Been There, Done That

We have all been there, or at least some version of it. That time when we are forced to make the really tough choices. During this recession many families and businesses have been faced with many tough decisions.

  • How many people do we lay off?
  • What can we sell?
  • Can we really live without cable TV?
  • No pay increases, again?
  • Hot dogs and hamburgers instead of steak and ribs?
  • Can we raise our prices, again?

South Dakota went through this earlier this year. There was some very tough and unpopular decisions made in Pierre. Now our federal government is at that place now. There is an August 2nd deadline looming that something, has to be done or the United States of America starts defaulting on it’s loans. (BTW that would be bad)

At the heart of the problem, is quite simple. There is more going out, then what is being taken in. Even my thirteen year old daughter knows the answer, cut expenses and increase income.

The government has one means of income, taxes. Is it a simple means of raising taxes (or like from the gang of six plan) closing tax loopholes?

From Joseph Mason ?Don’t Balance the Budget On the Energy Industry?

Economists have understood for decades that the relationship between tax levels and government revenue is a backward-bending curve, not a straight line. After a certain tax rate threshold, higher taxes have a negative effect on production.

In layman’s terms, tax people too much, and they no longer have the inventive to work. In a perverse feedback loop, decreased production lowers the tax base and federal revenues so that increased taxes result in lower federal revenues.

Instead of raising taxes, they need to be lowered? Instead of adding more regulation, we need to get rid of rules that get in the way?

Our own Representative Kristi Noem put out in a press release a few weeks ago:

As a former small business owner myself, I understand the difficulties in maintaining a business let alone expanding one. That?s why Washington must abandon the path of more heavy-handed government regulations, misguided, wasteful spending and higher taxes. Instead, we need to focus on the needs of small business owners because they create the lion?s share of new jobs both in South Dakota and nationally.

Before a small business makes the decision to hire another employee they need to see several things in the economic climate going forward. First and foremost, job creators need to know that the tax and regulatory environment won?t change for the worse. The looming threat of a tax hike or burdensome new regulation might be enough to stop a small business owner from hiring that new employee. Additionally, small business employers need to know that the government is working to implement policies that are growth-oriented. That means we should focus on enacting trade agreements to open markets and level the playing field with overseas competitors. It also means we should be implementing policies that encourage American-made energy to keep the cost of gasoline and other fuels down.

Do what you have to do to fix the short term problem, then go after the root of the problem

The solution to this problem is simple:

  • Cut Taxes.
  • Repeal or remove anti-business regulations (Obamacare)
  • Take a ‘all of the above’ approach to energy independence
    • Drill, baby, drill
    • Wind/solar/hydro energy
    • Research other fuels
    • Conservation
  • Get rid of programs and agencies that don’t work and causing problems.

Businesses want to grow, and hire more people. Most Americans want to work, and earn a decent living for their families. Right now what is standing the way is the government and their taxes and regulations.

Ronald Regan said it best:

In this present crisis, government is not the solution to our problem; government is the problem.


22 Replies to “Been There, Done That”

  1. springer

    MC’s solution above is right on. Too bad the politicians can’t see it instead of putting their own careers and/or power trips first. Of course, this would reduce the power of the fed govt and make our own nation more economically stable, which isn’t exactly the goal of many of the powers that presently be in DC who instead favor a global govt under UN auspices.

  2. Stan Gibilisco

    The key to solving this conundrum lies in finding out exactly where the so-called Laffer Curve (the revenue-versus-tax-level function) “peaks out.” Are we currently below that point or above it? I don’t know the answer to that question, but I suspect that the point fluctuates depending on the state of the economy.

    That said, I see great cynicism in the view that government should feel the need to find and exploit the peak of the Laffer Curve. Who says that the government should extract every last penny of revenue from the people? If one accepts that view, then one must also conclude that government should seek to make itself as big as possible. I don’t want to toil under the yoke of such an institution …

    Andrea Tantaros on Fox News stated my feelings perfectly when she said that she’s tired of politicians “torturing us” with this impending-doom business. At some point, I’ll tune out of the whole deal, and simply say that every incumbent up for reelection ought to be summarily fired in November 2012.

  3. Truthinator

    MC – I am happy to see that finally someone on the drill baby drill bandwagon actually found the ability to slip in the word “conservation.” You also need to slip in the words “increase energy efficiency.” If you’re interested in cheaper gas, just drop demand. The crude oil demand curve is leveraged, i.e. a certain percentage of demand decrease equals a much larger decrease in price – at least in the part of the curve we are in right now.

    Also, when tax cuts are your first cure I am not sure I have seen the proof of that. Did the current tax cut environment produce the prosperity that so many claimed it would? I think the proof is in the pudding here. It seems that despite the claims, the contrary is true. Republicans during the Clinton years held his feet to the fire and did, in fact, tax people, which left us with a great surplus.

    I just don’t see how you can say tax cuts are the panacea to reaching prosperity in this country.

  4. Les

    We are at a point that 100% confiscation of our income will not cover the ballooning of our programs plus the fact that a two point increase in interest will cost our government 5 trillion.

    So do we raise taxes or keep a negative interest rate which is as unreal as non taxation?

    1. 73*

      I’m sure the reason Obama doesn’t want to cut spending is because it will cause a large amount of layoffs in the public sector and really make job #’s look bad for a while.

  5. springer

    Truth, you seem to think that people advocating drill, baby, drill etc are not interested in conservation or in increased energy efficiency. But, Obama et al are pushing for only the latter two and ignoring the fact that we cannot get off our dependence on oil in the near future, and their policies are keeping us more and more dependent on foreign energy sources. We need to use our own resources while looking for and improving other sources of energy, but try telling the great O that! He and his cohorts aren’t the least bit interested in that or in creating new jobs or saving old jobs in oil or coal industries.

