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Paying the Piper — Mortgage note investor

Political silliness just keeps reaching new lows.  The latest idiocy revolves around the political fighting over whether to raise the payroll tax rate back to 6.2%, keep it at the reduced 4.2% reduced rate for two months, or maintain it at that 4.2% rate for the next 12 months.  This discussion occurs with only the occasional passing mention of the shambles in which the Social Security system finds itself.  The Social Security “trust fund” is falling apart fast due to an aging population that, in total, pays in less money but receives more than in the past.  To even have a discussion about extending a payroll tax cut without funding and restructuring the whole security system is scandalous.

Worse, there is absolutely no evidence that the payroll tax cut has had any impact on the economyor on the typical American’s pocketbook.  This lack of impact is consistent with past political maneuverings such as the homebuyer tax credit and “Cash for Clunkers”, as well as the bank bailouts.  The proponents of these programs often use the impossible-to-disprove argument that things would have otherwise been worse.  The only thing that we can know for sure is that they made the debt crisis a mangled mess.

The typical American family got back just under $1000 in 2011 from the payroll tax cut.  All of that and more went into their gas tanks, which now account for 8.4% of the median family’s income.  Seems to me that a longer lasting solution to weak personal finances would be to reduce the hit of energy bills that every household must pay.  If only there was a way to do that … oh yeah, the Keystone XL pipeline from Canada to the U.S. Gulf Coast would reduce our dependence on oil imports from unfriendly, faraway places to something closer to home, thus lowering our energy costs.  That pipeline has been put on hold until after the 2012 elections by the current administration.  Ostensibly, this is to protect the environment, though it is clear to most of us that political forces alone are driving the decision.

As the economy worsens, the government bureaucrats gain power by blaming others and claiming to have the right answers.  No matter how many times that they fail, the general public falls under the spell of fancy-speaking presidents and Congress-people telling us that it will be better if they could run things.

In the last 40 years, the U.S. has gone from being the world’s largest creditor to being the world’s largest borrower.  Over the next four years, the U.S. Treasury will have to refinance $5.67 TRILLION (60% of the total debt).  Other than printing more dollars, which isn’t good for anyone, we have not earthly way to pay for this.  And yet, as always, our leaders continue to sacrifice long-term recovery for short-term political gain, and the zombie citizens just go along for the ride.

Alan Noblitt is a mortgage note investor in San Diego, California.  As a mortgage note investor and broker, he can buy mortgage notes in nearly all 50 states.