More misdirection…

In another quote from the President’s speech at George Washington University, he goes on to reach out to the smooth brained among us when he says the following:

“They want to give people like me a two hundred thousand dollar tax cut that’s paid for by asking thirty three seniors to each pay six thousand dollars more in health costs? That’s not right, and it’s not going to happen as long as I’m President.”

This would be true if the economy were as simple as a single pie. If this were the case, whenever anyone took a piece of pie, there would obviously be less to go around for everyone else. [This fact is a demonstration of a Zero-Sum Gain where the total of the gains and losses in a situation will always zero out. –i.e. If I get one pie (+1) and you lose the pie (-1) the sum of this dealing is zero.

What the President fails to understand here is that the economy is slightly more complex than sharing a pie. In economic terms, if the demand on pie slices goes up and making pies becomes more profitable, more pies will be made. This means that my ability to buy and desire for pie can result in a greater amount of pie for everyone.

It is the penalties and taxes on the pie-maker in this situation that may artificially introduce into the transaction the idea of the zero-sum. If, as a pie-maker, I see that investing more of my time and money into the production of pies will increase my income to a point I feel is worthwhile I may do so. This increase can take the form of longer hours or additional employees. If, however, taxes and regulations are systematically increased on my new income to such an extent that my increased work produces a lesser gain than I feel would justify the expense of time, money, or the addition of employees to my company, then run the risk of losing out on true economic growth.

In the end, please try to remember that the President, when he talks about taking money away from the poor or the sick, is really saying is that he does not want to allow people who earn the money to decide how it is used. The President ultimately does not want the federal government to lose the ability to decide where the confiscated money goes.

Does he really think we are that dumb?

In the President's recent address he made the following statement:

"But after Democrats and Republicans committed to fiscal discipline during the 1990s, we lost our way in the decade that followed. We increased spending dramatically for two wars and an expensive prescription drug program – but we didn’t pay for any of this new spending. Instead, we made the problem worse with trillions of dollars in unpaid-for tax cuts – tax cuts that went to every millionaire and billionaire in the country; tax cuts that will force us to borrow an average of $500 billion every year over the next decade.

To give you an idea of how much damage this caused to our national checkbook, consider this: in the last decade, if we had simply found a way to pay for the tax cuts and the prescription drug benefit, our deficit would currently be at low historical levels in the coming years."

That’s right, according to the President, it is the fact that we cut taxes [an act that has historically ended up generating greater than expected revenue for the federal government—something completely being overlooked by a President who believes that taxes should be raised “for purposes of fairness” rather than for increased revenue] rather than the fact that we have (and he has continued to) increased spending to unprecedented levels that has caused us to have trouble with the economy.

He even goes on to blur the facts a bit more by mentioning how deficits would be lower if we had funded two specific projects while seeming oblivious to the fact that deficits mean that we are still SPENDING MORE MONEY THAN WE HAVE!

Spending is the problem. Until the federal government accepts this and begins to spend less, we will continue to dig ourselves into a deeper financial hole.