Carol Perry: Kicking the can over the fiscal cliff
December 30, 2012
Another year is coming to a close and the elections are behind us. Each year the political ads become more underhanded and vicious, but unfortunately that seems to work. I have to wonder how many people actually did their due diligence on any candidate? From the outcomes, I am guessing not very many.
What surprised me most was how many voters made decisions based on individual or personal issues rather than the one issue that must be resolved and soon. That issue is the budget and national debt. Is it because the voter does not care or are they ignorant of these issues? I not really sure. As I watched poll after poll prior to election day, there seemed to be more concern about taxing the rich, women’s rights, immigration and social welfare programs than our lack of a budget and $16 trillion of growing national debt.-
By making these smaller issues of primary importance, individual groups became separated into their own microcosm of society. It appears that what is good for some has become more important than what is good for all. When voting this year, the No. 1 issue should have been our out-of-control budget and national debt since so many other issues are intertwined with how we handle these two. Issues like the economy and employment as well as continuing entitlements are literally being crushed under the weight of such a monster but the voter did not make the connection.-
President Obama campaigned on higher taxes for the rich. They needed to pay their fair share, but the definition of rich and fair share was not logical. The rich were defined as persons earning more than $250,000 per year but are these really rich people? When I owned my small business here in Carson City, my receipts were over that $250,000 mark, but much of that went to rent, salaries and expenses related to running my business. While it is probably the same for other small business owners, the voter’s vision of rich were the folks actually taking home over $250,000.
The mentality here was not that these people were not paying a fair share, but more that they could afford additional taxes. The other issue of fair share was a bit muddled as well. Campaign ads portrayed a vision of the rich as “old money” or speculators. With money mostly inherited or earned by speculation, these were the folks supposedly using as many tax loopholes as their well paid accountants could find each year.
All of this was effectively conveyed to the voter in ads. The crux of the matter was even if the president got both the standard of rich and fair share defined under his criteria, the amount of actual income this new tax would bring in would be insignificant when compared to the money we really need to close the huge gaps in our budget and start bringing down our debt. –
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Some of those numbers, not well defined by the Romney campaign are that the top 1 percent, or even 10 percent of wage earners paid 38 and 67 percent respectively of all federal income taxes while earning 20 and 37 percent of all income. Also ,thanks to the financial crisis in 2008, the share of after tax income from the top 1 percent went from 17.3 to 11.3 percent by 2009. This means there were fewer of that 1 percent to tax.
I am in agreement with the President that there are folks like Warren Buffet, who could pay more in tax, but a change in the tax code makes more sense than penalizing the entire demographic.The goal of any administration should be to provide fuel to the engine of growth in order to create jobs. Jobs create tax payers. Taxpayers spend disposable income. Spending means more hiring . More hiring means more workers creating taxable income. Not exactly rocket science.
Here we are, the end of the year looms as does the fiscal cliff. The public wanted bipartisanship and cooperation between Congress and the President, but elected the same power split we have had for the past two years.
With the same politicians, comes the same gridlock, so why re-elect the very same people who did a lousy job of solving our budget and debt problems during the last term? I am not saying that every politician returning in January deserves to go home, but if the voters had done their due diligence on each candidate, instead of being swayed by TV ads, there might have been a better chance at budget resolution and debt reduction. Perhaps I am the crazy one, but is not one definition of insanity “doing the same thing over and over but expecting different results?”
Expect the next four years to resemble the last four years and hope that between the cliff and the budget deficit, we can survive fiscally unscathed. Personally, I have serious doubts that we can kick the can of budget and debt resolution for another four years, but the voters have spoken. I’m just not so sure that they all knew what they were saying. Happy New Year to you all.
• Carol Perry is a retired financial adviser and has been a Northern Nevada resident since 1983. She can be reached at Carol_Perry@att.net.