Major Mike’s Musings

President Obama announced another bailout. It’s not likely to work, but he has to do something besides blame the “previous administration” for the economy.

Here’s why government spending won’t fix the economy: Government money has to come from somewhere.

1. Taxes. Taxes come from the economy in the first place, so the net effect of government spending from taxes is zero.
2. Borrowing. Sure that puts extra money in the economy, but because of the interest, each dollar spent is worth less than a dollar.
3. Printing. Each extra dollar printed reduces the value of all the dollars already in circulation. Thus, each dollar spent is worth less than a dollar.

Government spending doesn’t create new wealth or extra jobs, it just redistributes money from those who pay taxes (or loan the government money) to those who help politicians get elected.¹

1. I had a little help here from Glenn Beck’s Arguing With Idiots. [↩]

“Remember, the reason government is funded by taxes is because it produces almost nothing that people will pay for willingly.”  — Mark Hillman

 The Congressional Budget Office released the following figures:¹

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1. Historical Effective Tax Rates: 1979-2005. Released December 2007 [↩]
2. Many in the category will get money “back” even though they paid no taxes. [↩]

Congressional leaders are recommending a 5 cent tax hike per gallon of gasoline at the pump to pay for repairs for the nations bridges. I say, “Pay it with pork.” Gas tax per gallon is already almost twice the price we used to pay for an entire gallon of gas when I began driving…that’s not even counting the price during gas wars.Let’s get real, folks.

Do you think you’re getting hosed at the gas pump? In 2005, gas companies reported record profits of $62 billion. Of course, over the same period, gas taxes totaled $71 billion.”Who’s the big gouger, now?” I ask.

Has anyone else noticed that when the government raises taxes, it’s on the “rich” but when the government reduces taxes it’s on everybody who pays them? Then when the government gives everyone the same-percentage tax cut, the folks who pay little taxes complain that the “rich” got a bigger tax cut.

An article in yesterday’s The Villages Daily Sun reported that the Florida Citrus Commission raised the tax on orange growers 19%¹ to pay for a more aggressive advertising campaign. The commissioners cited rising supermarket prices for the cause of decreased consumption of Florida oranges and orange juice. “If you basically don’t hammer home the message to the consumer that as prices increase you still have to buy this, the consumer won’t,” said commission chairman Stephen Ryan.

So, Steve, let’s see…raise the tax (price)² on a product that is losing market share because the price is too high . Then advertise to overcome the rise in price the tax brings. Hmmmm.

1. From 18.5 cents per 90-pound box to 22 cents per 90-pound box [↩]
2. The tax that will obviously be passed on to the consumer [↩]