I’m happy to announce that as of October 29th, one more course for my MBA is behind me. It wasn’t my favorite class, but I learned quite a bit nonetheless. I’m fortunate enough to work for a company with an extremely generous tuition reimbursement program and a few months ago when it looked like the economy was really going to go from “slowing down” to “total digger,” I figured it would be wise to add a few letters to my resume. It adds quite a bit to my days but in the long term, I believe education is always a good investment. Are there any classes you could take to flesh out your skills?

Anyhoo, since this week has been a blur, I thought I might do a little roundup of recent economic news …

On Wednesday, the Federal Reserve dropped its key interest rate, the federal funds rate by half a point, bring it to one percent. That probably won’t do much to regular mortgage rates but if you have a variable rate HELOC, you should see your rates drop. The reaction in the stock market was underwhelming, and will remain so until credit markets actually loosen  up - in other words, interest rates are somewhat irrelevant if nobody can get a loan. On the other hand, for entities who use very short term loan products or for existing variable rate loans, it’s helpful.

Ohio, Michigan, Kentucky, New York, Delaware and South Dakota have asked for bailout money for the automotive industry. Vehicle purchases are down significantly (see above), and automakers say that the industry is basically too big to fail because the industry directly and indirectly employs over five million Americans.

Financial firms at the heart of the derivatives and housing meltdown will still pay out nearly $20 billion in bonuses this year. According to Bloomberg,

Five straight quarters of losses and a 70 percent slide in its stock this year haven’t stopped Merrill Lynch & Co. from allocating about $6.7 billion to pay bonuses.

Goldman Sachs Group Inc. and Morgan Stanley, both still on track for profitable years, have set aside about $13 billion for bonuses after three quarters, down 28 percent from a year ago. Even some employees at Lehman Brothers Holdings Inc., which declared the biggest bankruptcy in U.S. history last month, will get the same bonus they received a year ago.

The bonuses will mostly go to top performers, with lower level employees taking large cuts, and the numbers are huge. Goldman Sachs had set aside an average of about $210,000 per employee. Since the receptionists and assistants aren’t going to get that, it means that the higher-ups are going to get bonuses in the millions. During the four years between 2003 and 2007, Goldman Sachs, Morgan Stanley, Merrill, Lehman Brothers and Bear Stearns paid out almost $140 billion in bonuses.

Alan Greenspan testified before Congress this week. He would like us all to know that it’s bothered him quite a bit that the financial industry did not behave the way he had hoped. It turns out that the financial industry didn’t have some big self-correcting mechanism that would kick in when things got out of balance. His belief in a free market with as little regulation as possible turned out not to produce an industry that would maintain sound practices in order to preserve shareholder equity, but a criminally predatory industry that rewarded its employees and left shareholders and taxpayers to clean up the mess.

Democrats are pushing for another stimulus package to the tune of $150 billion, and current Federal Reserve Chairman Ben Bernanke is all for it. He still won’t admit that the economy is in a recession, though, which seems to be an extraordinary display of denial. A stimulus would not probably be in the form of another rebate check but rather an investment in infrastructure projects that are both desperately needed and would provide jobs. Republicans are not excited about the idea and believe that making Bush’s tax cuts permanent is the better route to take because it would encourage investment. More of that self-correcting mechanism that would lead to the wealthy investing in bonds that would provide those infrastructure projects, no doubt, instead of investing in underpriced stocks and leaving that money essentially off the table for any kind of real growth.

Crude oil bounced around the $60 level and gas prices US fuel demand fell 7.8% compared to the same period a year ago. OPEC agreed to cut oil production by one and a half million barrels per day, and gasoline prices averaged $2.50 a gallon on October 30th, compared $3.58 per gallon just one month ago.

As I went through a week’s worth of mail this morning, I noticed two things. One is that I’m seeing far fewer catalogs than I recall over the last few years. I don’t know if that’s because we’ve been purged from many lists because we haven’t bought anything in a while or if it’s because companies are trying to cut costs. I don’t know that I think either is really true given that retailers desperately need this year to be a good holiday season, and maybe it’s just too early to be completely inundated. We shall see.

I did receive one catalog that I particularly look forward to every year, though. I don’t know about you but I love the Signals and Wireless catalogs. Signals supports public television and I believe Wireless supports public radio, so I like that some of their revenues are going to those causes, but mostly I like them because they have cool, quirky stuff that makes me laugh and/or covet. If I wasn’t such a Cheapy McCheapster, I’d have a field day in those two catalogs.

