Businesses Begin To Walk Down John Galt’s Path

George Santayana said, “Those who cannot learn from history are doomed to repeat it.” Whether that is the problem with the Obama Administration is moot. An alternative hypothesis says that they know what they are doing and know that it will destroy the country as we know it.

Regardless of which hypothesis is true does not matter to businessmen. They focus only on the effects of policies not on the motivations behind them. And they are almost universal in their judgment regarding the harm that Obama’s economic policies will do. A recent post indicated how business was voting after learning of the election outcome. Simply stated, they have withdrawn into their figurative bunkers. They are trying to survive, not grow. They are laying off people and cancelling investment. They are hoarding cash. The reaction to the election was especially dramatic because businesses held off making cutbacks in the hope that Romney would return rationality to economic policy. His defeat dashed such hopes and businesses adjusted to the harsh reality of another four barren years.

Anyone who understands business or economics knows there is a train-wreck ahead. It is a wreck of the magnitude not seen since the 1930s. Given such expectations, there can be no recovery and may very well be a Depression greater than what was termed The Great Depression.

The article below is more evidence of the fear that American business has regarding the future. This fear exceeds the normal concern over an economic recovery and extends to the very survivability of the economy and nation. Prepare for matters to get worse, likely much worse.

232 Business Leaders Urge Obama, Congress to Reform Entitlements

Bronson Stocking

November 19, 2012 at 12:15 pm

letter from 232 multi-industry organizations, in conjunction with the U.S. Chamber of Commerce, is calling on President Obama and Congress to restructure the nation’s entitlement programs and put them on a path toward financial sustainability.

These organizations recognize that the country’s rising debt poses grave economic risks. In the letter, they cite that near the end of 2008, debt held by the public was around 40 percent of gross domestic product (GDP); this is close to the historical average of about 37 percent of GDP. According to the Congressional Budget Office, though, debt held by the public in 2012 had risen to 73 percent of GDP. The future looks worse still, as debt is projected to skyrocket to over 100 percent of GDP in less than 10 years.

Runaway spending on Medicare, Medicaid, and Social Security will drive federal debt to unsustainable levels over the next few decades. Total national debt consists of publicly held debt and intergovernmental debt. Intergovernmental debt is the amount that the government owes to specific programs or agencies, such as the Social Security Trust Fund. Publicly held debt is more relevant to credit markets.his year,federal government spending outlays totaled $3.6 trillion, while total revenue fell short at about $2.5 trillion. Mandatory spending—on Medicare, Medicaid, Social Security, and other social programs—accounted for 62 percent of total spending in 2012, and it is expected to rise to 67 percent of spending over the next 10 years. The letter links the rising costs of entitlement programs to changing demographics, noting that “unlike other aspects of the entitlement debates, demographics are facts.”

With an aging baby-boomer population, the worker-to-beneficiary ratio forMedicare will continue to fall. In 1965, at the start of the program, there were 4.6 workers to every Medicare beneficiary. But, in 2011, that number had fallen to 3.3 workers per Medicare beneficiary, and it is projected to fall further, plummeting to just 2.3 workers per beneficiary by 2030. This means fewer and fewer workers will be paying for the benefits of Medicare recipients. Combining that fact with rising health care costs, it becomes clear that Medicare as it is currently structured is unsustainable.

Social Security, already the nation’s largest spending program, will become only more expensive as the baby-boom generation retires. It is no secret that Americans are living longer and thus staying in retirement longer. In 1965, a 65 year-old retiree could expect to live 14.7 years longer, but in 2006, that number had risen to 18.6 years. Social Security is already running permanent deficits, and its finances will worsen without reforms.

As the letter states, these indisputable demographics make it quite clear that Congress and the President have a job to do: fundamentally restructure the entitlement programs to ensure they are a true safety net for Americans today, as well as for future generations of Americans.

The online version of the letter is available here, including the full list of signatories.

