BY RICH GALEN
Reprinted from Mullings.com

It is well known that there are a number of countries in Europe that are in dire financial straits. So dire that they make our $16.7 trillion national debt look manageable.

We know about Greece and Italy, Portugal and Spain. Not only are they drowning in debt, but they have high unemployment (Spain’s is nearly 25 percent) and negative GDP growth.

But the scariest news over the weekend came from the tiny country of Cyprus.

I’ll wait while you try to remember if you know where Cyprus is located.

Ok. It is an island about half the size of Connecticut, with a population of about 1.1 million, located in the Eastern Mediterranean south of Turkey.

It is also broke.

Cyprus has close ties with Greece and had invested heavily in Greek bonds. Unfortunately for Cyprus, foreign investors in Greek debt were forced, in 2011, to take a voluntary haircut of up to 50 percent of the value of those bonds.

With an economy as thin as Cyprus a loss of that magnitude in the funds it had, essentially, parked for safety sake was more than just a jolt. It threw the economy into a tailspin.

Why am I bothering you with the Cypriot economic woes? Because of the manner in which the big guns in the European Union – in this case Germany – wanted to structure a $13 billion bailout.

Here’s what they decided: Individuals who have deposits of at least $130,000 (equivalent) in Cypriot banks will pay what the New York Times called a “one-time tax” of 9.9 percent of their deposits.

Smaller depositors will have their funds confiscated taxed to the tune of 6.75 percent.

The Times reported that many of the higher-value depositors are “Russians who have put vast sums into Cyprus’s banks in recent years” but it wouldn’t matter if they were North Korean generals. A deposit is a deposit for the use of the depositor, not for Angela Merkel.

Naturally as soon as word hit that this “tax” was going to be imposed on Tuesday, there was a run on the banks to get money out of bank vaults and into mattresses where it would be safe.

Naturally the ATM networks were shut down to prevent the good people of Cyprus (or Russia) from getting to their money before the government could take it away.

Chancellor Merkel said that making the depositors help pay for the bailout is the right thing to do. “That way,” she said, “those responsible will contribute in it, not only the taxpayers of other countries.”

I have $12.75 in the bank in Alexandria, Virginia. How does that make me responsible for creating the national debt?

My fear is this becomes a standard mechanism for helping to reduce what is known as the “sovereign debt” – the money countries owe.

Think about what will happen when officials of the Obama Administration come to work this morning and read that the EU could force Cyprus to confiscate legally deposited funds.

According to the Federal Reserve Bank of St. Louis, as of last Monday there was $6.8 trillion on deposit in U.S. banks.

No one, not even Barack Obama, would consider taking 100 percent of those deposits, but I can certainly hear the clack-clack-clack of keyboards drawing up the talking points explaining why rich people with deposits of over, say $50,000 should be willing to do their fair share in paying down the national debt.

Maybe to the tune of a “one-time tax” of, say, 15 percent. That’s not 15 percent of $50,000, it would be 15 percent of whatever you’ve got in the bank – in all your accounts. Maybe throw in those greedy 401(k)s and brokerage accounts that have swollen with the sudden rise in the U.S. stock market.

Sample Talking Point: If you can afford a 401(k) and$4/gallon gasoline, you’re making too much.

I’ll be a little late for work this morning. I’m going to the bank with my change purse and get my money out before I become an unwilling donor to help reduce the Obama debt.

It may only be $12.75, but the taxes have been paid on it, and it’s mine.

Editor’s Note: Rich Galen is former communications director for House Speaker Newt Gingrich and Senator Dan Quayle. In 2003-2004, he did a six-month tour of duty in Iraq at the request of the White House engaging in public affairs with the Department of Defense. He also served as executive director of GOPAC and served in the private sector with Electronic Data Systems. Rich is a frequent lecturer and appears often as a political expert on ABC, CNN, Fox and other news outlets.