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Beefs and Beliefs

Fiscal Cliff Behind Us; Beef Producers Will Suffer

Government consuming more of the economy can only hurt economic growth as investors draw back from the fire.


Today reminds me a lot of 2008, when the TARP fund was created to reward irresponsibility by financial people and union meddling in the financial affairs of their employers.

I was so mad back then I was spitting nails and the national press was acting like this was a wonderful idea and the government hacks the electorate keeps putting in charge of stealing our money were explaining how smart they were and why things had to be done this way.

I was flying to California, if I remember correctly, and as I sat in the airport with furies of steam rising from my neck and ears, I began listening to those around me and I realized everyone else was mad, too.

Today is a lot like that.

The difference is today is less an event and more just a milestone. It's really just another marker on a long and ugly path down for all American businesses, including the beef business.

I'm referring to the big lie the legislators and the national press corps called the "fiscal cliff."

Tuesday night while we all had no contact with them or their machinations they passed a bill to solve this manufactured emergency which is only one more milestone with its own marker on this bitter trail into the abyss of socialism.

Let me explain and then I have a call to action for us all.

I think we all know the origins of the fiscal cliff: the automatic "spending cuts" which would accompany the expiration of the "Bush era tax cuts."

The truth was these spending cuts were insignificant in the face of $1.3 trillion and growing annual budget deficits and a national debt of $16 trillion.

As my economist friend Bill Helming says, "The U.S. economy has already gone over the fiscal cliff economically, financially, politically and socially. The train has already gone over the cliff from an economic and financial standpoint. The major remaining question is how far down will our economy (the train) go before it hits bottom."


But first, the good news. Most of the people avoided most of the tax hikes -- except President Obama succeeded in his class warfare by getting increased tax rates on upper income earners. Unfortunately, the more successful you are the more you will be punished.

This policy worked so well for the United Kingdom that we're apparently determined to copy it. In 2010 Great Britain was still reeling from this worldwide depression we're all in and decided to cut spending and increase tax rates. That included as a key component a hike in the top marginal capital gains tax rate from 18% to 28%, plus higher overall tax rates on the highest earners.

Guess what? The tax increases apparently derailed England’s economy. GDP growth over the next three calendar quarters averaged only 0.77%, which was 70% lower than the growth rate during the nine months prior to the tax hikes. The percentage of British adults with jobs had been rising but plummeted after the tax increases. It has since stabilized at a lower level.

A more recent report says raising that country’s top income tax rate to 50% cost the UK  about $11.2 billion since 2010.
But enough with calling stupidity what it really is -- stupidity.

The real point of my diatribe is this: Our government currently is spending about one third more than it takes in every year and the national debt is getting so high we may never be able to pay it off. Certainly if we continue the obviously socialist/anarchist policies espoused by this president in his own writings long before he sought public office we will actually hit the bottom in some sort of loud and painful crash.

Dramatic cuts must be made. The reasons are clearly explained in this video which uses data from the U.S. Office of Management and Budget. Simply put, the federal government last year spent right around $3.8 trillion and took in $2.5 trillion, thereby creating a $1.3 trillion deficit.

In fact, spending for Social Security, Medicaid, Medicare and other "mandatory programs," together with interest payments on the national debt is equal to all the government revenues combined. Massive cuts are the only answer.

The national debt is now $16.3 trillion and we're headed for much worse with no relief in sight. By the time we're potentially rid of Obama in 2016 we will be in the same shape as Greece with debt level at 128% of our total annual gross domestic product. What will happen to us? Do you think the answer is nothing?

Further, this country is becoming as unfriendly to business and investment as anywhere in the world and the government is gobbling up bigger and bigger portions of the economy. Is it any wonder we're getting poorer?

As people get poorer, do you think they will eat more steak, or even more ground beef?

Here are some things we beef producers must do.

We must complain frequently in writing, in emails and by telephone to our elected representatives. We must demand they balance the budget and reign in spending, whether it gores our ox or not. Tell them ALL spending must be cut, especially the social programs such as Social Security, Medicare and Medicaid, which are the fastest growing.

Tell them we must also put end-points on the so-called social safety nets. These should never be offered as permanent excuses not to work. They were never intended to be so at their inception. When these programs have been cut here and in other countries, people miraculously find work.

Remember that your representatives are very affected by personal contacts. If they hear from a dozen people it's a pretty big issue. Contact them and be ruthless in your attitudes about cutting government growth and protecting our civil rights.

We must also stop pussyfooting with those poisoned by socialist mindset. We must clearly state the dangers of their way of thinking. By repetition of facts they might someday see truth and be cured.

Last, remember this nation is not a democracy and was never intended to be. It had a democratic House of Representatives and the Senate was to be a republic, with members elected by state legislatures and not so subject to the whims of the people. In fact, Ben Franklin was once quoted as saying, "Democracy is two wolves and a sheep deciding what to have for dinner."

That is today's America. Beef producers must try to change it.

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