By far the coolest catalog I have seen so far, though, is one from Heifer.org. From their site, here’s a blurb about their intiatives:

Heifer has learned over the years that a holistic approach is necessary in order to build sustainable communities. So we’ve developed a set of global initiatives – areas of emphasis that must be addressed if we’re to meet our mission of ending world hunger and poverty and caring for the earth.

Agroecology
In a world where land is overused, community members need to learn how to protect and rejuvenate their land, water and other natural resources. Heifer helps by teaching environmentally sound agricultural techniques.

Animal Well-Being
Before any Heifer animal is passed along to a project partner, Heifer trains the new recipient in animal management, using our strictly enforced. Animal Welfare Guidelines

Gender Equity
In Heifer’s view, gender equity is a social justice and human rights issue that directly leads to ending hunger and poverty. That’s why our participants are equal partners in sustainable development projects.

HIV-AIDS
Today, we as a world community, confront AIDS, a virus that in the past 25 years has either infected or killed over 64 million people. It is not only a health issue, as it fractures every sector of society, for Heifer, it is a prominent concern in the arena of sustainable development. This is why Heifer is incorporating HIV/AIDS education in our community training groups.

Microenterprise
Heifer provides both “no-interest living loans” in the form of livestock, as well as small monetary loans to help people start and expand businesses that yield big benefits for families.

Urban Agriculture
Heifer is reconnecting city-dwellers with their food sources, building strong alliances and instilling an entrepreneurial spirit among adults and youth through our Urban Agriculture projects.

Young People’s Initiative
Heifer weaves youth-focused programs through all our project work and emphasizes young people’s needs.

Their catalog, which I have to admit is really fun to look at (how many catalogs have you received where you can buy a cow for someone?) and is chock full of cute kids hugging their livestock, which is used for milk, wool, or to produce offspring for food or sale. There is one story in particular that warmed my heart about a little girl whose mother was able to sell two offspring from a Heifer donated goat for $200, which was enough for them to be able to build a new home with an iron sheeted roof to replace their thatched hut plus a uniform, books and pencils so that this little girl could go to work. $200 was all that it took to give a child an opportunity. Isn’t that wonderful?

I did look up Heifer through Charity Navigator. They have a three out of four star rating and their efficiency (how much of donated money is put towards administrative costs versus actual program costs like cattle) is low. I have to wonder, though, if their worldwide mission doesn’t create more expenses than a hunger organization that operates only in one country, but perhaps someone with more experience with researching charities can help me out with the Charity Navigator evaluation.

Check them out, at least. And if you have a person in your family who is impossible to buy for because they already have everything they need, consider donating in that person’s name to an organization like this or to one that they have a particular interest in.

Are you a Rachael Ray fan? She’s quite a dynamo, isn’t she? Her energy level is admirable, as is her drive and what appears to be her genuinely kind personality.

I’ve been thinking about her lately during my time in the kitchen. I never really got into her 30 Minute Meals show, mostly because I don’t happen to have a magic cupboard that holds everything I need for a recipe and partly because as nice as she is, it took approximately one appetizer demonstration to realize I never wanted to hear the term “EVOO” or the word “sammie” ever again.

Still, I like that she doesn’t get fussy about measurements, doesn’t change her kitchen for every show or put together over the top tablescapes, and almost everything she makes looks actually kind of tasty. She’s not intimidating, in other words, and makes you believe that you can cook. You know you can cook, of course, but I think to a large extent many of us have forgotten or never learned the basics. Her show demonstrates cooking without all of the pretentious “I’m a CIA grad” blah-dee-blah.

The reason I’ve been thinking of her lately is that with our tightening economy, people are looking for ways to eat at home more often. Grocery stores are encouraging this trend, which in my opinion is great, but not if family dining out experiences are replaced with frozen, overly processed garbage and not if you actually spend $75 trying to mimic a Kentucky Fried Chicken meal when more healthful recipes would save you money, time and calories.

Multitasking in the kitchen can save you time, money, and effort, and if you go into it with the right attitude, it can be very empowering. Maybe that sounds a little silly, but when you can’t turn on the TV without seeing reports of market crashes, bailouts, foreclosures, failing banks, and endless political ads, a little empowerment goes a long way.

