinitely wiser to do everything possible to enable private sector prosperity instead of promoting policies that penalize prosperity?

And wouldn’t it be infinitely wiser for our federal and state governments to do some serious belt tightening – especially in the areas where the feds excessively meddle:  welfare entitlements, aid to nations other than allies, federalized education programs, and private sector growth-stifling environmental regulations.  Cuts in these economically and educationally debilitating areas alone would save hundreds of billions annually.

Happy days would be here again.

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