Spend more money than you have, and all you’re likely to get is the single most effective way to go broke in a hurry. For example, hardly a day goes by without California’s governor proclaiming that the state’s fiscal mess is worse than previously thought.
Official estimates of the projected deficit continue to mount.
In the 2009-2010 fiscal year, the tally amounted to more than $40 billion, and the response in the state Capitol was to raise taxes.
Sen. John McCain, R-Ariz., a former Navy officer, is credited with saying, “Congress is now spending money like a drunken sailor, and I’ve never known a sailor, drunk or sober, with the imagination that this Congress has.”
As Groucho Marx famously said, “Those are my principles. If you don’t like them, I have others.”
The Heritage Foundation noted: “The Obama administration finally seems to have noticed that all of their policy announcements so far have only fueled economic despair, not alleviated it. So President Barack Obama took the rare opportunity … of offering some investment advice to the American people: ‘What you’re now seeing is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal, if you’ve got a long-term perspective on it.’ In other words, Obama wants Americans to, Buy! Buy! Buy!
“But before you rush out and follow President Obama’s investment advice, consider this: Last week, Obama’s Treasury Department announced that the government would take a 36 percent stake in Citigroup by converting $25 billion of its preferred shares into common stock. The Treasury paid $3.25 a share for the stock last week, which after a weekend’s worth of government nationalization rumors fell to $1.20 by Monday.
“So to recap, President Obama managed to lose billions of taxpayer-invested dollars in just a few days. But that’s not even the worst part. So far the government has poured $50 billion into Citigroup. Meanwhile, Citi’s market capitalization is only $6.54 billion.
“In other words, taxpayers could have bought Citi eight times over already for all the money they have thrown at it.
“We are in no way suggesting that President Obama should have or should now nationalize Citigroup. What the Citi story does highlight, though, are the perils and conflicts that make massive and intrusive government intervention in the economy a disaster for all involved.
“Congress has no idea how to run a bank, and that is why all the political posturing in the House and Senate is completely undermining the stabilization of the banking sector. Meanwhile, the private sector has no incentive to create jobs since they are facing a $1.3 trillion tax hike in the coming decade. Then there is the $646 billion tax hike every American will see in their energy bills from President Obama’s promised carbon capping plans. It is no wonder that nobody is taking Obama’s investment advice.”
The 362,000-member National Taxpayers Union has compiled a guide to the 10 biggest tax issues affecting Americans’ wallets in the upcoming Congress, and “the items are looking much more naughty than nice.”
“The arrival of a president who’s seeking more revenues and a Congress whose majority seems willing to oblige him could mean the new year won’t be a very happy one for taxpayers,” said NTU director of Government Affairs Kristina Rasmussen, who authored the issue brief. “These 10 tax hikes all have a strong likelihood of being considered at some point in 2009 or 2010 — and at least one of them might be among the first bills considered in the opening weeks of the 111th Congress.”
NTU’s Issue Brief No. 170, “New Year, New Fears: Ten Tax-Hike Threats in the 111th Congress,” outlines the following major tax threats:
» Repeal/expiration of the 2001 and 2003 tax cuts
» Payroll tax increases
» Smaller Alternative Minimum Tax patches
» Imposition of “windfall profits” energy taxes
» Modification of health-care tax treatment
» Increase in the federal excise tax on cigarettes
» Increase in the federal excise tax on gasoline
» Approval of the streamlined sales tax project
» Repeal of tax protections for retirement savings
» Attack on earnings deferral and international tax competition
“These potential tax hikes likely will undergo mutations as they move through the legislative process,” Rasmussen said. “Without a doubt, taxpayers need to be on their guard next year … if they hope to keep the government from digging deeper into their pockets.”
— Harris Sherline is a retired CPA and former chairman and CEO of Santa Ynez Valley Hospital. Click here to read previous columns. The opinions expressed are his own.