Kat's Arbitrary Thought Processes

I will not trade tomorrow’s freedoms for prosperity today.

This is a great follow up video to the one I posted a few days ago.  America, take note who covered for these companies, and who it was that was trying to blow the whistle years ago.

[youtube]http://www.youtube.com/watch?v=_MGT_cSi7Rs[/youtube]

Even my 5 year old understands that this “Bailout” is a bad idea. My FIVE year old!  When explaining this to my kids this morning, I asked them, where do you think the government will get the money for this?  My 5 year old Diva said, “From us.”

Let me break this down…  Here is what happened:

Way back under President Jimmy Carter, The Community Reinvestment Act was enacted that forced banks to offer sub-prime mortgages – essentially mortgages to people with bad credit and little hope of actually paying them off.  This was made even worse under the Clinton Administration.  In order to avoid the losses, banks would sell these bad, risky mortgages to Fannie May & Freddie Mac.  The FMs then sold packages of mortgage deals to investors, claiming that they were “riskless.”

When people defaulted on the loans, the investors had reason to worry.  Suddenly their investment was gone.  But where did the money go?  Into the pockets of Democrats like Chris Dodd and Barak Obama.  Franklin Raines managed to embezzle a couple of million from Fannie May before he left, and now he is advising Obama on all this!  Unreal.

Republicans tried to blow the whistle on all this.  as far back as 2003 the Bush Administration was calling for reform at Fannie & Freddie. McCain pushed for reform in 2005.  There are numerous other attempts by republicans to stop this from happening, but the Democrats stopped them every time.  Why?  Follow the money.

Meanwhile, the same people in the government who screwed this up are now the ones telling us that we have to throw huge wads of taxpayer cash at this and fix it. Ex-squeeze me, baking powder?  I don’t think so.

How’s this for a solution – Cut Taxes.  All of them.  Cut business tax, eliminate capitol gains tax, cut income tax, cut them all, and none of this, expires in 3 years crap, Cut them permanently.

Why would that work?  Economics 101, you ready?  It would keep the money in the hands of the people. Seriously.  Government types always fear that cutting tax mean they will have less money, but they are wrong!  If you cut the income tax, I can keep more of my money.  If I have more money, I can buy more things like, say, toys for my kids.  If alot of us have more money, and buy more toys, then the toy company has an increase in demand. That means they will have to hire new people to make the toys so they can keep the supply up with the demand.

Now, lets say we cut the tax burden on businesses.  Now those business get to keep more of their profit.  They get to put that money back into the business, and grow, which means more revenue. Growth means hiring more people.  Hiring more people means more people paying income tax! Growth can also mean giving raises, which means more people in the higher tax brackets.  Besides, 10% of 50.00$ is more then 30% of 10.00$.  So, charge the business of America a lower tax rate, allow for growth which leads to more tax, not less, as well as more employment, which equals more income tax revenue!

But now, the dreaded Capitol Gains tax.  Many people don’t understand this.  I don’t think Barak Obama understands this.  He keeps saying he will cut the capitol gains rate for small business, but small business does’t pay capitol gains, small business pays income tax on a Schedule C.  Capitol Gains is paid on money you would make if you play the stock market, more specifically, it’s money made selling stocks and bonds.  So if you buy a stock, no tax, but if you sell it for a profit, you will pay the tax.  So why should we cut this tax altogether?  Because investing in stocks and bonds helps our nation’s economy, and helps our nation grow.  More people would be willing to play the market if they weren’t concerned with the tax.

Yesterday, the market dropped 777 points.  Basically, that means alot of people were selling, but not alot were buying.  It’s the old supply and demand in effect again.  Big supply + low demand = lower prices.    But, if we eliminate the capitol gains tax…  Well, people wouldn’t worry about paying high taxes if they made a profit, and more people would jump in.   Small supply + big demand = higher prices.  Higher DOW, NASDAQ, S&P means better economy, more value to each stock, better chance of turning a profit, retirment accounts would be worth more, it’s a good thing!

But to just throw more money into a corrupt and failing system? That’s the very definition of insanity – doing the same thing over and over again and expecting a different result.  This “Bailout” is not the answer.  Tax cuts would be a great place to start.  Instead of handing the American people’s money over to a bunch of banks and government agencies that failed us the first time, let us keep the money and invest it how we see fit, be it a home, a car, or a big screen tv.