Don't Support the Bailout

Today I wrote an email to my Senators. I'm incline to include the bulk of it here:

"I want to make sure you're clear on where I stand on a couple of very important issues. I say this not because I feel like my view is of any particular importance or significance but because I feel like my point of view is very much in line with that of most Georgians.

I support FairTax and want to see more done to move us in that direction. Perhaps this economic slump is just what we need to put a sense of urgency to this. FairTax would certainly spur economic growth. It’s great to hear this talked about on a state level in a state that both Congressman Linder and Neal Boortz call home but I want to hear this talked about more on a national level. Georgia can’t get this passed. It’s going to be something that requires involvement of the elected officials from across the nation.

FairTax is a passion of mine because it appeals to my concept of fairness. By no stretch of the imagination am I rich, but I earn a respectable income that allows my wife to stay at home and raise our four young children. My single biggest expenditure every single month is not my car payment or my mortgage payment or anything like that. It’s my federal tax burden! I have withholdings of over 20% for federal taxes including Social Security and Medicare from every check I get. This is simply too much. By the time I figure in my mortgage and my giving to my local church, over half of my monthly income is accounted for. Over half!

I’d like to see a little bit more equality in the realm of taxation. Rather than spreading the wealth around as some have advocated recently, I’d like to see the responsibility spread around. I want to see everyone paying the same percentage of federal taxes and get rid of the progressive tax system. I’m well aware that several tax brackets exist above my income bracket and they only have higher tax rates. I’m also aware that many people that would fall into those brackets don’t derive most of their income the same way I do. Rather than coming directly from an employer on a W2 and being taxed at the published tax rates, their incomes come via dividends from stock holdings or corporations that are set up for the explicit purpose of distributing those earnings at a substantial tax savings. I’d love to do something like that for myself but having been a small business owner, I recognize the times, costs, and risks associated with that. It’s simply not something that’s feasible for someone in my position to do.

The inequities in the current system result in the lower income earners paying no taxes, the rich looking for tax shelters to avoid paying too high a percentage, and the middle class being squeezed. Middle class earners like me are being pinched between those that aren’t paying the same percentage in taxes that we are. I don’t think that meets anyone’s definition of fair. When coupled with falling home prices and increased costs of living – although the drop in gas prices recently has been a welcome sight – it’s a tough time to be middle class. While FairTax isn’t going to magically fix the situation, it would certainly help both from a financial standpoint as well as from an equality standpoint. If you felt like everyone else was pitching in and doing their part as well it wouldn’t seem like such an injustice.

Another big advantage that I see to FairTax that I hear seldom mentioned is the emphasis on savings. Like most Americans, I’ve spent more than I should at times. FairTax would be a nice, friendly, ever-present reminder to think about those unnecessary purchases. It would be a call to us all to do a better job of having a little bit of cash on hand to make it easier to weather declining home values or a layoff or whatever curveball life may throw at our pocketbook. If Americans were doing a better job at saving I’m not going to say the current financial situation could have been averted but having savings available would certainly serve as a safety net against it and hopefully make the current situation shallow and short-lived.

There’s one other thing I want to mention and that’s the proposed bailout of the automotive industry. As you may have guessed from my stated opposition to the mortgage bailout, I’m very much against another bailout. The federal government is today writing checks that I’ll be continuing to have to cash years from now along with my children and possibly my grandchildren. The answer isn’t throwing more money at a problem. It never is. The real question confronting the auto industry isn’t how to fix the current problem but how the situation existed for this long before needing to be addressed? As a corporation, how can you expect to remain viable if you’re costs are higher and your products in many instances inferior to that of your competitors? That’s the question facing the American auto industry today.

I don’t want to see a “car czar.” I don’t want to see new regulations on this industry. I want to see Detroit figure its way out of this current predicament. They certainly can. To think that they can’t do that without the help of federal money is just complete nonsense. Not only that but it’s an insult to the many hardworking and forward thinking Americans that these companies employ. The auto industry needs to be told that they’re not going to get a short cut out of the problem. They’re going to have to deal with the problems they’ve created for themselves the same way anyone else would have to deal with it. If I make poor financial decisions, the government isn’t rushing to my aid with a bailout. It’s my problem to deal with and figure out. Rewarding bad behavior (or in this case poor financial decisions) only reinforces that behavior and removes the only thing capitalism has to dissuade it and that’s the fear of failure and the financial penalties that accompany it.

I know a lot of people will be affected if the auto industry fails. I know a lot of people could lose their jobs and on and on and on. I understand that it’s a trickle down affect that impacts suppliers, parts makers, tire dealers, and so very many people. But look for a moment at how many people are affected by not addressing the problem? Everyone is affected by higher taxes. Higher taxes for many means they can’t buy the new car they had in mind. Selling fewer cars given the current state of auto sales could mean the very same things for the auto industry. At best all this bailout does is delay fixing the core problems within the industry until the next economic bump in the road. Then we’re faced with making yet another bailout or finally letting the industry struggle to deal with their own problems at a time when the impact will be far deeper and more widespread than it is now.

Please show some responsibility, show some restraint, show some fiscal conservatism and let these industry problems remain industry problems rather than making them all of our problems by getting the government more involved in the situation. Ronald Reagan once said that “Government is never more dangerous than when our desire to have it help us blinds us to its great power to harm us.” That I fear is the situation that we’re currently faced with. Please don’t be blinded by the power we’ve entrusted you with.

Thank you and God bless."