So what kinds of things can you do to multitask? It all amounts to basically thinking ahead. For example, the other day I was making a Thai-ish stirfry with cabbage. I only actually needed about half a cabbage (I used it to replace quite a bit of the noddle part of the dish - less wheat, more fiber), but I shredded the entire head anyway. While my veggies were steaming, I grated up a carrot or two and made a quick slaw dressing - mayo, a little sugar, a splash of milk, and either vinegar or, if you really want to go old school frugal, some juice from a pickle jar - and voila, I had dinner for that night and slaw for the next few days. Had I only made my dinner recipe and put that cabbage away to make something else later, I can almost guarantee you that it would have gone bad and gotten tossed.

Another example came just a couple of days ago. We decided to bake up some potatoes and top them with leftover chili in the freezer, but since the oven was on, we baked a few extra potatoes for work lunches or quick dinners later in the week.

Or this past weekend watching football, I prepared some radishes, celery sticks, and actually peeled and cut up carrots. They all went into a large plastic tub filled with water, which keeps them nice and crispy in the fridge. When it’s time to make lunches, grabbing a handful of veggies couldn’t be easier.

There are also cleaning tips and tricks to save you time in the kitchen.

• If you’re going to be in the kitchen for a while and will have a few minutes between tasks while something is simmering or baking, take the opportunity to clean your microwave. All you need is a large microwave Set it on high for a few minutes to get a good boil going. Let it sit for a few minutes and then wipe clean - the condensed steam will loosen just about everything.
• Let your cleaner do its work. Don’t be like the folks in the commercials who squirt their cleaner on and wipe everything off a half a second later. The only time that works is when you’re using seriously strong chemicals, which is of dubious benefit in my opinion. A spray bottle filled with half water and half white vinegar will take care of most of your kitchen and bath cleaning needs - unless you have marble. Don’t use vinegar on marble.
• If you are cooking with lemons or limes or just ate some kind of citrus fruit, toss the peels into a small saucepan with water and simmer for a free air freshener that doesn’t smell like chemicals.
• If you have a double sink, fill one side with halfway water while you’re cooking and put used utensils into the water as you finish with them. Anyone who has ever made mashed potatoes or oatmeal and left them to dry in the pan knows why this is a good idea.

Those are just a few examples, and I’m sure you have your own tricks. Please do share!

… And they say Obama’s a Marxist?

From Bloomberg on October 11th (yes, I’m behind again … so much to read, so little time):

Federal regulators directed Fannie Mae and Freddie Mac to start purchasing $40 billion a month of underperforming mortgage bonds as the Bush administration expands its options to buy troubled financial assets and resuscitate the U.S. economy, according to three people briefed about the plan.

Fannie and Freddie began notifying bond traders last week that each company needs to buy $20 billion a month in mostly subprime, Alt-A and non-performing prime mortgage securities, according to the people, who asked not to be identified because the plans are confidential. The purchases would be separate from the U.S. Treasury’s $700 billion Troubled Asset Relief Program.

From Merriam Webster:

so·cial·ism
Pronunciation:

\ˈsō-shə-ˌli-zəm\

Function:

noun

Date:

1837

1: any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods

What’s crazy is that this administration has found a bizarre combination of capitalism and socialism. If they follow this $40 billion a month plan for a full year, they’re going to spend one and a quarter TRILLION dollars to bail out a failed system that wanted to run basically on its own without any pesky regulation (oh sure, they have rules they’re supposed to follow but they also had lots of loopholes they stretched quite liberally), they’re going to let the crooks who caused the problem oversee the reconstruction, and at the same time, they’re going to take ownership via the loans of millions of homes.

You know, the whole point of this blog was that it was supposed to kinder and gentler, but seriously, the constant onslaught of insanity is making me a grumpy old woman.

OK, I was going to let this go, but this commercial from KFC touting its $10 challenge just irritates me. If you haven’t seen it yet, you can view here: KFC $10 Challenge Promo

Maybe I dislike this commercial because it actually worked to the extent that my nine year old asked if we could have KFC for dinner because it would save money. Since I can consistently feed our brood on less than $10 a meal, I don’t like the message being sent that $10 a meal is acceptable.

Maybe it is because I challenge anyone to feed a family of four at Kentucky Fried Chicken for less than $10 unless two of those people are preschoolers. In fairness, the family in the commercial is only three people, one adult and two children, but that makes it even worse. If I can feed our family, including one adult male who eats more than should be humanly possible without turning into a big tub-o-lard (and really, he doesn’t gain weight - the unfairness of it all), an almost 13 year old who is turning into that teenaged eating machine we’ve all heard of, a nine year old, a toddler and myself for under $10, then feeding this size 8 woman in the commercial and her two small children is not that impressive.

