The Greek financial situation--why should we care?

I've been ignoring the Greek financial crisis. After all, it's Greece and it's financial. Who cares? My eyes glaze over. Then I read an article by Larry Kudlow, a financial expert, who always writes clearly and connects the financial world with my world. I edited some of the article to keep it short. So, here it is. Notice the second half where he connects the Greek problem to ours here in the United States. We need to learn from this mess.

"The ink was barely dry on the $150 billion European Union/International Monetary Fund bailout of Greece, when world stock markets tanked. Financial analysts are concerned that the bailout money won't be enough to cover Greece's borrowing needs from its out-of-control budget deficit.
Additionally, there are new worries that the Greek debt contagion will spread to Spain and elsewhere in Europe. The looming specter of debt default and deflation is heavy in the air for investors worldwide . . .

Margaret Thatcher used her budget ax [to get out of Britain's similar situation years ago]. That's something neither Greece nor Spain appears capable of implementing in a sustained way. Thatcher also reminded us that the problem with socialist governments is that they finally run out of other people's cash.

What's more, while Greece and Spain have moderate 30 percent business tax rates, lower than rates in the U.S., their combined personal and VAT tax rates come to about 60 percent. Team Obama take note: These are anti-growth tax policies.

Indeed, the debt follies of Europe and the bankruptcy of the European entitlement state should be a lesson for Barack Obama's Washington, where overspending and borrowing have reached absurdly grand heights. As a share of gross domestic product, U.S. debt is projected to move toward 100 percent in the wake of the new Obamacare entitlements. That's near the 125 percent debt ratio of Greece.

And just like Greece, U.S. government union-worker benefits, which run 50 percent above private-sector equivalents, are bankrupting federal, state and local budgets. They're also spawning a massive voter revolt against big-government debt that will bear fruit this November in the tea-party midterm elections . . .

Call it a spend-and-borrow debt mess. A pox on all your houses, at least until financial-market and voter discipline force the dimwitted politicians to radically change course."


Let's hope we can learn from this, make difficult choices, vote in people who share our concerns, and follow through by sticking with a plan to restore our finances. Our children will thank us for it.

Watch your wallet

Last fall I watched a poised, assured Barack Obama promise the vast majority of the American people their taxes wouldn't go up if he was elected (just the evil rich would pay). After listening to all his proposals for "change" and considering the vast sums necessary to implement them, I was amazed that he could make such promises about keeping our taxes where they were. Now we see the truth coming out. Check this recent dispatch from the Wall Street Journal regarding your future taxes needed to pay for all the plans Obama has in the works.

If President Obama has his way, you will soon have to submit to government rationing of medical care and drive a tiny car. But at least your taxes won't go up if you make under $250,000 a year, right?
Oh, you poor naive soul. The Associated Press delivers the bad news in a dispatch by Stephen Ohlemacher titled "PROMISES, PROMISES: Obama's Tax Pledge Unrealistic":
Obama made a firm tax pledge during the presidential campaign, repeating it numerous times in the weeks and months leading up to Election Day: no tax increases for individuals making less than $200,000 a year or couples making less than $250,000.
"Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes," Obama told a crowd in Dover, N.H., last year.
But less than a month after taking office, Obama signed an expansion of child health care financed by 62-cent tax increase on each pack of cigarettes.
Obama also signed an anti-smoking bill in June that grants authority to the Food and Drug Administration to regulate tobacco. To pay for the new program, a fee is being imposed on the industry--and presumably passed on to consumers--estimated to generate more than $5 billion over the next decade.
While not directly increasing taxes, a House-passed version of Obama's plan to reduce greenhouse gases blamed for causing global warming would similarly increase American families' home energy bills by $175 a year on average, according to the Congressional Budget Office.
Obama hasn't offered a detailed plan to fix health care, though his aides are working with lawmakers as they craft proposals. Obama included only a down payment for health care reform in the budget proposal he unveiled this spring.
He proposed limiting itemized tax deductions for individuals making more than $200,000 and couples making more than $250,000. The plan, which faces stiff opposition in Congress, would limit deductions for mortgage insurance, state and local taxes and charitable contributions, raising about $270 billion over the next decade.
Obama also proposed a series of business tax increases and accounting changes that would raise an additional $30 billion.
If only someone had warned us back when Obama was running for president! Well, actually, John McCain and the Republicans did issue such warnings--but the AP, in a series of "fact check" articles, declared that the warnings were false and implied that they were lies.