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4 Comments

  1. Not just American businesses, but the US expat is shrugging when it comes to US citizenship and tax filing requirements. US Treasury reports of expatriations are well below what we expats know to be the case. The US Treasury reported 1780 in 2011: the actual number may be many times that; I assume about 10,000, as the consulates are booked solid with renunciation appointments. The Bern Consulate added two staff to handle renunciations. A Canadian asked for a second appointment in March 2012 at the Vancouver Consulate. After many months of just flat ignoring his requests, the Consulate gave him a second date in June of 2013!

    One of the writers at the Isaac Brock Society reported on her own blog that she had to pay $9000 in taxes: (1) Her French unemployment benefits are not considered “earned income” and therefore did not qualify for the Foreign Earned Income Exemption. (2) She and her husband sold a rental property in France to which the United States assigned her capital gains taxes. This woman earned not a single penny in the United States, and it is not as though France is a tax free zone! This story makes me angry. She WAS a loyal democrat, but I think she’s decided to relinquish her US citizenship.

    The level of incompetence of the United States government in these matters is FUBAR. The Canadian authorities were not happy with the crackdown, and the IRS said, oh, don’t worry, if the person owes no taxes, we won’t assign any penalties. One woman in Vancouver trying to come into compliance after many years of ignorance regarding the IRS expectations towards citizens abroad, received two bills: one for $11,000 in penalties for one year and another for $56,000 for another year. After paying a professional to write her “reasonable cause” letter, the IRS waived the penalty. She owed no taxes but they claimed that she had incorrectly filled out a form (prob. 3520). One of our bloggers calls the United States “FORM Nation” because they can now assess thousands upon thousands of fines for either not submitting a particular form, or form making errors on the form. No underlying tax or criminal issues need apply to the case, but the IRS can attack the filer on the procedure alone. Form Nation indeed. I too received a bill for over $3000 because I did not fill out the FEIE (Form 2555) to their satisfaction. They could not establish that I was really resident in Canada without that I dot the “i”s and cross the “t”s on the form. Finally, after the fourth attempt to send them the correctly filled out form, they sent me a zero bill.

    So frankly, the IRS and the US Ambassador Jacobson to Canada have misrepresented their intentions towards citizens abroad. (Ambassador Jacobson said to Canada: “We are not unreasonable. We are not unsympathetic. We are not irresponsible”–as they continue to abuse expats with threats of 300% FBAR fines! Jacobson said they weren’t after grandma’s savings accounts. But that is just a “fatca” lie. The US has its expat grandmothers in tears worrying over their retirement accounts being revealed to the IRS as a result of the FATCA legislation which I wrote about in an earlier post on your pages, “FATCA: a ticking time bomb for the economy”.

    What really angers the US expat is that the 49% living in the United States pay nothing while receiving all kinds of benefits; but we receive only one benefit for what we pay: the right to visit the United States to conduct our affairs or to visit our families–the IRS will soon be able to refuse the renewal of passports to anyone not in compliance. But unlike the 49%, the IRS requires that we pay: if not the outrageous extra territorial tax claims (as in my example of the lady in France) then its consists of these abusive fines which later they will say, “never mind” because they were never warranted in the first place.

  2. In my own way, I went “Galt” in 2008. I suspect that most “businessmen” that hung in there until now mostly represent those who are now “going Galt” because: (A) they have no choice (i.e., economics now dictates it), or (B) by choice (i.e., truly going “Galt”). At this late stage I would guess that, by definition, most are in the former group. That is, most just simply must shut down due to economics. I would like to think most do so by choice, but I doubt it, as hanging in there this long indicates that most are part of the problem not the solution. In order to be part of the proactive solution at some point you must proactively disengage from that which is killing you (whether quickly or slowly doing so) and your business/economic activity. At least in part it is because it has taken most this long to disengage that the problem is so severe. It is tautological but still insightful to point out that the sooner people who are being targeted by the cultural Marxists for destruction, re-education, or outright destruction stop providing resources to their tormentors the better our chances are of digging out of this mess, while the longer it takes “businessmen”, for example, to “go Galt” the more we have sealed our fate. “Better late than never”, but the longer we wait the more likely we never rebuild that which has been perverted and destroyed.

  3. Congress and the president are doing their jobs – that’s why we’re so screwed. Clearly their goal is to tank the economy, bring on martial law and institute a New World Order based on soviet style policies as prophesied.

    Maranatha!

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