An Outstanding Assessment

A very insightful piece from Simon Black.  I cannot add to this but to say, Mr. Black is spot on with his assessment of Americans today.

https://www.sovereignman.com/trends/new-poll-record-number-of-americans-want-more-government-in-their-lives-21388/?inf_contact_key=bca43013ae3658dd22297fe0e5837999bd3b2e4d6f6b2a81a9955af064c21ad9

April 24, 2017
Sovereign Valley Farm, Chile

In a poll conducted a few days ago by NBC News / Wall Street Journal, a record 57% of Americans responded that they want MORE government in their lives, and that the government should be doing more to solve people’s problems.

That’s the highest percentage since they started asking this question in 1995.

In fact, 57% is nearly double what people responded in the mid-90s.

Furthermore, the number of Americans who feel the opposite, i.e. responded that the government is doing too many things that should be left to private businesses and individuals, fell to a near record-low 39%.  

Bottom line: people want more government.

It’s hard to even know where to begin with this.

First- more government is nearly an impossibility.

As I’ve written several times in the past, the US federal government already spends almost all of its tax revenue on mandatory entitlements like Social Security, and interest on the debt.

They could literally cut nearly everything we think of as government– national parks, Homeland Security, even the IRS– and still not make a dent in paying down the national debt.

According to the US government’s own financial statements, their net operating loss in 2016 was an unbelievable $1.05 TRILLION.

Think about that– they lost more than a trillion dollars in a completely unremarkable year.

They weren’t waging world war, funding a major infrastructure project, or dealing with an economic crisis.

It was just business as usual. And they STILL lost over a trillion dollars.

More government is going to cost even more money that they don’t have… which means even more debt and even more pain in the future.

The usual refrain is to pay for more government programs by raising taxes on the rich, or big corporations, or whoever the evil villain du jour is.

Anyone who thinks this actually works needs to study history.

Simply put, RAISING TAXES DOES NOT RAISE TAX REVENUE.

I wish every Bernie Sanders voter could understand this very simple fact:

Since the end of World War II, US federal government tax revenue as a percentage of GDP has been nearly constant at 17%.

In other words, while the actual dollar amount of tax revenue goes up every year due to inflation and economic expansion, the government’s slice of the total economic pie is 17%.

Yet during the previous eight decades, actual -tax rates- have been all over the board– sometimes rates were higher, sometimes rates were lower.

Back in 1963, for example, the highest marginal tax rate on individuals exceeded an unbelievable 90%.

I’m sure there are plenty of Americans who would love to see the wealthiest citizens paying 90% again.

Yet in 1963, even with rates that high, the total amount of tax revenue that the US government collected was 16.7% of GDP.

In 1988 when the highest tax rate was slashed to just 28% under Ronald Reagan, total tax revenue 17.3% of GDP.
 
It doesn’t matter if tax rates were high or low– the actual tax revenue that the government collects stays constant at around 17% of GDP.

This raises a point that these socialists never seem to understand:

If the government’s slice of the pie never seems to change no matter how high or how low tax rates are, shouldn’t they focus on making the pie bigger?

Duh.

And it seems intuitive that higher taxes obstruct economic growth (i.e. make the pie smaller) because there’s less money in people’s pockets to spend and invest.

Then, of course, we have to touch on the issue of competence.

It’s absurd to want a government that has a nearly interminable track record of overreach, waste, and failure, to be even MORE involved in people’s lives.

We’re talking about the same institution that wastes taxpayer money to study monkeys on treadmills…

… or spent $1 billion to destroy $16 billion worth of perfectly good ammunition…

… or $2 billion to build a website.
 
It’s extraordinary that these people are already in charge of educating our children, regulating our savings, and now our medical care.

It’s even more appalling that given such dismal performance people want more.

As the old saying goes, the classic definition of insanity is trying the same thing over and over again and expecting a different result.

A final point I’ll mention is that it’s concerning to see people in the Land of the Free and Home of the Brave expect the government to solve their problems.

What ever happened to self-reliance? The pioneering spirit? Good ole’ American can-do ingenuity?

In truth there are countless ways for a motivated person to solve problems. Or at least to make forward progress.

For example, to all these kids that have their hands out demanding free university education, I always ask the same questions:

How many books did you read in the last twelve months?

How many FREE online courses from Harvard and MIT did you take?

Are you actually doing anything to help yourself? Or are you just whining on social media about how no one is giving you anything for free?

America was founded as a place where people take responsibility for themselves.

But this now seems to be an outdated, minority view.

The Land of the Free is truly becoming the Land of Getting Free Stuff.