But ultimately, what gets my goat is that it’s an incredibly stupid comparison and that means that KFC thinks we’re stupid enough not to notice.

I’m not going to subject this commercial to a huge amount of investigative objectivity and scrutiny, because frankly, it doesn’t need it. I think we’re fine going with some general assumptions, don’t you?

• “Seven pieces of chicken is HOW much?” So asks the incredulous little girl of the store butcher. Sweetheart, you’re not asking the right questions. Your 7 piece value meal will include both white meat and dark meat, so you need to be specific about which pieces you want, and frankly, the butcher should send you over to the whole chickens in the first place. They’re much less expensive.
• Flour. They buy a 5 pound bag of flour. I don’t think you can use a whole bag of flour when you make seven pieces of fried chicken. That would be some incredibly crispy chicken.
• The little boy gets handed the worst line in the commercial, because he has to ask the hapless stock boy if he has the secret herbs and spices. He doesn’t, of course, because they’re secret, but it didn’t take me long to find a recipe online that probably isn’t too far off:

1 tablespoon rosemary
1 tablespoon oregano leaves
1 tablespoon powdered sage
1 teaspoon powdered ginger
1 teaspoon marjoram
1 1/2 teaspoons thyme
3 tablespoons packed brown sugar
3 tablespoons dry minced parsley
1 teaspoon pepper
1 tablespoon paprika
2 tablespoons garlic salt
2 tablespoons onion salt
2 tablespoons chicken bouillon powder (or 4 cubes, mashed)
1 package Lipton tomato Cup-a-Soup mix

Place all ingredients in blender and pulse for 3-4 minutes to pulverize, or rub through a fine strainer. Store in an airtight container so the spices will not lose their potency. Makes about 3/4 cup.

Add 1 ounce mix to every one cup of flour for coating chicken.

Holy grocery receipts, Batman! I’m guessing buying even the smallest container you can find of all of the spice ingredients would be at least $45 - challenge over, KFC wins!

Of course, they don’t really dwell on the detail that if you actually did buy all of the ingredients for the secret spice recipe, you’d have enough to make probably a month’s worth of fried chicken. Details, schmetails.

• The narrator then confirms for us that you can’t cook a 7 piece dinner with a side and four biscuits for less than $10, but lookie here, KFC to the rescue with that meal for $9.99, pre-tax, no beverages, and no pesky leftover ingredients in your kitchen that you could use to make other meals at home.

This commercial reminds me of double talking politicians. It isn’t exactly LYING since you couldn’t possibly make that meal for $10 if you didn’t have any of the ingredients on hand, but it’s certainly not telling the truth, is it?

I’m so tired of the bailout mess already, aren’t you?

So check this out. The Treasury is hiring people to manage the bailout - experts in the financial field, naturally. Applicants are supposed to inform the Treasury Department if they have any conflicts of interest that would compromise their ability to carry out their duties.

From the Associated Press via MSN Money, the Treasury Department is hiring for three essential types of positions:

• Management of mortgage securities once the government has purchased them.
• Management of loans.
• A “custodian” for the program to run auctions, handle accounting and attend to other duties.

All sensible. They’re not going to hire individuals, these would be functions that are contracted out to companies and paid for by you, Joe the American. The problem is, the companies that will inevitably be awarded these contracts are probably part of the problem in the first place. That, my dears, is a conflict of interest because it is almost impossible to believe that they would not have at least a desire to make sure their own assets are taken care of first.

The Treasury Department has a solution, though. They have said that any company that believes it might have a conflict of interest has to tell them and has to also write a nice essay on how they will make sure to not let it become a problem.

The law allows the department to offer contracts that are not governed by federal procurement regulations, but requires it to draw up conflict-of-interest guidelines.

Interim guidelines released last week require applicants to disclose “any actual or potential conflicts of interest” that may come into play. Applicants must submit a plan to show how they will “avoid, mitigate or neutralize” such conflicts.

“Not governed by federal procurement regulations” means unregulated awarding of contracts to companies who will get to spend $700 billion of your money. Chew on that while you consider that Henry Paulson used to be the CEO of Goldman Sachs.

Treasury says of course that they won’t only rely on the good word of the companies:

Department spokeswoman Jennifer Zuccarelli said the government will do more than simply require the companies to identify potential conflicts. “While we ask the firms to independently identify their conflicts, Treasury then independently identifies potential conflicts ourselves,” she said.

If you’re going to do that, why not put the whole process through regular channels?

