Stop Pulling the Wagon

I do not believe that I am the only one to recognize that what Osama Bin Laden tried, but failed,  to do to the United States, we have done to ourselves. 

When those planes flew into the Twin Towers of the World Trade Center on 9/11 it was the intention of Osama Bin Laden to cripple or destroy the economy of the United States.

Many States (California, New York, Michigan and others) as well as the Federal Government are financially dysfunctional and  virtually Bankrupt.  The States have not filed the Bankruptcy paperwork (yet) and the Federal Government cannot file Bankruptcy but will finance its insolvency with inflation (more later).

California (where I live) is in a 25 Billion Dollar hole and is still digging deeper with no realistic options to get out of the hole.  They “burned” the ladder.

The Federal Government just blew past their 12 Trillion Dollar “credit card limit” and Congress is looking to raise the limit to 14 Trillion Dollars with the hope that this new limit will get them past the next election.

In California, the state has three major sources of revenue (plus an endless array of fees, assessments etc).  Those are Property Taxes, Sales Taxes and Income Taxes. When the housing “bubble” burst it triggered a financial “Perfect Storm”.  Since California was/is dependent on property taxes that are based on a percentage of property values, when those values declined 40-60%,  revenues plunged.  What followed was like a snowball going downhill.  Fiscal disaster.  And, the State has already “pre-spent” the planned for future revenues which are not going to come in.

At the Federal Government level our elected representatives are not willing to make the hard choices needed to cut spending and instead just keep running up the debt.  At some point just paying the interest on that debt will consume a significant portion of the nations annual tax revenues and then the “Feds” will have to greatly increase the printing of “Fiat” (worth less and less) paper money.  In this process any savings you have will be devalued.  If interest rates go up, and they will have to, “Katie Bar The Door”, we will either have hyper-inflation or we all need to learn to speak Chinese.

Our Leaders need to stop spending money we don’t have, stop creating “Entitlements” we can’t afford, stop borrowing the future of our Children and Grandchildren and stop lying to us.  So far, they are not showing any inclination of changing their ways. 

I don’t like gloom and doom scenarios any more than anyone else.  Somebody please show me where I am wrong in this analysis.  Its the old Ant and Grasshopper story.  We taxpayers are the ants and those in charge are the grasshoppers. 

Who do we blame?  We (the People) elected ‘Em!          

Bob Bandy

“If God did not want them sheared, He would not have made them Sheep.” 

In the classic Western Movie, The Magnificent Seven,  this is what the outlaw bandit leader, Calvera (Eli Walach), tells the leader of the Seven, Chris Adams (Yul Brynner).

Calvera is referring to his practice of robbing the villagers of the fruits of their labor and leaving them just enough to survive on till his next visit.

In fact Calvera later states:  “Generosity – That was my first mistake!”  Meaning, he left the Villagers a little too much, or they would not have had the resources to hire “The Seven”.

Sound familiar?   Consider the following:

We taxpayers are considered as little more than sheep by our Governments: Local, State and especially Federal.  They view us as a steady source of tax money to be “sheared” on a routine basis.  And, just like Calvera did with the people of the Village, Government  plans to leave us with just enough to survive on until the next “shearing”.

I don’t think we can count on Government to make the same “mistake” as Calvera.  The only mistake our leaders are likely to make is to “Kill the goose that lays the golden eggs”.

Please forgive the mixed metaphors.  

Bob Bandy

Credits:  The Magnificent Seven.  1960.  Executive Producer – Walter Mirisch.  Produced and Directed by John Sturges.  Music by Elmer Bernstein.

I often like to ask myself questions that begin with “What If?”

We face an increasingly oppressive and invasive Government that seeks to tax, regulate and control every aspect of our lives.

There are many of us who are frustrated with what seems to be a lack of a way to halt the loss of our freedoms and the confiscation of  “wealth” through all kinds of taxes and fees (I call it stealing) on what we worked so hard for.

Mahatma Gandhi literally changed history with his life.  With non-violent means he led a movement that brought an end to British Colonial power in India.  The 1982 Oscar winning movie staring Ben Kingsley presented the impact of his life in a profound way.  If you have not seen it, you should.

What if we had a leader today, in our own country, who would lead a non-violent movement to dismantle the corruption, waste, fraud and deceit of our own government?

What if a significant percentage of the population of the United States changed its lifestyle to a more simple one that is not centered on consumption and aquistion of “stuff”?  Our Government is totally dependent on all of us Taxpayers doing a lot of consuming.  When consumption shrinks significantly, tax revenues plunge.

What if we voters voted out of office all incumbents?  Would things be better or worse?

What if I made a decision in my own life to not be a slave to the “State” and to “stuff”?

What If I started living my own life on an income that is sufficient for my actual needs but at a level where there is only minimum or no “income” taxes?

Make up your own “What If”s” and think about it.  Just a thought.   

Bob Bandy

I would love to wake up some morning and turn on the news without hearing the President or some member of Congress tell me of the latest plan to fix something that I wish they would just leave alone.