 

Until tomorrow,

Simon Black

Founder, SovereignMan.com

I was wrong, some places in America are totalitarian already

Leftist-statist fascism is in the news daily and there is no more non-tolerant place than American college campuses. These left leaning institutions have always supported state control of the economy and redistribution policy however, since the 2016 election, the statists have moved to a proscription against speech and freedom of association.

This contagion has spread beyond the traditional east and west coast statist bastions to small lower tier educational institutions in the Midwest.

A story on ZeroHedge,  Conservative Students “Violently Threatened” At Lutheran College

spoke of a situation that could have been reported in 1930s Nazi Germany.  This story is upsetting to any freedom loving American but it gets worse. There is a strong move among these same statists to create an economic crisis by not paying their obligations and then, get taxpayers to foot the bill for their obligated student loan debt.

Students Demand “Sanctuary” From Immigration Laws, Student Loan Debt, And Finals

The First Crack: $270 Billion In Student Loans Are At Least 30 Days Delinquent

Next Mega-Bailout On Deck: White House Studying “New Bankruptcy Options” For Student-Loan Borrowers

At 108 US Colleges, More Than Half Of Students Haven’t Paid Even $1 On Their Student Loans

The Student Loan Write-offs Have Begun: 78,000 Students File For Debt Discharge After Corinthian Closures

24% Of Millennials “Expect” Student Loan Forgiveness

“Cancel All Student Debt” – The Petitions Begin

To correct this we must remove the state from any and all influence in higher education and enforce the rights expressed in the US Constitution. Failure to do so will result in a loss of freedom and a very large tax bill to bailout students by paying off their debt.

Stop the statists: reduce student loan debt

Students are increasingly taking on greater levels of debt in order to attend college.  College tuition and fees have inflated significantly in the past several decades due to the states involvement, forcing the majority of students attending post secondary educational institutions to take out ever larger federal student loans. This situation is pronounced at state supported schools but even more so at private institutions who also can feed their bloated institutions on students’ federal loans.

According to the College Board, inflation in college costs are significant and continuing to rise at rates well about the Consumer Price Index (CPI):

Between 2006-07 and 2016-17, published in-state tuition and fees at public four-year institutions increased at an average rate of 3.5% per year beyond inflation, compared to average annual increases of 3.9% and 4.2% over the two prior decades.

According to the Federal Student Aid Portfolio Summary from 2016, the US Department of Education states there is $1.1298 T of outstanding student loan debt.

If the current situation continues, the state will continue to grow their already very large class of indentured individuals who are at their beckoned call. However, the situation goes beyond individuals.

The problem of having over a trillion dollars in student loan debt is significant beyond the burden it places on individuals.  Many economists see this large overhang of debt negatively impacting GDP growth. Headlines like Student-Loan Debt Slows Recovery are common within the MSM and even on alternative news sites. The theory about the impact of student debt is based upon a rational assumption; payments to service student loan debt cannot not be used to: start a business, form a household, purchase a home or car, or even go out to eat; basically less money from younger Americans is flowing to our nation’s GDP and instead going to the student loan cartel.

Here are some market based proposals to slow the growth of student loan debt please let me know what you think of them.

  1. Stop sending the message that everyone should go to a four-year college. Obama advocated many times about college but he was wrong, there many professions and job opportunities for those without a four-year degree. Less demand for four-year college degrees means prices will fall for those who do obtain one.
  2. Local officials should revamp their high school curriculum and programs to meet the reality mentioned above. They can by offering a very rigorous and real college preparatory track as well as offer a serious vocational track which includes on the job training and apprenticeships. Beyond the educational value this offers to more students, this model will reduce demand at four-year colleges thus lowering costs.
  3. Stop federally guaranteed student loans – do not make the taxpayer the backstop for student loans as they eventually will be called on to do in the current system. Going back to free market principles which will force lenders to properly assess a student’s real ability to payback loans. For example, a student who did not fare well in high school will likely not do well at a four-year college and thus is a poor loan risk. For redemption, this student can go to a two-year program and prove they can handle a more rigorous course load before taking on significant levels of debt they will be unlikely to payback. This reduces the cost of bad loans to lenders those making loans more affordable.
  4. Raise admission standards at four-year institutions, this will force students to compete (scholarships) and it will also drive many marginal colleges and universities out of business. This action will likely assure those who take out students loans will pay them back.  Here lenders see the best return on their investments feeding their desire to continue to offer high performing students (those who really graduate) loans.

Getting off of the dole is not popular

An article on ZeroHedge titled, It Was A Pretty Disturbing Briefing”: Why State Governors Suddenly Got Cold Feet About Obamacare Repeal spoke about the difficulty the states see in the new administration’s efforts to repeal Obamacare. The crux of the problem is the statists’ fear of the wrath of people who lose government funded healthcare and the vast amount of federal money in play for the states to quickly repeal and/or replace Obamacare. The article makes it clear as shown in the quote below; governors fear the back lash from those forced off of the dole and of the loss of federal funding for their Medicaid programs if changes are made to Obamacare.

