This won't effect U.S borrowing or rates much but it is a slap in the face of Obama and the Democrats who wouldn't make the tough choices and cut any of their hand-me-outs. Of course the Dems say it's because the Tea Party wouldn't raise taxes but that is one stupid argument. It's like me or you saying our credit rating was ruined because our boss wouldn't give us a raise. <img src="http://4.bp.blogspot.com/-ZyJ-tkvIPSI/TisyZMiWSoI/AAAAAAAAAgs/vTr415KtBXc/s400/majority-want-higher-taxes.jpg">
First time in the history of the U.S. that it's credit rating get's downgraded. All under Oduma's watch. How's that hope and change working for everyone???
The S&P started making noise about lowering the govt's rating when it became obvious that the congress was acting like a bunch of stubborn, obnoxious little brats. No doubt about it, pork from BOTH sides of the aisle needs to be cut. NEITHER side has done themselves, nor us, any justice whatsoever. They have ALL praised and defended their own pork while demeaning the pork of others. Now, they've wasted too much time pointing fingers. We're in a mess. It is what it is. We're paying these idiots to FIX problems and they're not. Cuts are indeed necessary!!! But cuts made blindly and too drastically with wild abandon may not produce the desired results. Cuts are necessare, but they must be planned and thought out. Raising taxes - on a limited term basis - for business and the upper 2% of the wealthy poses an interesting way to raise a lot of needed cash. No, they won't like it ... but maybe it's about time an action was considered that would work for the majority rather than the minority. Look ... I feel and appreciate their pain. I'd feel and appreciate a little more if I was in the 'club'. But some of their remarks make me suspect their sincereity. For example ... I'm hearing it said that taxing business and the wealthy would stymie efforts to create jobs. That has been said often enough that there are those who are beginning to believe it. And dummie me, I always thought that jobs were created as a result of increased SALES ... which resulted from increased DEMAND. Labor cost - a number that has haunted middle management for decades - is a function of sales and sales alone - according to accepted accounting principles - and takes no tax nor incentive into consideration. So I have to ask myself ... self ... why is this smoke screen being created??? Greed??? Who knows??? No matter ... I just can't help but feel that in these extraordinary times, it wouldn't kill some to step up to the plate with extraordinary measures. Not Blindly ... and not forever. Besides ... how much couild it really hurt to postone the purchase of that next 90 foot Dutch yacht, or that next German, or Italian or British luxury car ... really.
Here's where we are in this mess. Personal and corporate income taxes total around $1 Trillion per year. Let's say we use Obama's numbers and double his proposed tax increase making the top rate 20% higher. To round the total number off, let's call it a $200 Billion annual tax increase. (It couldn't be any where near that high without killing the economy) $200 Billion won't even cover the annual interest on the debt. If there were no interest on the debt it would still take over 70 years to pay off the debt with this increase. It's negligible compared to where the debt is. In 2010 the budget deficit just for the year was $1.3 Trillion. The CBO estimate for the 2011 budget deficit is $1.5 Trillion. Obama's proposed 2012 budget calls for an estimated $1.6 Trillion deficit. It's clear that there is no way tax increases can help solve the present national debt of $15 Trillion when we have the government spending about $1.5 Trillion more than they take in every year. There are only two ways to reduce the debt. 1) Grow the economy to increase revenues. Current GDP growth rates are estimated around 1.6% annually. In a booming recover we might see close to a 10% increase for a year or so then about 3% to 4%. So, that's not enough to make a difference in even 10 to 20 years. Maybe in 50 years if the deficit spending stopped cold so we didn't add to the current $15 Trillion debt every year. 2) Reduce spending! This is the only solution to stop the national debt from growing and keeping us from going bankrupt. Cutting spending by $2 or $3 Trillion over 10 years ($300 Billion per year) won't do it. We have to, at a minimum, zero out those $1.5 Trillion ANNUAL deficits. That's $15 Trillion in cuts over 10 years just to stop the debt growth! We need to cut deep and cut fast or we are going over Niagara Falls in a barrel very soon! We need a Balanced Budget Amendment to stop these $1.5 Trillion annual deficits. We can't pay for them. We can't grow out of them. We need to stop the spending now! Sources: http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=203 http://www.foxbusiness.com/markets/2010/08/19/budget-deficit-trillion-source/ http://www.washingtonpost.com/wp-dyn/content/article/2011/02/14/AR2011021400906.html http://www.cbo.gov/doc.cfm?index=12039