Monday, September 21, 2009

A teachable moment is upon us

It appears we have another teachable moment upon us.The lesson is being delivered by Merriam-Webster.We seem to have a problem with 2 words-tax and recession.Here are the entries direct from the online dictionary.

Main Entry: 1tax
Pronunciation: \ˈtaks\
Function: transitive verb
Etymology: Middle English, to estimate, assess, tax, from Anglo-French taxer, from Medieval Latin taxare, from Latin, to feel, estimate, censure, frequentative of tangere to touch — more at tangent
Date: 14th century
1 : to assess or determine judicially the amount of (costs in a court action)2 : to levy a tax on3 obsolete : to enter (a name) in a list 4 : charge, accuse ; also : censure5 : to make onerous and rigorous demands on job taxed her strength>
— tax·able \ˈtak-sə-bəl\ adjective
— tax·er noun

Main Entry: 1re·ces·sion
Pronunciation: \ri-ˈse-shən\
Function: noun
Date: circa 1652
1 : the act or action of receding : withdrawal2 : a departing procession (as of clergy and choir at the end of a church service)3 : a period of reduced economic activity
— re·ces·sion·ary \-shə-ˌner-ē\ adjective

Tax is at the center of healthcare reform.Is forcing everyone to carry health insurance the equivalent of a tax?The President uses the argument that we all must carry auto insurance so that if we get in an accident,everyone else doesn't pick up the tab.Wrong.First,not everyone drives an auto and thus doesn't carry auto insurance so the apples to apples comparison is out the window.Second,insurance is simply a formula of risk/reward.You aren't mandated to carry collision coverage to repair your vehicle.You must carry liability on property damage and personal injury to protect yourself from a lawsuit should you injure someone else or damage property.Nowhere in that do you see the rest of society picking up the tab if you get in an accident.The comparison to health insurance in which an uninsured person requires care they can't pay for is paid by all other policy holders in the form of higher premiums.Again,no apples to apples comparison.

Even our income tax system doesn't compare as it only applies to wage earners.Should you receive benefits from a social program,you may be taxed depending upon the program.The point is there is no all encompassing program in existence in which every American adult pays something.This would qualify as the first one to force every single adult citizen to pay.So,in that respect,it's even worse than a tax.Should you be forced to buy insurance and be fortunate enough healthwise to never use the healthcare system,you would receive absolutely no benefit whatsoever.

Recession is another term that may need to be revisited.Generally,2 consecutive quarters of negative GDP growth qualifies as a recession.Just one quarter of positive GDP growth ends it.GDP is a measure of the goods and services produced.We know that we can have jobless recoveries.It's happened in the past and is happening now.Simply relying on the GDP number to determine the state of the economy in totality is folly.Look at what's not being accounted for when Bernanke tells us the recession is over "technically".The unemployment rate is still rising.The housing market is pitiful and hasn't bottomed,only paused awaiting the other shoe to drop.Commercial real estate is starting it's bubble bursting.Unsecured credit is still waiting in the wings for it's trigger to collapse.The dollar is tanking with international pressure mounting to replace it and our Fed policies will be the enablers to make it happen.The FDIC is about to tap it's line of credit.The banks are still saddled with their toxic assets on their books.The stock market is way overheated without merit and is unsustainable.Interest rates are still artificially being suppressed by the Fed.And of course the debt.We're accruing debt to pay on our debt.Like using one credit cards cash advance option to make the payment on another.

Obama is nowhere near done with his social overhaul of America so the debt is only going to worsen.Obama and Bernanke must speak in positive tones as our economy is 70% based on consumer spending.Consumer confidence must be positive.Americans need to spend and buy on credit for the Fed induced artificial economy to function.

There are many more negative numbers out there.No one with any semblance of integrity can simply ignore them and declare the recession is over.So,I guess we go back and revisit what the meaning of "is" is.Because tax and recession have been revised in the Obama revision of the dictionary.More to come...

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