Like many of you I learned the importance of financial responsibility at an early age. You simply don’t spend money you don’t have. The money you do have you work for. And if you’re lucky, you might save some of that money for a rainy day or leave it for your kids once you’re gone.
The lessons I was taught at home, at school and at church were all the same. Be good stewards of what God gave you, whether it’s your land, your home or your finances.
These lessons of self responsibility and good stewardship weren’t invented by our elders. They were passed down through generations of hardworking Americans since our founding. It was, in fact, Thomas Jefferson himself that said, “Never spend your money before you have it.”
I guess some Washington politicians have forgotten these lessons, or perhaps they were never taught them in the first place.
Let’s take, for example, the recent fiscal cliff debate.
As you well know, Congress voted to avert the “fiscal cliff”. They did this by shielding 99% of taxpayers from a scheduled tax increase, while raising taxes on higher earners making more than $450,000.
The tax package stopped incredibly high tax increases for most Americans.
It also included new permanent amounts for the death tax. Estates worth $5 million or less per person ($10 million per couple) will be exempt from the death tax. Estates worth more than that will pay a 40 percent tax on anything over the exemption level. As an added benefit, these levels are indexed for inflation and also include a stepped-up basis.
This isn’t perfect. We would have liked to see the death tax go away forever. But it is better than the alternative, which would have been a 55 percent tax on anything over a $1 million per person ($2 million per couple) exemption level. These levels would have crushed small ranching families.
The package also extends the 2008 Farm Bill until September 2013. Again, this isn’t perfect. This short-term fix gives extreme animal activist groups more opportunities to target the livestock industry, and while we have been successful holding them off in the past; we will have to continue to work hard to keep them from harming the cattle industry in the next farm bill.
Ranchers would have much rather seen a fiscally responsible 5-year farm bill signed into law. A 5-year bill would have provided more predictability for important conservation and research programs that help ranchers produce better beef for consumers while protecting our natural resources.
Looking at all of this you could say there were some good things that Congress did through this legislation. Certainly keeping taxes from skyrocketing to unachievable levels and allowing more ranchers to pass on their land are both good things. But let’s look at what else they did.
They also added $4 trillion to the federal deficit over 10 years through a number of tax exemptions and long-term unemployment benefit extensions without offering any offsetting spending cuts. Many reports suggest that federal spending was decreased by only $1 for every $40 of new revenue generated.
As a rancher and a banker this just doesn’t add up. Unless, of course, you’re charging the additional $4 trillion to a national credit card that’s debt limit is already maxed out at $16 trillion.
Even though Congress did address some of the tax issues, they missed a golden opportunity to take a responsible approach to start getting our country out of debt.
Congress has said they will address spending cuts soon when they face yet another fiscal debate, this time over whether they should raise the debt limit and what to do about the automatic spending cuts scheduled to take effect.
Republicans have said they will cut spending. Democrats, including the President, have pledged to raise the debt limit and continue “investing” in government programs. Clearly the two have different ideas.
If they want my advice, I’d invite them out to the ranch, cook them a steak, and show them some simple ranch arithmetic.
Joe Parker Jr. is a third generation rancher from Clay County, Texas. He is president of the Texas and Southwestern Cattle Raisers Association. He is also chairman of the board and president of the First National Bank of Byers.