The politicos weigh in:

“I am very concerned that they fail to meet the tough conflict-of-interest-standard directed by Congress in the legislation,” Pelosi said in an Oct. 7 letter to Treasury Secretary Henry Paulson. “Under these guidelines, companies that benefit from the Troubled Assets Relief Program may also be eligible to offer asset management or other contractor services if Treasury personnel approve a mitigation plan.”

The second-ranking House Republican, Rep. Roy Blunt of Missouri, said the bailout legislation rushed through Congress provides for much oversight and transparency. “Whatever the secretary does, the American people are going to get a chance to look at it,” he said in a television interview Sunday.

Pelosi raises a good point, and Blunt raises a ridiculous one. The American people may well get a chance to look at it, but will they understand what it says after it’s been legalized into oblivion?

In addition to the concern over conflicts, [Laura] Peterson [senior policy analyst for Taxpayers for Common Sense] said the government also has a generally poor track record when it comes to hiring private contractors quickly.

“There’s been lots of missteps in the past,” she said. “Iraq and Katrina are two very recent examples.”

Government auditors have issued a number of reports critical of contracting procedures during the Iraq war and in the aftermath of Hurricane Katrina.

I’m currently using my commute time to listen to an interesting book called The Shock Doctrine: The Rise of Disaster Capitalism. This whole bailout contracting article from MSN could be cut and pasted into that book and fit in just perfectly. I won’t go into a full review of the book, you can go to the link for that, but the upshot in this scenario and others that Naomi Klein recounts (with much bias against the Bush Administration, I should mention in the interest of disclosure) is … what sense, exactly, does it make to give a function to the federal government if they simply turn around and contract it back out to the private sector? Your tax dollars are going to fund, after a huge mismanagement of their assets in the first place, the contracting of the banking industry to “fix” the problem?

Can I SCREAM now?

What It Is:

Investments that have specific interest rates, such as bonds.

What It Means:

In this context, “fixed income” does not mean what you would think if someone said, “I live on a fixed income.” In other words, they’re not investments primarily sold to senior citizens living on Social Security.

A fixed income security simply means that the amount that the investor will get paid remains the same for the life of the investment. A bank CD is a fixed income security, as are most bonds. In contrast, a money market account at your bank is not a fixed income security because the rate of return changes often, sometimes daily. Stocks and mutual funds are not fixed income securities, since their value changes constantly.

This weekend as my husband and I wandered into Lowe’s to look for chainsaws, we walked past the huge holiday decoration display. We didn’t venture down the aisles because the toddler would have lost his mind entirely but some of the bigger objects were impossible to miss. Let me just say one thing here … I can’t stand those huge nylon blow-up yard decorations. Absolutely hate them. For those who live in my town who are reading this post and have one (or two, or ten), I’m sorry - to each his or her own, they just aren’t my cup of inflatable tea.

Anyway, off to the side of the decoration area was a pathetic little display of Halloween stuff marked 50% off, which got me to thinking, not for the first time, why do we pay full price for holiday decorations? Ever? We know that on November 1st, everything Halloween related will probably be marked down at least 75%, and ditto the day after Thanksgiving or Christmas. Why not wait until those times to get your decorations, if you need them at all? I mean really - you’re going to keep them for more than a year I hope, so why do you need to have the current year decorations?

Can someone explain this to me? Am I just a huge grinch?

If you have an underappreciated, underloved, desperately lonely blog, Chuck Westbrook has an idea. He wants to share the love and help the “little guys” get some readers. I think it’s a cool idea so I’m going to participate. If you’re interested, check out his post here and get involved as well.

Note: I’m not even going to try to avoid politics in the next week and a half. It’s impossible. Everything about the economy is coming down to these two guys who won’t be able to do most of the stuff they’re going to say they’re going to do, but hey, at least it gets some discussion going.

One of the biggest issues in this election is taxes. In an economy burdened by dropping home prices, tight credit, an expensive war, and government bailouts, citizens are justifiably concerned about how much of their money will be scooped up by the government.

Both candidates have similar stated goals (grow the economy, middle class relief, get out of this crisis) but they have very different ideas about how to reach those goals from an income tax standpoint. They also both say that the other guy has got it completely wrong. What’s a poor voter to do?

Yesterday over at MoneyNing, there was a nice little table posted that broke down what taxpayers at different income levels would pay under each candidate’s proposed plan. I went poking around online and found a similar table from CNN/Money in June of this year, which is reproduced below.

