Two Parallel Stories
Alex Zakson
January 17, 2008
Imagine a family. They live in a wonderful house they inherited, but the house comes with a hefty mortgage. The family is supported by the working parent, who earns enough to not only meet all expenses, but to save money for retirement and the two teenage childrenīs eventual college education, and even make extra payments to pay off the mortgage earlier. Life is good.
An economic slow down forces the working parent to reduce his working hours, and consequently his income. The other parent finds a part-time job to augment the family income, as do the teenagers, to increase their spending money. The additional measures help, but donīt completely remedy the situation. The family has to and does cut back on some expenses.
An unanticipated event forces the family to take on a substantial burden. They take out a home equity loan to meet this expense, and while they are at it, they borrow additional funds to install an alarm system, something they had always wanted, telling themselves that it will provide them with security. But being short of funds, they install a minimal system. This added expense puts further strain on the family budget. They make further cuts. They no longer pay down the loans, put away money for retirement or save for the childrenīs education. They make greater use of their credit cards, and pay out higher and higher amounts in interest. They put off painting the house, repairing the alarm system, replacing worn out appliances and upgrading their cars. Their quality of life suffers.
They need to increase their income, but are loath to do it by giving up too much of their time to work. The children will do fine. They will go to college, albeit they will have to take out loans, and eventually the children will inherit the house, but with a hefty mortgage.
Now look at America. We live in a wonderful country. But we inherited the country with a hefty National Debt. The country is supported by taxes that are enough to not only meet all expenses, but to provide some money for retirees and young peopleīs education. There is even a surplus to reduce the National Debt. Life is good.
A new administration takes over and decides that taxes are too high; they reduce taxes. The tax cuts reduce government revenue, and erase the surplus.
The tax cuts create some new jobs, and the new workers increase the tax revenue, but not enough to compensate for the tax cuts. The Administration tries to cut expenses, but is not successful. They talk about cutting Social Security and Medicare benefits, educational loans and aid to local schools and the underprivileged.
An unanticipated event, 9/11, causes the government to go to war in Afghanistan. To meet the cost, they issue bonds. And while they are at it, they go to war with Sadam Husseinīs Iraq, something the Administration always wanted to do, saying that it will provide us with added security. But being shortsighted, they go in with a minimal force and rose-colored glasses.
Poor planning swells the cost of the wars, balloons the deficit and puts serious strain on the economy. The countryīs infrastructure crumbles, but there is no money to improve it. Tax cuts and war costs leave nothing for these vital, but neglected areas. This economic folly causes the price of energy to skyrocket and the dollar to fall, but the Administration celebrates saying that now our exports will be cheaper, and therefore will rise.
Instead of raising taxes to meet expenses, the administration doggedly continues to insist that the tax cuts are working, as is their war strategy.
They are wrong. The country needs to increase its income, and reduce its expenses. That means raise taxes and cut expenditures. How about the billions a week spent on a no-win war in Iraq.
An economic slow down forces the working parent to reduce his working hours, and consequently his income. The other parent finds a part-time job to augment the family income, as do the teenagers, to increase their spending money. The additional measures help, but donīt completely remedy the situation. The family has to and does cut back on some expenses.
An unanticipated event forces the family to take on a substantial burden. They take out a home equity loan to meet this expense, and while they are at it, they borrow additional funds to install an alarm system, something they had always wanted, telling themselves that it will provide them with security. But being short of funds, they install a minimal system. This added expense puts further strain on the family budget. They make further cuts. They no longer pay down the loans, put away money for retirement or save for the childrenīs education. They make greater use of their credit cards, and pay out higher and higher amounts in interest. They put off painting the house, repairing the alarm system, replacing worn out appliances and upgrading their cars. Their quality of life suffers.
They need to increase their income, but are loath to do it by giving up too much of their time to work. The children will do fine. They will go to college, albeit they will have to take out loans, and eventually the children will inherit the house, but with a hefty mortgage.
Now look at America. We live in a wonderful country. But we inherited the country with a hefty National Debt. The country is supported by taxes that are enough to not only meet all expenses, but to provide some money for retirees and young peopleīs education. There is even a surplus to reduce the National Debt. Life is good.
A new administration takes over and decides that taxes are too high; they reduce taxes. The tax cuts reduce government revenue, and erase the surplus.
The tax cuts create some new jobs, and the new workers increase the tax revenue, but not enough to compensate for the tax cuts. The Administration tries to cut expenses, but is not successful. They talk about cutting Social Security and Medicare benefits, educational loans and aid to local schools and the underprivileged.
An unanticipated event, 9/11, causes the government to go to war in Afghanistan. To meet the cost, they issue bonds. And while they are at it, they go to war with Sadam Husseinīs Iraq, something the Administration always wanted to do, saying that it will provide us with added security. But being shortsighted, they go in with a minimal force and rose-colored glasses.
Poor planning swells the cost of the wars, balloons the deficit and puts serious strain on the economy. The countryīs infrastructure crumbles, but there is no money to improve it. Tax cuts and war costs leave nothing for these vital, but neglected areas. This economic folly causes the price of energy to skyrocket and the dollar to fall, but the Administration celebrates saying that now our exports will be cheaper, and therefore will rise.
Instead of raising taxes to meet expenses, the administration doggedly continues to insist that the tax cuts are working, as is their war strategy.
They are wrong. The country needs to increase its income, and reduce its expenses. That means raise taxes and cut expenditures. How about the billions a week spent on a no-win war in Iraq.
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