Thats not to say that there are not things that need to be fixed.  For example, why not “fix” deficit spending?  This is a very real and  growing  problem which surely  will at some point come crashing down on us in the form of very high, possibly, hyper-inflation. Can they even spell Zimbabwe?  And, it could be “fixed”.  We just need those in charge of Government to commit to not spending more than is actually in the “bank”.  You know, like the rest of us have to do.   What a concept!

Here is another one.  Why don’t they “fix” the current 10.2% unemployment problem?  They could do this if the Administration and Congress would help create an environment where those who create the jobs are less afraid of Government interference.  As it stands now any prospective employer must be fearful that Government will dictate who you can hire,  who you can fire (lawyers ready to pounce),  how much you can pay, Environmental Regulations, Healthcare “Mandates”, permits, fees, licenses, etc.?   A real gauntlet.

And, if you comply with everything, obey all the rules, pay all the fees and manage to make a “profit” (a dirty word to Barney Frank and others), then you are looked on as greedy, evil and a target to be punished by having most of what you worked so hard for confiscated (stolen) in taxes.

What incentive does a prospective employer have in a business environment where each new day he/she hears in the news about proposed new Employer Healthcare requirements and taxes,  Cap & Trade (Cap & Tax) regulations and other Government plans to “fix” things.

And all of this from a bunch that could not even efficiently run the Cash For Clunkers Program (actual cost to Taxpayers in excess of $40,000 for every car sold!).  The only thing that government seems to excel at is Corruption, Fraud, Waste and Mismanagement.  What do you expect when the Chairman of the House Budget Commitee (Charles Rangel) is an admitted Tax Cheat?

In my mind, Congress and the Administration is best thought of as a Disorganized Criminal Enterprise.  If they were organized at least they might avoid deficits.    

Bob Bandy 

 I once had a friend of mine tell me that people do their taxes all wrong.

When I asked him what he meant he said “they start at the top of the tax form and work their way to the bottom to see how much they owe.”  “What they should be doing is starting at the bottom with the amount of refund they would like and work there way to the top filling in the lines to accomplish their refund goal.”

He was joking but there is a truth here.  Too many of us live our lives in the way he described.  We fill our lives with a lot of “stuff” we have to pay for and then enslave ourselves into making the money to do so.  In the process we arrive at an income level (the “bottom of the form”) and become the victims of whatever taxes the government wants to impose on us.

There is another way.  Find out how much non-taxable income you can have before the government wants to start taking its “cut”.  Keep in mind that the government has decided not all income is taxable.  Now plan your life in such a way you decide how much tax you are willing to pay.  Live your life accordingly.

You can live very well on a low tax, or no tax, income level with a little planning and thought.  And, you can be in charge and making these decisions about your life.

Its legal because you are playing by their rules.  And, as a bonus, you do not become the slave of the government and a lot of “stuff” you don’t really need and, truth be told, may not really even want.  In other words, do you own your “stuff” or does your “stuff” own you.

Keep in mind that while tax evasion is illegal, tax avoidance by legal means is not.

I think of it as a game.  And if I play the game right, I can lighten the load in that wagon the government wants me to pull.  Worth thinking about.  

Bob Bandy

Cartoon by Syl Mateo

I have a question.  Are those who “serve” in Congress really as dumb as they seem to be?  Or, Do they just not care? 

Deficits in the Trillions of Dollars can only be paid for in one of two ways.  (1) Inflation, which is another way of saying devalue the dollar.   At the current rate of growth in the debt, hyper-inflation is a possibility.  In other words your current and future savings go “Poof”.   (2) Bankruptcy.  An ugly word and not a truly workable solution on  a Federal Government level.  Governments have a way of avoiding the word Bankruptcy by printing money.  In other words, inflating their way out of debt by making the Dollars they owe worth-less and less and less.  Refer back to option (1).

For those who think this debt can be paid with future taxes I would only point out that we are reaching the point where just the interest on the debt will eat up a very large percentage of any expected tax income.   That takes money away from things like Education, National Defense, Medicare, etc.. 

Think about it on a personal level.  If an individual or family increases his/her/their debt (cars, boats, R.V.’s, credit cards, whatever) eventually a point is reached at which just the interest on that debt exceeds the available income.  What are the options when this point is reached?

For too long Congress has simply “kicked the can down the road” with gimmicks and “creative” accounting to future generations.  Our future generations.  Our children and grandchildren.  Well, the end of the road is near and what is Congress doing?  Borrowing more and more Dollars from lenders (the Chinese, Japanese and others) who are becoming more and more concerned about our ability as a nation to practice fiscal discipline and repay our debt.  What is Congress’ plan if they decide to stop loaning us Dollars?

Is a financial Armageddon unavoidable or is there still time to change our ways as a nation?  I always want to have a positive mindset but I believe the clock is ticking and we need to change those in power or they need to change their ways very soon.  Looking at what is happening in Washington DC, I am not confident that will happen.  I believe we need to act financially on our own to protect ourselves and our families from what seems more and more inevitable.     

Bob Bandy