Debt plagues the nation, from the average person to the government itself. Already high debt burdens became increasingly more difficult for people to bear with the bursting of the housing bubble and the credit crunch, and when increasing unemployment and a variety of other economic stresses entered the equation, for many the debt problem reached the crisis point. Government debt increased exponentially, as well, with bailouts and other schemes to try to bring the economy under control. However, unlike people in the real world that have to struggle to eliminate debt or stop foreclosure, do without as they reduce spending or work to exhaustion to increase income, government gets its money from the people. All it has to do, in the end, to deal with government debt is raise taxes. And, taxpayers are feeling resentful, and that resentment seems to be simmering throughout the nation.
The bailing out of the banks is one area of resentment. Many taxpayers resent their tax dollars being given by the billion to banks that gouge them mercilessly, to the point that, despite banking industry campaign contributions and well paid lobbyists, even Congress had to take heed of consumer anger and come up with some legislative protections. However, the consumer protections that recently became law will not take effect until next year, leaving the banks with months ahead of them to maximize their profits before they have to submit to the new regulations.
“Those (cardholders) who are revolving balances, even those with good credit, are going to suffer,” said Curtis Arnold of CardRatings.com , as quoted by Liz Pulliam Weston in a recent article published by MSN Money. “There’s probably never been a worse time to have credit card debt.” The article, titled â€œBanks Have Declared War â€“ On Youâ€ is an interesting read, detailing the now familiar experiences of card holders throughout the nation, including the surprise slashing of credit card limits, sharp jumps in credit card interest rates, and increased fees of all sorts that even consumers with good credit scores and on time payments are experiencing. But, what is really interesting is the comment section.
People are furious. Many are deciding that the time may be right to pay off credit card debt and close accounts in protest, taking their credit card and banking business instead to credit unions and local banks not receiving bail-out money. Many regional banks didn’t get caught up in the sub-prime lending madness and aren’t in a position of having to suck as many fees and charges out of their customers as possible to cover their losses. Some consumers are opting out of credit cards entirely, deciding that debit cards are the best option, with others vowing to go back to using checks, instead of using a credit card and paying the balance off monthly.
Another realm of resentment has to do with taxpayer dollars being used to ease the foreclosure crisis. Many taxpayers who were careful with their money, borrowing responsibly for homes that they could afford, feel outraged that their tax dollars will be spent to rescue those that were less responsible with their personal finances. Again, the comments following articles on the subject reveal a real anger on the part of some taxpayers, particularly those that have made real sacrifices in order to be responsible borrowers and those who put off home ownership because they didn’t believe that they could afford the inflated prices during the bubble.
The rapidly expanding government debt â€“ which translates to forced extraction of even more taxpayer dollars from not just the current generation of taxpayers, but also from their children and grandchildren â€“ has people enraged throughout the nation. People are frustrated by the lack of control over the process. Banks are bailed out despite public protest. Polls revealed Americans didn’t support automaker bailouts, yet money went out. And, the list goes on and on. People are tired of struggling to afford health care and worrying about retirement, while lawmakers enjoy the best of health care and retirement plans. People are tired of doing the best they can in the confines of their budgets, only to have the government take even more from them for deficit spending that the nation’s citizens have little control of and, all too often, little desire for.
Contributing to the rapid expansion of government debt due to deficit spending is a significant decrease in the money that the government is collecting via current taxes. According to a May 27, 2009, USA Today article citing data from a recent American Institute for Economic Research study, â€œfederal tax revenue plunged $138 billion, or 34%, in April vs. a year ago â€” the biggest April drop since 1981.â€
While a great deal of that is, naturally, related to the overall economic difficulties the nation is dealing with, such as higher unemployment leading to less income to be taxed, there may be a significant portion of that drop that is part of a calculated effort on the part of some taxpayers. Tax revolt is in the air, with citizens deliberately simplifying their lifestyles, working less and spending less, with the specific goal of reducing the amount of tax dollars they give to the government. The government is walking a fine line, because increasing taxes to make up for the shortfall will surely ignite more to actively protest those taxes and refuse to pay them.
The people are carrying their own debt and, for the most part, are working hard to find ways to meet their obligations. To have the government demanding ever more tax dollars for bailing out corporate cronies arriving in private jets to beg for money, for industries that demand financial assistance while passing out billions in bonuses to executives already making more than the average worker sees in a lifetime, is simply too much. The people are right to be infuriated at being unable to save for their children’s college tuition or for their own retirement because of the increasing demands of a greedy government with no shame. The collision of the debt crisis and the tax crisis is inevitable.