Saturday, January 28, 2012

Life on Planet Broke

I wanted to comment on the SoTU address by the Hawaiian Kenyan, but I find it's hard to beat Mark Steyn at turning a phrase.  Mark posts The State of our Union is Broke at National Review Online.
Had I been asked to deliver the State of the Union address, it would not have delayed your dinner plans:

“The State of our Union is broke, heading for bankrupt, and total collapse shortly thereafter. Thank you and goodnight! You’ve been a terrific crowd!”
Hey - I'll be here all week.  Remember to tip your waitress!  Go read.

It's amazing the whole Buffet Rule nonsense has been dredged back up, like the zombie that is, as if increasing taxes on the richest few people in America would matter as much as a fart in a mitten (to borrow a quote in a comment at Sipsey Street).  I have this nasty habit of being grounded in reality, and while I've talked about this before, let's hit the bullet points.
  • The whole issue is pure hypocrisy, and Warren Buffet is stinking hypocrite himself.  The real tax rate Buffet is paying is closer to 50% than the 15% the president quotes.  That's from 35% when it was regular income and 15% as dividend earnings.  Our tax code is written to encourage investing in businesses by taxing your capital gains at less than the ordinary income rate.  Whether or not that's a good thing, and I believe it is, is completely independent of raising tax rates on millionaires and billionaires (where millionaire has been defined as earning more than $250,000).
  • The tax rate is different from the percentage of income you pay as tax due to our "progressive" tax system.  The rates are a step function; for the first step of income, you pay a lower percentage tax than on the last dollars you earn.  Over 97% of the population pays less than 12% of their gross in taxes.  In fact, about 50% don't pay anything, and some make more in government benefits than they pay, leading to a decrease in lifestyle if they work harder and earn more. 
  • If took every penny of the combined wealth - not just their income - of the Forbes list of the Richest 400 in America and reduced them to paupers, you'd end up with $1.5 trillion, which is not quite enough to pay for one year of our deficit ($1.56T).  (source)
  • But maybe for 2012 a whole new Forbes 400 of Saudi princes and Russian oligarchs will emigrate to the Hamptons and Malibu and keep the whole class-warfare thing going for a couple more years
  • If took every single penny of income from everyone who earns over $10 Million per year, you'd get $240 billion - enough to run the government for 18 days.  If they took every penny of income from everyone with an income of over $250,000, the money would be gone in under 200 days.  It wouldn't pay for the current spending programs for a year, let alone add all the programs they want.  For a refresher, watch Bill Whittle's excellent video.
Or, as I've said many times,  It's The Spending Stupid!  We can not and will not get out of this mess until spending is scaled back to being supportable with tax revenue, which is historically around 18% of GDP.  It really needs to be scaled back closer to 15%, and we need to run surpluses as far as the eye can see. 

As I've done before, I like Steyn's conclusion so much, I'll use it here.  (I did say to RTWT)
There are times for dreaming big dreams, and there are times to wake up. This country will not be going to the moon, any more than the British or French do. Because, in decline, the horizons shrivel. The only thing that’s going to be on the moon is the debt ceiling. Before we can make any more giant leaps for mankind, we have to make one small, dull, prosaic, earthbound step here at home — and stop. Stop the massive expansion of micro-regulatory government, and then reverse it. Obama has vowed to press on. If Romney and Gingrich can’t get serious about it, he’ll get his way.

No comments:

Post a Comment