“Tens of thousands who would not be able to afford their coverage and would lose their coverage,” Democratic Governor Jay Inslee of Washington said after the closed-door meeting. “It was a pretty disturbing briefing.”

In non-statist speech, the governor of Washington was simply saying that taking these people off of the public dole would be politically untenable  – the MSM would have a field day reporting how evil politicians are hurting Americans and how irresponsible governors are for ever growing state budget deficits.

I suspect other governors beyond Inslee, both Democratic and Republican, feel the same as they are more concerned with keeping their positions of power by keeping everyone happy rather than face the truth of the debt ridden situation Obamacare places America’s finances into.  This is not a right vs. left issue but one of survival of statist politicians. From the same article:

On Friday, Kasich called House Republicans’ initial plans to replace the health-care law “inadequate.” Kasich, a former Republican presidential candidate, didn’t go into details during brief remarks to reporters after a meeting Friday with President Donald Trump. “To me, it’s not acceptable,” Kasich said. The governor, who opened Ohio’s Medicaid program to more low-income people under Obamacare, has advocated maintaining the Medicaid expansion. He has said the income limit for the program should be lower.

Whether one believes it or not, once the ink was dry on the Affordable Care Act (ACA) the die was cast. With Obamacare as the first step, America is heading towards socialized medicine and likely financial Armageddon.  The Congressional Budget Office (CBO) in their March 2016 report shows this in the large and growing expenditures the federal government is making to support ACA.1

The federal government subsidizes health insurance for most Americans through a variety of federal programs and tax preferences. In 2016, those subsidies for people under age 65 will total more than $600 billion, the Congressional Budget Office and the staff of the Joint Committee on Taxation (JCT) estimate. (The government also bears significant costs for health insurance for people 65 or older, mostly through Medicare and Medicaid).

Like the metaphor about the frog in boiling water, Obamacare is mechanism the statists are using to control America’s healthcare system.

  1. Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2016 to 2026. Rep. Washington, DC: Congressional Budget Office, 2016. Print.

Cowards

Why is it the cowardly ruling elite or even the American people refuse to discuss the failing Ponzi schemes funding our entitlement programs?  Could it be they and the vast majority of American people believe the funding will magically appear if they do not think about it; is it a ‘bad’ political move to acknowledge the abject failure of the state to uninformed voters; or is something else?

Looking at the systemic under funding/over promising of Americas’ sacrosanct social programs will certainly cause great distress to all but the most seriously financially illiterate but yet, this fast approaching catastrophe is all but ignored in our political discourse.

Referencing www.usdebtclock.org clearly shows over $104 trillion of under funding of the lefts’ Social Security and Medicare programs.  I have yet to hear a cogent argument that this data is incorrect or that there is a real solution to this problem.

All Americans whether, statists or liberty seeking patriots should demand a honest debate of this problem before it is too late.

 

 

Follow up to, Can this continue

An update to this message below regarding our growing debt.  In this year’s campaign, we hear a great deal of hyperbole about debt free college (Hillary) and free child care (Trump + Hillary) “new investment” (Trump and Hillary).   The two have also promised tax cuts for the middle class.  Because of the ignorance of the majority of the voters, people are supporting these candidates without demanding  a solution as how to pay for all of these gifts.  Hillary has stated she will tax the rich and Trump has not said how he would pay beyond growing the economy and eliminating waste.
I did a little model of taxing the rich based on IRS 2014 Income Tax data.
Even if the capital gains rate was hiked to 30% and the top three tax brackets where set to 42, 44, and 48 percent, the gain in new revenue would be only $171,976,037 dollars. This change would likely hurt the economy, drive down GDP and investment while having negligible impact on our borrowing needs.  My conclusion is we do not have a taxing problem, we have a spending problem.
tax-the-rich
Source

When will the American voter wake up?

The reality is, the average  American’s economic well being has been dropping for the past 7 years and still, I hear those who want more of the same despite the facts clearly showing failure of this administration. The numbers of informed voters are not yet large enough to make a difference.

One cause of our economic malaise is our rapidly growing debt. By any measure, it is threatening to overcome us and will one day unless it is reduced. It is now time American voters look to a new way, limited government which will in turn lead to less debt and more economic activity taking place in the more efficient private sector instead of the highly inefficient and wasteful public sector.

However, there is some cause for hope. In my latest readings on the economy, I am starting to see facts being clearly communicated which show our leaders’ being called to account for their economic malfeasance.

Please voter, learn the facts and wake up!