Obama’s Tax Obsession

See: Explaining Obama’s tax-hike obsession

But Obama’s tax obsession becomes understandable when you realize the long game he’s playing: Big Taxes to fund Big Government. Decade after decade. See, it’s an almost universal belief among left-of-center journalists, economists, policymakers and politicians that Americans must pay higher taxes in coming years to cover the medical expenses of its aging population – not to mention all sorts of brand new social spending and green “investment.” Dramatically higher taxes. On everybody. And if we have a debt crisis, maybe those tax increases come sooner rather than later.

And why not? Look at how high taxes and high spending have made Greece such an economic giant.

See Also: Why The Democratic Party Is Doomed

This week’s fight over raising the federal debt limit exposes a key weakness in the warfare-welfare state that has bestowed power onto the Democratic Party: Without an ever-growing share of the economy, it dies. Every vital element of the Democrats’ coalition — unions, government workers, government contractors, “entitlement” consumers — requires constant increases in payments, grants and consulting contracts. Without those payments, they don’t sign checks to re-elect Democrats.

Are we having fun yet?

The Pending Crisis And Growing Analogies To Greece

From the “Are we having fun yet?” files comes this bit of happy commentary from Former Federal Reserve Chairman Alan Greenspan.

See: Greenspan Says U.S. May Soon Reach Borrowing Limit

“The federal government is currently saddled with commitments for the next three decades that it will be unable to meet in real terms,” Greenspan said. The “very severity of the pending crisis and growing analogies to Greece set the stage for a serious response.”

Greece?

That will suck.

Bitter Resentments And The Death Of The Euro.

All the happy talk in the world from bloviating socialist economist can not stem the tide that is turning against the Euro.

In Germany, the Euro is becoming the butt of bad jokes that are funny only because of the truth that they tell.

See: Berliners dream of return to deutschmark

Cabaret artists have been making jokes about wheelbarrows of notes, or telling the one about the German and the Greek who go out to eat, the German choosing the cheapest item on the menu, the Greek gorging on a range of dishes, before the waiter brings the German the bill at the end. The audience doubles over. But the reality is stomach-churning.

"We are building up an almighty bubble of debt which is going to burst in one great bang," says Hans-Werner Sinn, chief of Ifo, one of the country's leading economic thinktanks.

That means a bitter round of budget cuts, deeper than any seen since 1945. Every area of German life is expected to take a hit, from education to welfare benefits, swimming pools to autobahns. Far-fetched as talk of the return of the mark seems, the more it is talked about, the more it is likely to become popular, despite Merkel's insistence that if the euro fails, so will Europe.

Without Germany, the Euro is nothing. The Germans know it. All of Europe knows it. The resentment in Germany is real. Resentment like this will kill the Euro.

Europe – Retiring On Empty?

See: Crisis Imperils Liberal Benefits Long Expected by Europeans

In Rome, Aldo Cimaglia is 52 and teaches photography, and he is deeply pessimistic about his pension. “It’s going to go belly-up because no one will be around to fill the pension coffers,” he said. “It’s not just me; this country has no future.”

Changes have now become urgent. Europe’s population is aging quickly as birthrates decline. Unemployment has risen as traditional industries have shifted to Asia. And the region lacks competitiveness in world markets.

According to the European Commission, by 2050 the percentage of Europeans older than 65 will nearly double. In the 1950s there were seven workers for every retiree in advanced economies. By 2050, the ratio in the European Union will drop to 1.3 to 1.

1.3 workers to every 1 retiree. That is not workable. The poor workers paying into the system will have to be taxed at over half their gross just to keep the system going. They won't do it. They will quit. Quiting will easily look like the best option. “Better,” the workers will rationalize, “to go on the dole then have to be the sucker that pays for it.”

European politicians knew that this day was coming. They knew that their welfare state was based on Ponzi scheme economics. It was the reason that they opened their borders to immigrants from Muslim nations. They had hoped that these new immigrants would help them maintain a high worker to retiree ratio. They had also hoped that the new immigrants would feel invested in the success of Europe and in the welfare of those that they would be supporting in retirement. (Can we say - Epic Fail!)

What then for Europe?

Can they find a way out of this catastrophe?

It may be too late for them.

But what about for us?

Is our social welfare system really that much better off than the European's? Or are we seeing in Europe, a harbinger of our own doom?

The Next Big Bailouts - State Pension Plans

Hold on to your wallets.

See: Will State Pension Funds Need a $1 Trillion Bailout?

The federal government could face another economic disaster and massive bailouts within a decade if it doesn't force state pension funds to revamp their operations soon, an economist says.

Even if they meet "aggressive" 8 percent growth targets, several states will see the reserves in their pension funds dry up by the end of 2020, with many more running out of cash within another decade, says Joshua Rauh, an economist at Northwestern University's Kellogg School of Management. Broke states are likely to go begging to the federal government, which would probably have to bail them out to the tune of more than $1 trillion, he argues in a new paper.

It is important to keep in mind how big of a deal this is. The beneficiaries of these state pension funds are very powerful politically. These are government employees. They own the government. It is their play-toy. (Government employees are the most powerful lobby in any government.)

You will be told to just shut up and pay.

More debt. More taxes. Are we having fun yet?

See also: State Pensions Face $1 Trillion Shortfall

Greece - Economic Liberalization And Removing The State From The Market Place

See: The Bitter Pills in the Plan to Rescue Greece

Another reform high on the list is removing the state from the marketplace in crucial sectors like health care, transportation and energy and allowing private investment. Economists say that the liberalization of trucking routes — where a trucking license can cost up to $90,000 — and the health care industry would help bring down prices in these areas, which are among the highest in Europe.

Note how in this paragraph, "liberalization" refers to "removing the state from the marketplace."

Greece is in such bad shape, they are considering taking two steps back in order to take one step forward.

Not to worry though. One of the proposals is to have Greece increase its Value Added Tax (VAT) up to 25%. That is a high enough rake off of the private sector to insure that no real economic recovery will come of anything inadvertently positive that could be imposed.

There is no easy solution for Greece or for any other nation that is suffering from the all to predictable results of running out of other peoples money to spend. You can't spend what you don't have. Resorting to debt will only make the problem bigger. Resorting to raising taxes will only cripple that part of the economy that creates wealth. Freeing the economy from government regulation and taxation could work but it can not rescue welfare-state socialism from its all to predictable and inevitibly destructive results.

Bottem line, Socialism Sucks.