Let's talk about the economy. Your household's economy and our Government's economy, our National debt, taxes and the IRS, and Job creation.

national debt

Ronald Reagan once said: “The nine most terrifying words in the English language are: I'm from the government and I'm here to help”.

Two questions come to mind:
1.How is the Government helping us? and
2.How does an average person behave when a problem arises?

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Consider this scenario:

You are driving down the road, and you have a flat tire. This is a problem. How do you fix it? Would you get out of the car, look at the flat tire, and then open your wallet and throw every dollar, every credit card, and every coin you have at the flat tire, with the expectation that it would be miraculously fixed? Of course not. In order to fix your tire, you would identify what steps need to be taken to fix the tire and get you back on the road again. You identify a process which addresses the problem. The solution might be that you change the tire yourself, or you call the AAA road service, or you call a family member or friend to come and help you. At some point, you may have to spend some money to pay someone to change the tire, tow your car, fix the damaged tire or buy a new tire. You have identified the problem, applied a solution, and used your financial resources appropriately.

Unfortunately for us over the past 5 years, our Government has been identifying problems, both real and imagined, and has been throwing our hard earned money at these problems with the expectation that all this money will fix things, improving our situation, and making our lives happier, healthier, and safer. There has been stimulus money i.e. our federal reserve prints more money, corporate bailouts, labor union bail outs, cash for clunkers, billions for non-existent shovel ready jobs, unending billions to develop federal websites that do not work, etc.

Senator Tom Coburn, M.D. (R) from Oklahoma compiled annual wastebooks of government spending. Here are the links to 4 years of these wastebooks. You might want to take a look at some of these and see how the Government spends your money.

Thank you Senator Coburn for creating these documents for all of us.


So what's the solution?

The current funding levels of our National budget are unsustainable and have produced a rapidly rising National debt that is stealing the future of our children and jeopardizing our free society. The Government should operate within a balanced budget for each fiscal year. Funding should not be redirected to support one government program or one function over another. Fiscal responsibility and accountability needs to be applied across all government programs. Funding of all departments should be cut by 1-3% annually and continue until our National Debt is paid. Spending on projects that only serve the Government elite and their cronies should be stopped. Incompetent Government contractors and incompetent Government appointees should be fired as their failed job performance does not serve us.

Government must stop spending money it does not have. Legislation must incorporate strategies to eliminate waste, ensure that federal contracts operate within fixed-price budgets, work to achieve a balanced budget for each fiscal year, control discretionary redirection of departmental funds, make recommendations to identify and to eliminate fraudulent use and abuse of our money, and most importantly, reduce or eliminate as many taxes as possible.

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Internal Revenue Service (IRS) and Tax Reform

An outcry of the American Revolution that created our great nation was against burdensome and oppressive taxation of the American People by the British Government. Yet today, our Federal Tax Code is over 4 million words long and is too complex to ensure compliance. Today, the complexity of the tax code, with its many loopholes, deductions and credits, acts as constraint on those activities that would stimulate a strong economy i.e. working, saving, investing and taking on risk. In today's world, even the most diligent tax professional has difficulty in keeping up with pace that our tax code keeps expanding. This process is costly and inefficient for everyone. In addtion, administration of the IRS is out of control, it has grown too big, and the agency needs to be reorganized. In fact, it has recently become evident that some high-ranking officials in the IRS have abused their authority and have taken action against some citizens that was based on a political agenda rather than service to our citizens.

Let's get our citizens, you and me, out of tax hell. Let's redesign the tax code that is simple and easy for everyone to understand. What if we had a code that seemed as if it was designed on purpose, one that was simple, fair and easy to understand? Then Tax Day wouldn't have to be such an annual nightmare. Government would not choose winners and losers in our markets, and would not be able to reward or punish us because of the economic decisions that you and I make. Each one of us, and not the government, could make our own decisions about what is right for us. Why not reduce the higher marginal tax rates that many American's pay so that resulting increase in incentives would in turn stimulate our economy. Then people and families that earn more could keep more or their own money and wouldn't be punished for working hard and succeeding. Tax reform that reduces deductions and credits and makes the tax code more transparent and understandable to all Americans, would be a fairer system for all. Then the American Dream could be within reach of more taxpayers.

It is probably true that of all the U.S. Government agencies, none is more maligned by our citizens than the IRS. However, we must remember that the vast majority of those that work at the IRS are hard-working people just like the rest of us and they should not be stigmatized by the misdeeds of a certain officials. Tax reform could help them along with the rest of us.


Our economy and job creation

It's easy for a politician to promise you "a good paying job"but how many actually know how the process of job creation works? As a business woman, I can tell you that the formula for creating a job is simple, and it applies whether you are creating a job for yourself or for someone else. Simply put, there has to be a need or a demand for a good or a service. People who are creative, entrepreneurs, or in business will recognize the need and demand for their products and services. As more people want and buy the goods and services, the businesses will hire workers to produce and sell the products. However, the cost of hiring a worker cannot exceed the ability of the business to make enough money to keep the business operating. To hire a worker, the business owner must determine the cost to hire worker. This cost includes wages and salaries, payroll taxes, social security and medicare taxes, workers compensation taxes etc. In addition, there is the cost of the worker's fringe benefits such as paid vacation days, paid sick time, paid personal days, retirement funds, and health insurance. The higher the cost to hire a worker, the fewer the workers that can be hired.

Our ability to create jobs in this country is directly dependant upon whether we have a strong market-based economy, i.e. a private sector, free enterprise system, or a government controlled economy, i.e. a socialist economy that only generates income through taxes, borrowing money by issuing bonds or printing more money from the Federal Reserve. Before you decide, ask yourself, which system creates the most sustainable jobs. The truth is government spending reduces more jobs in the private sector than it can create in the government sector. The reason is private sector jobs tend to be more productive and efficient than government jobs. This is because it costs the government more dollars to create a job because the government must take money away from businesses and the citizens by taxing us or borrowing money from the federal reserve which, in turn, increases our National debt. As previously mentioned, all the billions of dollars of stimulus money and wasteful spending as identified in the Wastebooks above has not succeeded in creating sustainable jobs and restoring a robust economy to the American people.

Since the most recent economic downturn in 2008, our economy has been slow to recover. Yes, it is true that the stock market is booming, but job creation is slow and the job participation rates are the lowest in 30 years.Why? First, people are not investing in houses, they are investing in Individual Retirement Accounts (IRAs) and pension funds which in turn invests their money and funds in the stock market. These days with interest rates so low placing your money in a savings account is the same as just placing cash in a tin can i.e. the amount of money will not grow larger. In addition, unemployment estimates are misleading. Unemployment rates do not account for people who are unemployed and have stopped looking for work nor do unemployment rates include new graduates from high school, colleges, and universities who have never entered the work force and who can't find jobs. Ask yourself if you are better off today than you were 6 years ago.

So what's the solution? and how can we create more jobs?

We must lift Government mandates that keep Small business from creating jobs and providing people with incomes that would raise them out of poverty and break their dependency on government programs. Decrease taxes so people can spend their own money on things they need and want. This would strengthen our National economy.

Stay tuned... more to follow