Wednesday, September 1, 2010

Mr. Simpson And The Cow

Author's Note - July 15th 2011

When I originally posted this in September 2010, President Obama's deficit commission had just published their report. I'm bringing it out again in response to the president's assertion that we're not paying attention out here. I'll be so forward as to say I've probably given his deficit commission report more thought than he has. Some of the figures are somewhat dated, as cost of tax code compliance has apparently more than tripled since the 2009 report cited here. America is experiencing record-breaking deficits and unemployment, and is far worse off than when Mr. Obama was elected. Recognizing that our out-of-control federal government is the problem, not the solution is the first step on a long, long road back to prosperity and liberty.

Alan Simpson, esteemed Republican co-chair of PBHObama's deficit commission, recently found himself in hot water for his colorful, and possibly vulgar (according to some government/media outlets) description of Social Security as a very, very, very well-endowed cow, and something about a rude remark to a lobbyist. Now, all kinds of leftists are calling for his ouster from this commission, because he told the truth, under the guise of his rudeness to the lobbyist. At least he didn't describe the lobbyist as a well endowed cow....

I don't envy Mr. Simpson his job. Assuming he survives this, he and the members of the commission have the unenviable job of making non-binding deficit reduction recommendations to the executive and legislative branches, recommendations they're free to ignore. What follows is my view of the problem and what I believe they should do, not just to reduce the federal deficit, but to radically transform the federal government and the tax system that funds it.

"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration." Nowhere does it say Congress shall enable/encourage home ownership through a mortgage interest deduction. Or guarantee a federal minimum income floor with the minimum wage, egged on by the Earn Income Tax Credit and child care tax credits. Or design schizophrenic tax tables that favor singlehood over opposite marriage, while encouraging the creation of children with a per child income tax deduction. Or substitute America's traditional generosity with tax deductions for charitable giving. Or limit free speech under the guise of "tax exemption" for non-profits (religious organizations). Or expand the police powers of the Internal Revenue Service to levy fines or new taxes to compel private citizens to enter into contracts with health insurance providers for the purposes of Obamacare. I know, despite what we hear from the "living" Constitution crowd, that these things aren't there. This scheme of credits and deductions might lead some to believe this is the government giving back, but that view begs the question, "Whose money is it to begin with"? The federal government doesn't have any money. In the face of reckless federal spending, and the future crises it portends, the current tax structure is a severe impediment to sound fiscal policy and fiduciary responsibility. No serious effort to reach entitlement reform and government reform should be undertaken without addressing the tax problem at the root of it all.

The deficit commission should point out the imaginary Roe-style penumbras and emanations that have morphed the thirty words of the 16th Amendment into the 3,700,000 word (2009) US Tax Code. The vast tax bureaucracy and regime are more dedicated to social engineering than to raising government revenue. Congress has codified incentivized behavior, redistributive transfer payments, financial and personal manipulation, and punitive police measures which force otherwise free Americans, "under the penalty of perjury", into compliance with this purportedly voluntary system of taxation. The Internal Revenue Service's own National Taxpayer Advocate, Nina E. Olson, released a 2009 report calling on Congress to reduce the complexity of the tax system. She also described the $193bil (2.66 billion hours at the $7.25 federal minimum wage) in compliance costs, and 7.6bil hours spent on paperwork, equivalent to the hours worked by 3.8mil full-time employees or 190,000,000 40-hour work weeks.

The tax commission should recommend a single flat tax rate. No marginal rates. No loopholes or deductions. No more rebates, prebates, tax credits or stimulus checks. No tax "shelters" or death taxes, so that you and I, and Warren Buffet, all devote the same percentage of our treasure to meeting our individual tax burden. End the class warfare by extending the obligation to pay taxes to 100% of all working Americans, not just those whom the elitist radical progressives in Congress and the Obama administration would like to soak. For some Americans, it might result in fewer cartons of cigarettes. For others it might mean taking fewer vacations. Would this make my tax bill go up? Probably, but that just means I've got courage and a little more common sense than most of the politicians and lobbyists in Washington.

Any tax increase must be accompanied, not by cuts in growth of spending, but real reductions in spending at the federal level. The commission should recommend an immediate freeze in entitlement spending at current levels until 2016, and further recommend the repeal of Obamacare, the remainder of Stimulus and Son of Stimulus, labor union buyouts and the dissolution of FannieMae, FreddieMac and all other government sponsored enterprises. The commission should acknowledge Mr. Simpson's candor and require government functionaries and politicians to tell the truth about entitlement programs, which takes us back to the well-endowed Social Security cow.

The truth is that 1/6 of all Americans receive some kind of federal assistance. Social Security and Medicare alone consume 10% of GDP, right now. Barring drastic action by the next Congress, spending on all entitlement programs will continue to grow exponentially because more Americans then ever before believe the progressive lie that they're actually entitled to them. This, and the fact that America is now governed by a cabal of elitist radical progressives whose own sense of entitlement drives them to accrue more power by expanding the scope and influence of the federal government. Their ascendancy and ever-expanding entitlements have coincided to become a vicious and self-perpetuating cycle of dependency, which reaches beyond the permanent underclass of the New Deal and Great Society, into the boardrooms of business and industry with federally subsidized long-term unemployment and government stakes in trade union pensions, banking, insurance and manufacturing. Now they have granted themselves a permanent seat at our kitchen tables with Obamacare. Obamacare alone imposes nearly $100bil in new taxes just for itself beginning in 2011, three years prior to the delivery of a single service.

At the end of its life PBHObama's deficit commission may be just another turkey in the political theater which is Washington, DC. Given courage and a little common sense, it could be so much more, with real reductions in federal spending on entitlement programs and the possibility of real tax reform. One can always hope....

Eternal vigilance is the price of liberty.