Thursday, April 1, 2010

RED FLAG WARNING: I'm back....Recipe for Disaster Cake

All my classes have concluded and now I'm back to bring more dire warnings of doom and pending disaster. Yes I missed out on giving stinging missives on the final show down in the halls of congress over the health care legislation. It is now the law of the land and soon we'll all be feeling lighter in our hip pockets when the 16,000 new IRS agents come knocking at our doors with one hand out for more taxes and the other holding the government 'gun' to our heads.

Our President tells us we will really like this new program once we get to know it. Nancy Pelosi told us they would have to pass the bill to know what was in the bill. And our dear bumbling, foul mouthed Vice President whispered a very honoring phrase in to the President's ear during the signing ceremony saying, "This is a big F..... deal!" Class act all around.

However, I turn now to the task of warning my friends to be preparing for the tough times ahead. Yes they are just around the bend. In the course of human events no nation has ever escaped the ravages of over spending and under production. Currently the US debt is on a scale never before seen in world history. The long term debt is now in the 12 to 14 trillion level with our nation unable even to pay the interest on the debt. It is truly gruesome to consider that we the "given" generation has indeed given our children and grandchildren a crushing national debt load that threatens our national security.

We are also under producing. We not only have given our selves a huge entitlement to go along with social security and medicare, but we're also nationally buying more stuff than we produce to sell to other countries. We don't produce steel any more, we sell services. And how many cell phone service plans can one nation sell its self. It is kind of like having an Amyway dealer on your block. They get one or two others to sell product and then before you know it everyone is selling the products to one another until the block is totally saturated and no one sells or buys.

The worst aspect of the health care law is the now confessed real reason for doing it by our democratic leaders. Senator Max Baucus, (D) Montana, recently was caught on tape telling a group of listeners the health care law was necessary to reshuffle wealth from one class to another lower class. To make having wealth more fairly distributed. This is classic Marxism, "from each according to their ability, to each according to their need".

Alan Reynolds in the March 30, 2010 Wall Street Journal observed the idea of taking more from the rich to pay for ObamaCare won't work. "Add it up and the government is counting on squeezing an extra $1.2 trillion over 10 years from a tiny sliver of taxpayers who already pay more than half of all individual taxes." He goes on to say, "It won't work. It never works." Reynolds then goes on to demonstrate how the raising and lowering of tax rates over the years has shown that when rates go up, revenues go down and just the opposite when rates decrease. He also discusses that rich folks aren't stupid. They find other ways to keep the tax man's hands off their income, again resulting in lost revenue. So who in the end gets taken to the cleaners? It is obvious, the middle class. They make up the difference in revenue shortfalls.

Lastly, I see a situation where wages will be going lower. An example will suffice: I run a company where I employ 30 people who perform a home cleaning service. I pay my employees $12.50 per hour on average. but I don't offer health care benefits. But ObamaCare now requires that I do offer it and pay part of the premium. So now my company is faced with either laying off workers to enable me to have enough cash flow to pay the added expense or I will have to ask the workers to take a cut in pay. New workers too will start out even lower to help make up the loss in company revenue. Over time the tax bite will increase when it is realized not enough tax money is coming in to pay for the programs so wages will stay depressed. If I let people go, then my business may fold for lack of workers to meet the demand. So again, who is the big looser? The middle class takes another one for Obama.

So there you have it. A recipe for disaster cake. And the icing? High Inflation....coming soon to a nation that prints money by the train load.

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