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- Economy & Government
By: Wayne Brown
So, you are convinced that the government is going to save the people of the good ol’ USA with all of the good things the left is laying on the table? Things ranging from stimulus packages to government run healthcare, job creation efforts, and the regulation of industry and the environment just to name a few. One might ask, “how could it not save us…they are putting all that money into circulation with all that government spending. That’s got to be good for the economy, right?”
Not this time, Robin! It only looks good if you don’t understand it. Government spending has nothing to do with producing the same effects as a booming economy. Booming economies are highlighted by widespread business growth and physical expansion into new markets. As a result, jobs are created and there is competition for the worker which tends to increase the wage scale. That effect pulls down unemployment numbers and raises the monetary value of the weekly paychecks which are taxed by the government. As a result, government revenue streams increase in value providing more money to support the insanity in Washington.
We need to understand one thing very clearly. The government does not make or produce anything of substance. It is not a profit center which makes money. It is pure and simply….overhead, nothing but expense, the expense of supporting a government, an infrastructure, and a military. In the past few decades, it has also been conduit of major welfare expense as more and more politicians use taxpayer revenues to buy votes. Regardless, in the end, it is all overhead.
Government gets it revenue from us, the citizens of the USA…the taxpayers. They also get a bit more from other miscellaneous areas but the bulk of the revenue comes in through the payroll tax process. In other words, they take our money before we see it and decide what should be done with it. In one sense, that is fine in that we should all pay a part to support the necessary operation of our government. On the other hand, those charged with running our government are addicted to spending and that addiction has exceeded all parameters of the revenue streams of the government to the point that about 42 cents of every dollar now spent by our government is “borrowed money” from either the taxpayer through raids on the Social Security/Medicare revenue streams or from outside sources like China, for example. In fact, 18% of the current national debt is owed to the taxpayers of America and that is more than twice what is owed to China. So the government spends to excess further increasing our debt and supposedly putting money into circulation that is “borrowed”. In the end, the government is taking money from at least half the citizens (those who pay taxes) and selectively spending it or passing it out on the streets to selective organizations.
This is not stimulus; it is simply redistribution of wealth. When the president hands billions of dollars to “green” startup businesses that declare bankruptcy within months of receiving the money, who do you really think benefited by those transactions? It certainly was not the taxpayers who are now shouldered with the debt. It certainly did not prove anything except that those industries could not survive in the marketplace even with government assistance. In the end, the money falls down a rat-hole and disappears into the pockets of a few all with no accountability on the part of anyone in Washington. The stimulus effect, if any, is rather short-lived and false…just as false as the growth in the housing market prior to 2008 which was engineered by the government.
When economies grow, good and service change hands between the businesses which makeup the American marketplace. Jobs are created on both sides of the equation. Workers have paychecks and they spend their money because they have confidence that the good times will last. That spending trickles into the coffers of other businesses that use it to create more goods and services, hires more people, and buys more raw materials, which in turn has the same effect again and again. There is a synergy of momentum created which expands exponentially and ultimately grows our gross domestic product values.
When governments grow, the opposite occurs. The number of people on the federal payroll goes up and the associated overhead goes up with it. That means that more of the revenue which the government takes in from various streams must be spent just to keep the doors open on the government. Since a dollar can only be in one place at a time, that means there are less of them passing through to other areas supported by the government or that more borrowing on the part of the government is necessary just to sustain the status quo. Those elected to office want to promise a chicken in every pot and grow the government to support that proposition. Too often, there is no measurement of “cost/benefit” in the consideration which generally comes at the wave of the hand by the president or a quick vote from Congress.
As the government grows, it ties up more revenue requiring higher taxes to sustain itself and likely more borrowing in the end. Debt continues to grow as well for spending cannot be cut unless government grows smaller in physical size. The fact that the government went out and built a bridge does not mean that the economy will be stimulated or improved. It simply means that the money to build that bridge came out of the pockets of taxpayers, was borrowed, or was a combination of the two. There again, since a dollar can only be in one place at one time, something else has to suffer, more borrowing has to occur, or taxes must be raised. That is the reality.
When economic growth outperforms and exceeds the growth in government, revenue streams increase in value because more people are working and paying taxes, even when they are paying taxes at a lower rate. When that takes place less money has to be borrowed to sustain existing situations and if new spending is not enacted, eventually more of that revenue goes against reducing the debt. At present, we have a federal government attempting to create that “stimulus” for economic growth in the marketplace while at the same time talking out of both sides of its mouth with regard to future taxation and the implementation of outrageous programs such as Obama-Care. The private sector trembles in fear of the unknown and the economy continues to remain stagnant. The government is creating its own destiny with the approach that is being employed.