    1. Truthinator

      Springer, I don’t think that. I just mentioned that it is very rare to see a drill baby drill person advocating conservation. That factor has sadly been absent in so many of the conversations.

      I do agree that now Obama owns the policies of that past. On some of the progressive blogs I look at, they’re complaining that he’s the second coming of Bush! We both know that’s not accurate, but many of the Bush policies stayed on.

      As far as the jobs go, I agree that they should be working harder to create the jobs. I mourn the loss of the 50,000 factories in the last 10 years. That is a lot of jobs that left. Both parties are responsible for that.

  6. old guy

    We do need to take a look at the tax code doing away with some deductions while changing how some income is handled like hedge fund operators. I am not opposed to a increase in rates or eliminating of deductions for the $500,000 income people.We don’t need all the military bases over seas nor do we need these wars. Entitlements need to be addressed. Seems to me the two easy fixes would be to raise the age by a year or two for eligibility and increase from $106,000 to $200,000 on SS and Medicare. How do you figure out what programs work and what doesn’t? Every program works for somebody the key is it cost effective. I would also look at what Federal Departments we could do away with like, the Department of Education, which are best handled at the local level. I do believe we need a health care bill. We could redo the one we have to make it more realistic like curbing malpractice . Anyway ramblings from a old-guy who is neither a republican nor a democrat.

  7. Fred

    I must admit that I’m a bit perplexed in that our federal taxes are lower than they were under the previous administration, our federal taxes as a proportion of the GDP are the lowest since 1950, and businesses have tons of cash with great profits in the last two years and getting more productivity out of the American worker. So what am I missing?

    As a small business owner I realize that the business environment is forever changing and that nothing is certain. I must do the best I can. Businesses that expect things to always stay the same would still want to have a market for tube radios and blacksmith shops.

      1. Bob Ellis

        Victims of their own sloth and bad judgement.

        The Marxism of the Left always leaves millions of victims who only wanted to live their lives the way they wanted to. Marxism’s victims are usually left in economic mediocrity, and too often left in a shallow grave.

    1. PlanningStudent

      Part of those large profits as of a recently are due to quantitative easing 1 & 2 by the fed… Money in the last few years isn’t worth what is used to be. To help one get this picture think of gold as having not gone up in price at all, the dollar is going down and just by less of it.

      Tax dollars as a percentage of GDP are around 15% but should be at 18%. To correct this the answer isn’t to raise taxes, (Marco Rubio recently said) the answer is to create more/new tax payers. So many people are out of work and not paying taxes that is why we down at 15%..

  8. Electrifying South Dakota

    As I recall, I had pretty good attendance during both my undergraduate and MBA academic forrays, but I really don’t recall a lecture about not expanding your business unless the government gave you a tax break. Over the years, I have added additional staff based upon 1) profitability, ie. one additional person being capable of contributing additional revenue in excess of cost; 2) workload, ie. my staff is getting buried under a pile of work; 3) competitiveness, ie. by adding one additional employee I am capable of either providing similar services to customers that they are getting from my competitor, or I am able to provide better services to customers than they are getting from my competitor. To be honest I don’t sit down and think to myself, “Gosh, if only the government wouldn’t regulate and tax me I could hire additional staff.” More immediate than what the government is going to do is my concern about what my competitors are doing and how I can grow my business.

    1. yoyoyoyoyo

      right there with you…I dont know in what industry you determine whether or not your going to hire someone based on proposed tax base, unless you are just skating by. Although in Noem’s case, im sure legislation with regards to the amount of farm subsidies she receives plays a role in whether or not she can hire additional staff to work for her or not.

  9. Truthinator

    I have never considered income tax when hiring a new employee – or as many here would say being a “job creator.

    I have, however, made decisions based on regulations from time to time. I’m not sure that there is one business out there that is not in danger of being over-regulated.

    Some regulations are critical and our society could not function properly without them. Others present a nuisance. We need to tell them to STOP on the nuisance regs.

  10. 73*

    The debt ceiling was raised 74 times since JFK. 7 times under Bush.

    I’m 100% for lowering the debt but I don’t see what exactly we think we are accomplishing by fighting this issue so hard before we have the presidency.

    Yes lowering the debt ceiling is important but if in a year and a half we lose the 2012 presidential election because of Medicare and this debt ceiling fight we lost the battle that really matters and the one that will make the most difference to our nation.

    These small fights cannot cost Americans the oppurtunity to repeal Obamacare, fix medicare and Social Security and reduce our nations debt.

    I worry we have lost site of the big picture.

  11. CaveMan

    C’mon lets be at least slightly cerebrally connected here. The Debt Ceiling is nothing but a political punch the Liberals use against the Conservatives every time it comes up for a vote. To think of it as anything important leaves one wondering the sanity of the speaker. Have we ever in the history of the USA NOT raised the damn Debt Limit?????????????????????? Why the HELL have one in the first place??????????????????????????????????????????????????????????????????

  12. springer

    Essentially we don’t have a debt ceiling if it can be raised as easily and often as it has been through the years. I liked the way Lindsay Graham talked on TV last night; he said that neither party is capable of behaving itself when it comes to controlling spending, and the only way to make them behave is to set a limit on what they can spend. That’s why we need to NOT raise the debt ceiling and to pass a balanced budget amendment to the constitution that will control the politicians, because they obviously cannot control themselves.


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