Six Months?

Senate Alters Taxes for Big Companies
http://online.wsj.com/article/SB125738134701529625.html?mod=djemITP

Listening to lots of talking heads over the last few days, I'd say there is a consensus emerging that the US has about 6 months before something untoward is likely to happen unless a clear plan to reduce the deficit is in the works.

Sadly, the government - day in and day out - is more like the family that knows it is spending too much and going more and more in debt and, instead of cutting expenses, decides to tap another credit card (with respect to the government, this means raise taxes as well as borrow).

The idea of the government living within the means of what the economy can afford - with respect to having the capital to sustain its current investment capital and move toward full employment - is just not there.

As one of the commentators last night on Bloomberg remarked, we make look at a nominal 10-year federal deficit of 10 trillion; but, the unfunded social security and medicare liabilities are 100 trillion.

One can just think out what the likely results are for a family budget (one's own) or a company (think of GM) when they are spending too much.

It's hard to believe jobs will come back to America when America is too high a cost place to do business. If taxes are too high and the return to investors is too low, we are back to stagnation at best on the jobs front.

There is no magic bullet to trying to produce something if the cost of producing it is greater than the income from selling it. This was the GM lesson. Their costs were too high due to all the UAW benefits; and, the most hurt were younger GM workers who had to pay for the benefits paid to retirees, union members with seniority and union officials at closed plants.

Nothing is being done by Congress to hold back this kind of squandering of resources. In fact, the threat of unionizing the economy and removing any relationship between production costs and sales values is one of the key things holding back the economy. How could it be otherwise - except in the union and Obama nirvanaland that is but a figment of the imagination. In real terms, people like to be fairly paid and fairly dealt with. Ask two or three young teachers who got laid off so a burned out union teacher with senior could keep their job about fairness?