Misdirected Behavior

After being out of town so much lately I had to spend my Sunday afternoon paying bills. Now, I'm always thankful that I can pay my bills but it isn't one of my favorite tasks. What got to me today was that one of the checks that I wrote was to GMAC. The thought occurred to me that GMAC is part of GM. The government just poured a bunch of money into them -- which I've been doing off-and-on for much of my life. So, now I'm paying them twice -- once with a coupon and once in my tax bill. Somehow that just doesn't seem right to me. I've always paid my bills. My credit is good. I don't owe much money but when I do owe someone I pay them.

Suddenly it occurred to me that those of us who seek to do the right thing and work to take care of our obligations are penalized for our good behavior while those who do the opposite are rewarded for their bad behavior. Hmm....I wonder if that is what the "Tea Parties" were really about.....

The Administration still doesn't get it.

Axelrod: Tea Party Anger is Misdirected

It's the Spending, Dummy!

Have you ever noticed that when something gets "out of whack," the more you tinker with it to get it back right, the further "out of whack" it becomes? That's what happens when the economy gets in the shape that we are seeing now.

The lawmakers and political candidates all have "fixes" for the economy. One says that we need to raise taxes for the rich while the other says that we need to extend tax cuts to stimulate investment. Proponents of increasing taxes for the wealthy think that the average person will support such increases because they see the high-earners as deserving to be taxed more. That is a very elitist attitude in itself and totally discredits the intelligence of most of the American public.

I think most folks just want our tax system to be fair -- to treat us all equally -- without special breaks for particular groups.

Those who believe the tax cuts implemented by the Bush Administration are contributing to the budget deficit are also confused. Revenue is not the issue. Spending is the issue. When you cut taxes and then increase spending substantially you are going to increase the deficit. Tax cuts stimulate market activity which in turn will generate more revenue at a lower tax rate. Those cuts must be followed however, by either holding the line or decreasing spending. Budget deficits are caused when you spend more than you bring in. It's the spending, dummy -- not the revenue side of the equation!

Midwest Flooding

I feel compassion for all of the displaced people who suffer from the flooding in the Midwest. But I also feel frustration that my tax dollars will be bailing them out. I've always heard, "If you build a flat roof, it will leak. If you build in a flood plain, you're going to get wet." I wonder why they call it a flood plain? Duh!

More on Drilling the Outer Continental Shelf

Drilling the outer continental shelf for oil seems on the surface to be a simple, quick-fix approach to alleviating gasoline prices. According to this article from Forbes, it will not be quick and it is certainly not simple.

Both Senator McCain and President Bush this week have called for opening the outer continental shelf to drilling. It may be somewhat disingenuous at this point in the election cycle. It is unlikely that sufficient votes can be garnered to pass any comprehensive energy legislation prior to the election.

If the area was open for drilling, it would be good for the U.S. consumer. In the short-term, we could see a decline in oil prices due to a relaxing of speculative pressure. However, it is unlikely that any decline would be sustainable due to the longer term supply and demand issues faced. The big benefit to the U.S. consumer would be in the revenue generated from such leases. A large portion of it would find its way into government coffers -- either at the federal or state level. The big issue there is how will it be utilized. If it does become a reality, let's hope that it isn't just a new way for government to grow. Let's use it to offset other taxes or possibly to pay down debt. Reducing debt reduces the annual interest bill that we are paying on that debt. Either way, the taxpayer wins.

Wealth Redistribution Takes a New Form

In my naivete, I once thought insurance premiums were calculated based on asset risk class. That is, if I lived in an area likely to get hit by a tornado, my risk would be higher for homeowner's insurance. If I build in a flood plain I would expect to pay more for insurance. If I build a house on the beach in Florida, I would expect to pay insurance premiums out the nose because of the likely event of facing a hurricane. Some people don't see it that way.