Now, this chart isn’t perfect because the only point at which the numbers in that chart are valid is when you’re at the very top dollar within the given range. That’s because it’s a representation of the marginal tax rates, which we’ve discussed before. It’s a stairstep system, remember. Still, it’s a good representation of the real impact of each candidate’s plan would be as far as federal income tax burdens.

The single most important thing to remember about both of these plans is that they apply to adjusted income. The tax rates in both candidates’ plans do not apply to your family’s gross income. If your combined household salary is $55,000 (about the national average), you are most likely not going to pay taxes on that amount. Personal deductions, deductions for children, mortgage interest, pre-tax contributions to retirement plans or flex spending accounts - all of these adjustments (and many more) lower your final adjusted income and therefore lower the amount of taxable income.

That’s important to keep in mind because the fundamental debate over taxes comes down to whether or not raising taxes is a disincentive to ambition. The basic argument is that if we have a progressive tax (higher incomes are taxed more), people will simply choose to not take that next promotion or start that business. That is, in effect, the whole Joe the Plumber debate, right?

According to this chart, McCain’s statement in New Hampshire recently that he would not raise taxes for anyone is apparently true. Unfortunately for him, that statement doesn’t take into account that by most polling numbers, he will be facing a strong Democratic majority in Congress if he wins.  What he says he wants to do and what he would actually have the ability to do, therefore, are two very, very different things. His plan can be read here.

Obama’s plan is to not raise taxes on anyone until you see salaries of over $250,000 and according to this graph, this also appears to be true. The slight increase given in the table comes from the current tax tables actually starting below $250,000. Still, it’s interesting to note that even up until a household hits $600,000, Obama’s not exactly digging deep into pockets.

Bearing all of this in mind, let’s ponder for a moment.

If we have Joe the Plumber who thinks Obama of Locksley is going to take away his American Dream, what should Joe do?

One course of action would be to simply forget about buying that business and stay an employee of a plumbing firm for the rest of his life. That is what critics of Obama’s plan say will essentially happen - hardworking ambitious Americans will simply give up the dream and stay worker bees forever. I don’t think it’s true in general because I have faith in the innate drive people have to grow, but I’m sure there are some who will decide that it’s not worth the hassle.

Another plan would be to buy that business and work as a sole proprietor until he hits that $250,000 a year magic number (ADJUSTED, remember) and then take the rest of the year off. Also not exactly a shining example of American gung-ho drive and probably quite impossible to do as a single person plumber, but also not an irrational plan if he thinks he can pull it off.

But there’s a third option, and that’s the one that seems to be getting lost in the shuffle. The third option is that Joe buys his plumbing business and then uses all of the tax advantages he can to keep his taxable income below $250,000, and those resources are considerable. Wages to hire employees, equipment, vans, trips to see vendors, trade show expenses, sponsorships for local charity events - the list goes on and on. By taking this path, Joe not only reduces his taxable income, he also provides jobs and helps his community and charities of his choice.

McCain also believes that Joe should invest in his business and community, but he believes that the best way to accomplish that is to simply lower Joe’s taxes and let him choose where he’ll invest or donate. I don’t disagree with the idealism of this belief at all. In the long run, it is beneficial for Joe to invest in his community - more jobs, better incomes, less people living in poverty all mean there are more people who can build out their basements and install a bathroom or upgrade their current bathrooms and kitchens. The question comes down to whether or not individuals will work towards a long term goal as a trade off for short term luxury without an incentive (or disincentive, as the case may be) to do so. My personal belief is that when we don’t spread at least a smidgen of the wealth around, what we end up with is a growing gap between the rich and the poor, which ultimately is unsustainable. Look around.

OK, just one more issue, as this post has gone on way too long already.

When taxes get cut in one place without a cut in spending, we have a problem. One only has to look at the debt clock running out of numbers to see that the government has run amok. I’m here to tell you that if we see a large drop in personal income taxes and corporate income taxes at the same time, you WILL see your property taxes go up, your sales taxes go up, your local income taxes go up, and (if you have them in the first place) your state income taxes go up. You will see more bond referendums in your elections in order to pay for roads, schools. We all know this at a common sense level, because we know that if our own personal incomes go down, our spending has to go down as well. Somehow, though, as a society we choose to believe that when it comes to government revenue and spending, those rules don’t apply. Silly Americans, why do we do that?

This post is featured in the Carnival of Personal Finance - Financial Armageddon Edition! at Master Your Card. Please drop by over there to for some other great posts.