By Mark Rhoads
Extreme Left-Wing Democratic leaders such as Senate Majority Leader Harry Reid (D-Nevada) are so completely addicted to spending more and taxing more that they cannot face reality anymore. Reid thinks that the downgrade by Standard & Poor’s to AA+ proves his theory that America’s deficit and debt problem is caused by the fact that it does not tax enough rather than that it spends too much. But most economists understand that the current unemployment rate of 9.1 percent nationally understates the employment problem because tens of thousands of laid-off workers are dropping out of the work force due to discouragement in finding a job.
Democrats believe in new taxes like fans of Peter Pan believe in the magic of pixie dust. They really do not understand that an economy in a recession as bad as this one is now reaches a point of diminishing returns when it can no longer produce more tax revenue because there is so little economic activity or income that is left to tax.
Direct taxes, indirect taxes, ruinous government regulations that have the effect of taxes, and the manipulation of currency by the Federal Reserve without direct congressional approval already force many citizens to work from January 1, to past June 1 just to support the government in the style to which it has become accustomed. President Obama eloquently calls for “shared sacrifice” to meet the deficit challenge but he never asks the federal government to sacrifice anything. There are more than two million civilian government employees who have generous salaries, heavily subsidized health-care plans, more than generous pension plans, and many sick days and holidays that make their lives better than their counterparts who work for the private sector. This was not always true but it is now.
When a large corporation needs money, the directors often sell off unneeded assets. The federal government directly owns 650 million acres of land–nearly thirty percent of all the land in the fifty states. Not all of those acres are needed for military bases, national parks, or forestry purposes. Much of it just sits there serving no useful purpose to anyone because the extreme empire-building ideology of federal government agencies dictates that it never sell off anything to private purchasers. The government owns 84 percent of the land in Harry Reid’s home state of Nevada, and more than half of the land in Alaska, Utah, Oregon, and Idaho.
To compound the problem, that also means that thirty percent of all land in America is removed from local tax rolls so the land cannot bring in any property tax to help pay for local schools, police, fire protection or sanitation services. In this way the federal government is the direct enemy of state and local governments. The federal government also wages war on the tax base of local government by imposing mandates on the states and localities and providing no money to pay for the cost of those mandates. The Obama Administration, and others in both parties, have done nothing to relieve the burden of unfunded mandates on local governments so they shift that financial burden to local taxpayers who have no chance to vote to approve or disapprove the mandated spending.. The best way for the feds to stop their war on the states is not spend more money that they do not have, but to repeal some of the mandates that are no longer needed if they every were in the first place. Illinois was once proud to lead the nation in spending for educating children with special needs but that good program was undermined by mindless federal mandates that made it impossible for local school districts to limit funds to purely educational needs instead of all the ancillary medical expenses that special needs children also have in addition to normal costs. How fair is it to bankrupt local school districts who are forced to spend almost unlimited funds on a relatively small number of special needs children while having to abolish sports, music, and after-school activities for students who do not have special medical requirements?
President Obama often condemns the greed of rich people but he never mentions the enormous greed of the federal government itself. A government that spends an amount of money more than one hundred percent of the Gross Domestic Product is out of control because it spends too much and not because it taxes too little. The government spends almost two billion dollars every hour (one-half million dollars every second) and there is just not enough potential revenue left from tax increases to close that gap from the revenue side only.
In most 12-step programs, the first thing that an addicted person must do is to admit that they have a problem that they are powerless to control and that their lives have become unmanageable. That condition closely matches the addiction that some Democratic leaders have to spending and taxing. Both parties have failed to admit the massive scale of their problem and that they are powerless to manage it. They even make things worse by pretending that government can do something effective to create new jobs. Creating good-paying long-term jobs lies in the domain of the private sector mostly and is not in the power or competence of elected or appointed federal officials. They cannot be part of the solution because they are a such a major part of the problem.
If Harry Reid and Senate Democrats believe that new increases on general tax rates or “closing loopholes” on rich people will actually bring in enough new revenue to close the annual deficit of one trillion dollars then they have an obligation to stop being so vague about how much new money can be raised and how? Is there enough new tax money available to close the deficit or not?
Also published in Illinois Review.