The View From 1776
Monday, April 06, 2009
Political Dangers Ahead
Even if we soak “the rich” until they drown, there won’t be enough real income to pay for the President’s proposed socialist statism.
The only recourse is massive inflation, which will destroy the value of savings and make us dependent upon our political masters in Washington for handouts. Of course, that is the dream of liberal-progressive-socialists, particularly of today’s students emerging from colleges and universities thoroughly indoctrinated in the ideology of socialism, but utterly ignorant of economic reality.
Read the article by John Baden.
Desperate people desperately want to believe that political solutions to economic losses and their social consequences exist, will be found, and will be enacted. I believe they are way too optimistic. First, someone will actually win the lottery. Further, the lottery is a voluntarily accepted individual tax on hope and stupidity. In contrast, the taxes and future costs imposed by government are diffused on all. Even those who don’t pay directly suffer indirectly. Frictions and inhibitions on enhanced productivity and innovation always accompany political management.
Those who pay no income taxes may soon be a majority, a frightful prospect indeed. According to the Tax Foundation, in 2006, the top 5 percent of earners paid over 60 percent of all income taxes, the top 10 percent more than 70 percent. The bottom 50 percent paid less than 3 percent.
The bottom group may soon receive cash payments from the federal government. This means that half the population may see additional government as free. And when the cost is zero, the demand for government transfers and services is unbounded. The long run implications are dire for it fosters the plundering of our most productive citizens.
This month the official national debt has just exceeded $11 trillion. But this is a serious underestimate. If we include the government’s off-the-balance sheet liabilities and unfunded retirement and healthcare obligations, the real national debt is actually $56 trillion, or $483,000 per U.S. household. And this neglects the underfunded liabilities of state and local governments and federally guaranteed corporate retirement accounts.