Plain and simple…growing and healthy economies can save governments but government cannot create nor can it sustain growing, healthy economies by inserting itself into that environment with taxation and regulatory efforts which are directly counter to the goal. Obama does not believe this and subscribes to big government as the solution to all the needs of the citizens of the USA. If you need something, the government will eventually supply it and it will do so by taking more and more of your earned income and redistributing it as it sees fit. You don’t have to be wealthy to fear wealth distribution. There are more middle-class taxpayers than there are wealthy people in America so eventually the taxman will come to our door for greater and greater amounts of our earned income…all in the name of the government knowing the best way to save us from financial ruin.
Our current state of affairs as a country are not the direct result of economic down cycles that will simply get better with time by any means. The current state of economics in this country is government-imposed and government-sustained and it will continue in that manner as long as Obama occupies the White House. In order to change that situation, Obama would have to remove the government from center stage of our existence as a nation and shrink it significantly. He will not do that for his legacy as a president rides on what he hopes to achieve with the powers of a big government in the lives of all Americans. Sadly, he will ride that horse until it takes it last breath. Even sadder is the lack of opposition he faces in that process which allows him to circumvent checks and balances and walk on the Constitution on a regular basis. Americans should be outraged but instead far too many are apathetically thrilled with this socialistic dreamer who occupies the White House.
Everything is eventually affected by the “Law of Diminishing Returns” and so goes it for the government. By growing larger, the government does not grow more efficient except possibly in the area of having its fingers in about every aspect of your life. Government wants to take your ability to choose and execute it for you in terms of healthcare, taxation, environment, employment, education, and the list goes on and on even getting to the highly ridiculous side of shutting down your annual neighborhood bake sale. For the citizens and taxpayers, the benefit does not justify the cost. Even for those who are not paying taxes, and not productive, but are willing to take all the handouts the government can muster, reach the same conclusion from a different perspective...it's not enough. If that seems unreal to you just take a look at Greece…the freeloaders are rioting in the streets because government cannot fulfill its promises of security and generosity. Charity and welfare are eventually taken for granted and must always grow in scale to be appreciated.
This is not to say that welfare and charity can be ignored but maybe it should be ignored at least by the government. America has strong communities at the local levels and within those communities there are many knowledgeable people and organizations who know far better than the government where funds need to be spent to gain relief for those in need. We can address welfare and charity effectively without putting it in the hands of Washington politicians to be used as beads to barter for votes in the public place. This is the spending that no one in Washington wants to stop doing regardless of their political orientation but it is a good example of an area where the government needs to step aside and let local community organizations and private industry carry the burden. An efficient and effective government owes that to its taxpayers.
The upcoming election in November 2012 offers an opportunity to change our direction and move the concept of “big government” out of the spotlight. Once that step is achieved and once Obama-Care is simply a bad dream that has gone away, then we will see the American economy start to get up off its knees and return to health. Then, we will begin to see more revenue flowing to the government such that our newly elected officials may be able to give serious consideration to reducing our ever-growing debt load. If we stay with the status quo, government will only continue to grow in size and cost in every conceivable way for that is the goal of this administration and about the only success that it can claim.
Keep the Preamble to the Constitution in mind as you think of the federal government…”We The People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.” Outside of the six points noted in that mission statement, we, as citizens, should look to the federal government for nothing else and in turn the federal government should neither offer it.
Our country has been robbed and squandered by career politicians seeking power and pandering for the vote. The voters have been paid off with pork-barreling and earmarks that sent billions and billions of tax dollars off to no good end. Finally, we have come to a place where the road to the future forks. One way takes us further into debt as a country baited with the promise of a better future and more security all offered in exchange for your freedom and liberty. The other is a tough road for it requires us to truly change; to stop the insane spending, to apply our revenue in some fashion to our debt, and to live within our means as a nation in order to put our future on a solid foundation and allow those who come behind us to experience the America that we knew. This is not a road for the faint of heart or the queasy but it is a road to the solution. Freedom and liberty are not on the chopping block on this road but those who elected to be a non-productive component of society may find it a rather barren journey. Still, like our forefathers, those who desire to remain a free nation will answer the call and take the hard road and those who truly know how to lead will take us down it all the way to the destination.
Our choices for the future are clear. If we look to an overgrown federal government to answer our needs and guarantee our security, we will accomplish nothing except to bankrupt each other over time and enslave ourselves to a socialist collective. If we elect to rein-in the insanity and become fiscally responsible, we can once again fire the economic engines of this great country and again see a nation on a course which will solidify our future, reduce our debt, and draw a line in the sand putting all those who would freeload off the American taxpayer on notice…It ends here!
©Copyright WBrown2012. All Rights Reserved.
22 February 2012