Unfortunately I think you are missing the point of what a true fiscal conservative is. If you are truly fiscally responsible you consider all options to bring spending in line with revenue. Some times that means cutting spending sometimes that means taking on a second job and sometimes that means both.
Too many people confuse smaller government with being fiscally conservative or cutting taxes being fiscally conservative. Those are ideologies but you can not budget anything correctly if you do not look at what you spend and what your revenue is.
It is okay if you are for a smaller government but that is not the same thing as what we are talking about. We are talking about bringing spending in line with our revenue which means you need to look at both. Obviously the more government spending you get rid of the less revenue you need, but, as has been seen in the past, and as I will discuss in future post, most people are not ready to give up enough of the services the government provides to get to where we need be.
While your view may be that we need less revenue because you don’t want the government to provide many services you need to be realistic about what can pass in congress. More importantly you have to examine the cost of all the things you accept the government hast to provide, a military? roads? I am sure even those that advocate for smaller government can think of a few other items they want. Once you do that if you still think we can pay for all the things you want and pay off our debt you need to convince enough other people to give up things that they cherish. This is an up hill battle since the majority of the population is okay with raising some revenue to pay for the things they value. A true fiscal conservative is more interested in balancing the budget over the long run than he is in shrinking government. If your primary concern is shrinking the government you are a conservative, but you are not fiscally conservative because getting spending and revenues to align is not your top priority, shrinking the government and cutting taxes is.
Almost all credible economists and every bipartisan commission that has looked at this issue in the past say we need to look at both, spending and revenue.
As for your suggestion Warren Buffet or anyone else just donate more to the government to solve our problems it just won’t work. There needs to be shared sacrifice. We know we can not run our government based of volunteer contributions. We have a hard enough time getting people to be honest on the taxes they do pay.
I agree the tax code is way to complex and we need to simplify it, but we will save that for future post.
I want to address the story you shared. It is very entertaining and it has been around for at least 10 years, sometime it is a meal other times it is beer. The latest version attributes it to a Professor of Economics at the University of Georgia by the name of David R. Kamerschen, Ph.D. Sorry the story was not written by him. These simple stories are circulated around the internet to whip up frenzy at the base of either party. Often they are said to have come from some important or well educated person in order to give them credibility. If you like the story and want to use it to prove your point please at least be honest about where it came from, and if you don’t know say you don’t know. If you are not sure check it out first at a reputable site. I find Snopes to be very reliable at dispelling urban legends. http://www.snopes.com
Here is the link to the article about the origins of this story. http://www.snopes.com/business/taxes/howtaxes.asp
Some people call these simple stories for simple minds. I think they are simple stories that people want to believe so much because it is easy and supports their narrow view of the world. It is easier to accept them than to look at the real facts and make the hard choices. This is what this blog is designed to do. Get people to come together to solve our problems by listening and considering all options instead of yelling and relying on simple talking points that are never backed up by facts or empirical evidence. Spamming stories like this is part of the problem not part of the solution. If you want something simple to hold onto here it is.
We need to pay for what we bought in the past and what we buy in the future. If we as a nation don’t want to continue to buy certain things, I am fine with that. But majority still rules and while we can all point to programs we would like to be cut we can also all point to some we cherish. Once the majority decides what we are buying we need to make sure we raise enough money for the stuff we already bought and for those things that we decide to buy. You have to look at both the money coming and the money going out as the part of any solution.
As for your cute analogy this is where it goes wrong. While many people wish that the service our government provided was beer or a good meal, alas our government does not provide that service. In fact it does not provide just one service. The story fails in it’s simplicity for not looking at what benefits everyone receives and wrongly assumes that everyone benefits equally from a strong government. This is where I encourage people to look behind the facts.
Those people that do not like government or the social safety net will be quick to point out all the areas where the poor benefit more than the rich and middle class. Things such as food stamps, Medicaid and unemployment benefits immediately come to mind. And those people are absolutely right, poor people benefit more than the rich and middle class from those items. Again, we as a nation can decide which if any of those benefits we want to continue, and at what level, but once we do we have to pay for them.
Where your story really misses the mark is on the functions the government provides that benefit the rich and middle class more. Trying to keep this simple I will limit this to a couple of examples. The government maintains roads and an interstate transit system (something lacking in a large portion of the world). The poor person that does not own a car benefits little from that system, the middle class person that drives to work or on vacation benefits, but the people and companies that own fleets of trucks and need the roads to get their goods to market benefit the most.
Likewise our government employs air traffic controllers and the Federal Aviation administration to keep our skies safe. The poor, that can not afford plane tickets, only benefit to the extent planes do not fall out of the sky and land on their heads, since they own no cars or homes. Middle class people benefit because it makes it easier to take vacations and visit family and friends. Rich people and companies with private jets or the need to get their employees and goods places quickly benefit the most.
While there are several examples I will end this section with the thing the wealthy benefit most from. It is a stable government leading to stable markets. When we have large losses in the markets due to the government’s inability to get our fiscal house in order it should be clear who is hurt the most, and conversely who benefits the most. So when the stock market falls 20% the poor loose nothing because they own nothing. The middle class losses tens and sometimes hundreds of thousands of dollars in their retirement accounts. However, the wealthy and the corporations loose millions and billions. This is why Warren Buffet and the Wealthy have a vested interest in making sure we have a stable government and put our fiscal house in order. Asking them to pay more to save them billions in economic losses does not seem like it is asking too much.
For a comical take on your analogy please see the post at http://www.viralgrapevine.com/how-tax-cuts-work-by-david-r-kamerschen-refuted-the-real-way-tax-work-removing-the-internet-garbage/
Even through food stamp, medical, or any kind of support that money paid to poor to purchase food or services are actually goes in pocket of corporations. Actually corporation cox government to pay those billions of dollars to poor and they suck back .
ReplyDeleteI, too, have read the beer story. It is entertaining & informative in a one-sided kind of way as you point out in your post. There are flaws in your argument as well. While it may be true in major metropolitan areas of our country that poor people don't own cars, that is not universally true in all areas of our nation. Research from a variety of sources indicates that as little as 50% of the population in large cities like New York may own cars (due to the total cost to own? - when insurance, parking, licensing are added to the mix). That same research estimates anywhere from 88-95% of the total US population to be car owners. So your argument that poor people do not benefit from the transportation infrastructure is flawed. Are those poor people never leaving their homes at all? Or only walking where they need to go? Doubtful. If they use public transportation in any form they benefit from the government support of roads, highways & transit systems available in their metropolitan communities.
ReplyDeleteYour "stable markets" argument also falls short. While it may be true that there is a bigger direct & immediate advantage to the wealthy to maintain stable markets, it is not true that a 20% drop in the markets has no impact on the poor. Stable markets benefit the poor as well when the wealthy invest their assets in ways that create new jobs. Bottom line? Everyone is impacted. Everyone should have a vested interest in economic & fiscal health & stability in our nation. The wealthy need the poor to provide a labor force to keep their investments productive & the poor need the wealthy to be willing to risk their wealth through investments in our economy that create jobs & fund our nation's tax coffers to provide the public services that they depend on for survival. Truth? Everyone benefits when everyone buys in. No one group should be expected to make all the sacrifice for the rest of the population - no matter where you fall on the economic spectrum.
Because of the complexity of the tax system and the hundreds of millions of people it applies to it will always be possible to find exceptions to any analogy like the above. Will I think it is difficult to refute that the poor benefit the most directly through the tax system as suggested in this article the wealthy benefit substantially indirectly from government programs and spending, including direct spending by government with the companies they own.
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