Day: April 30, 2011

Response from Senator Menendez

Dear Mr. Reinke:

Thank you for contacting me to express your concerns regarding the federal government’s debt limit. I appreciate hearing from you on this critical issue and having the opportunity to respond.

The national debt is the total amount of money borrowed in order to fulfill the requirements imposed by current and past Congresses and Presidents, during periods when both Republicans and Democrats were in control of different branches of government. These are legal obligations, and the responsibility for meeting the Nation’s obligations must be shared by both parties.

Raising the debt limit is necessary to allow the Treasury to meet obligations of the United States that have been established, authorized, and appropriated by Congress. Also, it is important to note that increasing the debt limit does not authorize a single penny of new spending— it only allows the government to pay bills already incurred.

If Congress fails to act before the debt limit is reached, the Treasury would default on the legal obligations of the United States, causing far more devastating damage to the economy than the financial crisis of 2008 and 2009. A few consequences of defaulting could be a substantial tax increase on all Americans, and the potential loss of millions of American jobs.

The Secretary of the Treasury, Timothy Geithner, said that because Treasuries represent the benchmark borrowing rate for all other sectors, default would raise all borrowing costs. Interest rates for state and local government, corporate and consumer borrowing, including home mortgage interest, would all rise sharply. Equity prices and home values would decline, reducing retirement savings and hurting the economic security of all Americans, leading to reductions in spending and investment, which would cause business failures on a significant scale. Additionally, payments on a broad range of benefits and other U.S. obligations would be discontinued, limited or adversely affected, such as military salaries and retirement benefits; Social Security and Medicare benefits; veterans benefits; and unemployment benefits to states.

I share your desire to see our country headed down a more sustainable fiscal path, and I am committed to making the tough choices that will reduce the gap between our commitments and our resources. I believe that reducing our deficit will require a balanced approach to spending cuts; reforming tax policies, such as closing corporate tax breaks that allow oil companies to avoid paying billions of dollars in taxes; and controlling health care costs. As your federal representative, I take very seriously my responsibility to work with colleagues on both sides of the aisle to enact sound fiscal policy that that invests in our future and protects the economic security our nation’s children.

Again, thank you for taking the time to express your thoughts on this important matter. Rest assured that I will keep your views in mind. I invite you to visit my website (http://menendez.senate.gov) to learn more about how I am standing up for New Jersey families in the United States Senate.

Senator Menendez

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Yea, I say don’t raise the “debt ceiling” and I get back “default”. No, not default. You have to cut the spending! Argh!

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http://cafehayek.com/2011/04/money-isnt-wealth.html

Money Isn’t Wealth
by DON BOUDREAUX on APRIL 20, 2011
in MYTHS AND FALLACIES,SEEN AND UNSEEN,TAXES

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Steve Landsburg – in his armchair or out of it – is brilliant, just brilliant. This post of Steve’s is a must-read.

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http://www.thebigquestions.com/2011/04/18/the-man-who-cant-be-taxed/

The Man Who Can’t Be Taxed
Published by Steve Landsburg on April 18, 2011
in Bad Reasoning, Current Events and Economics. 64 Comments

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Nothing makes my job easier than a journalist who writes about something interesting and gets it 100% wrong.

Thanks, then, to Elizabeth Lesly Stevens for her column in yesterday’s Bay Citizen. Stevens wants to tax the “idle rich”, her Exhibit A being Robert Kendrick, heir to the $84 million Schlage Lock Company fortune. According to Ms. Stevens, Mr. Kendrick appears to do pretty much nothing but park and re-park his four cars all day long. Taxing people like Mr. Kendrick, she says, has to be part of any solution to America’s fiscal crisis.

Here’s what Ms. Stevens misses: Assuming the facts are as she states them, it is quite literally impossible to raise revenue by taxing the likes of Mr. Kendrick. We could argue about whether it’s desirable, but because it’s impossible, the discussion is moot.

Here’s why it’s impossible: For the government to consume more goods and services, somebody else must consume fewer.

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Everyone has to go back to poor old Robinson Crusoe’s island where some kind of money is created — be it pretty seashells or giant totem poles.

Let’s assume for the sake of argument it’s Confederate States of America dollar — one fiat currency is as good as another. An let’s further assume that the price level has become stable over time, one CSA dollar trade for one fish. AND Ms. Stevens, who’s economic education is sorely lacking, steals all the CSA dollars. For her to consume more fish, someone has to consume less. The amount of CSA dollars she’s stolen is irrelevant.

Economics is the “dismal science” because it can’t make more fish. It does tell us that when any good is limited, that is fish, there are several ways the fish can be divided. Argh! The free market will, if allowed, “fairly” allocate that poor fish, but the money used to vote on it ain’t the fish.

Argh!

It’s so simple and yet so hard for liberals and some conservatives to grasp.

Money has real world consequences. Gooferment is the problem. And, politicians and bureaucrats are today’s high priests. At least, in the Aztec days, they had human sacrifice. But, I’ll be they didn’t use the politicians and bureaucrats!

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