Wednesday, September 19, 2012

The 47% 120919


The 47%

How quickly things can change, especially during campaign season!  We all thought this presidential election would be about “the one percent.”  This of course refers to the top 1 percent of income earners in America who have the audacity to succeed, and then only contribute 37% of all federal income taxes paid in this nation.

            What a difference a day makes.  On Tuesday, September 18, we all became aware of comments made by Governor Mitt Romney at a fundraiser a few months ago.  The comments were recorded and recently released.  Governor Romney’s comments can be summarized as follows: Approximately 47% of Americans don’t pay taxes, view themselves as victims, believe the government owes them something, and will vote for President Obama no matter what Mitt Romney says or does.

            As is so often the case in modern day sound bite politics, Romney’s point has been completely lost because of the way he said it.  By his own admission, his comments were “not elegantly stated.”  But . . . his essential point is correct.

            Those in the lowest ½ of income earners pay virtually no federal income taxes.  That means that a large percentage of people that go to the polls every other year have no incentive to control the cost of government.  Instead, many of them have a vested interest in more and more federal government spending, regardless of the damage to the economy and the unfairness to those individuals that pay government’s bills.

            Various political philosophers and commentators have pointed out that democracy can only exist until the voters discover that they can vote themselves largesse from the public treasury.  Governor Romney was simply pointing out that given the number of people currently receiving the largesse, America is perilously close to the tipping point.  Hopefully he will discover how to state it “elegantly” over the next seven weeks.  If not, we are in big trouble.

Sunday, September 16, 2012

Taxes 120916


Seriously Governor Dayton?

            Governor Mark Dayton was recently quoted in the St. Paul Pioneer Press as follows: “This unwillingness to pay taxes…is going to be the death of this country if it’s not corrected.”

            The only inference that can reasonably be drawn from this comment is that Governor Dayton believes America’s success is positively correlated with the people’s willingness to pay more of their income to the government.  Really?  Are you serious?  From the moment our Founding Fathers set foot on American soil, their belief was that liberty, prosperity, and the ability to pursue happiness were fostered by keeping taxes low, thereby allowing people to take care of themselves and their families.

            This limited government model was not just a good theory.  It proved to be more successful in practice than anyone could have imagined.  In less than 200 years, America became the leading economic engine in the world, providing a standard of living to its citizens that was the envy of the world by the time I was born in 1961.  Our prosperity continued through the 1990s and into the early 21st Century.  Meanwhile, European nations were creating welfare states.  Eastern Europe crumbled in the late 20th Century and now Western European nations are going down one after another.  Big, centralized government did not work.  Capitalism and freedom did.

And it is not as though Americans pay no taxes.  As of 2007 (the most recent year for which I found data) the top 20% of income earners had a 25.1% effective federal income tax rate.  Add state and local taxes, and these folks pay around 40% of their income in taxes.  And the evil top 1% of income earners pay closer to 45% of their income to the government.

            The choice in this election is clear.  On the one hand we have leaders like President Obama and Governor Dayton who measure our greatness by how much government does for us and how much we are willing to pay.  On the other hand we have leaders who measure greatness by how much free people can do without government and how a smaller government can work well without bankrupting the next generation

Monday, September 3, 2012

Ideas 120904


We Have Won The Battle Of Ideas

            The 2012 Republican National Convention contained all the usual accoutrements: lots of red, white and blue; goofy looking hats; balloons and confetti.  And of course the speakers were carefully prepared for TV, with scripted speeches and makeup.  All of that fails to impress.  But if you are able to look beyond the superficial, something quite remarkable took place.  In order to appreciate the significance of what happened, one must put it in historical context.

            In January 1998, I started my first radio job.  I had the good fortune to work as a radio host and TV commentator for more than eleven years.  When I started, nearly all elected officials were either Democrats or “mainstream” Republicans.  There were a handful of rogue politicians (nearly all Republicans) warning of the coming economic apocalypse.  But they were marginalized and regarded as histrionic nuts.

            Over the next several years I argued that if America continued down the same fiscal path, we were headed for economic ruin.  My conclusion was based upon simple math.  You cannot go backward financially indefinitely without consequences.  You cannot pay retirees large and lengthy streams of income from underfunded pension programs.  You cannot sustain a system in which nearly one-half the people are taking money from the other half.

            In the late 1990’s and into the early part of this Century, those of us sounding the alarm were a relatively few voices crying in the wilderness.  But over time more and more people began to look seriously at the dangerous fiscal path we were on.  But it took several years before “mainstream” Republicans had the courage to confront the problem at all, let alone talk about it.  Remember when Medicare was “the third rail” of political discourse?  Ever so slowly more and more people started to acknowledge the fiscal cliff over which we are headed.

Somewhere along the way we went over the tipping point.  Now most politicians admit we are on a path that leads to destruction.  In November 2010 I was elected to the Minnesota Senate along with a group of freshman Republicans who take the fiscal crisis very seriously.  Our numbers are growing.  And our viewpoint was well represented at the Convention.

            On Wednesday evening Vice Presidential candidate Paul Ryan (R-WI) addressed the Convention.  In reference to Medicare, he stated the following: So our opponents can consider themselves on notice. In this election, on this issue, the usual posturing on the Left isn’t going to work. Mitt Romney and I know the difference between protecting a program, and raiding it. Ladies and gentlemen, our nation needs this debate. We want this debate. We will win this debate.”  A Republican, asking for the Medicare debate!  Times they are a changin’.  At one point in his speech, Ryan announced the intent of the Romney Administration to limit federal spending to no more than 20% of GDP.
            Many Convention speakers referenced out of control federal spending and the need to reign in the size and scope of government.  A national debt clock graced the Convention hall.
            What does all of this tell us?  It tells us the political insiders believe voters are ready to hear the tough news and elect people who are willing to deal with the problem.  Governor Chris Christie (R-NJ) sounded like a father explaining self-discipline and deferred gratification to a son or daughter.
            I am convinced that the majority of voters get it.  They know we must change entitlements, stop with the handouts and get our fiscal house in order.  The only question is whether voters that want to see the problem fixed will outnumber those who go to the ballot box to protect their government largesse.  The problem has been defined and the solution is clear.  I can only hope we have not already created such a large entitlement class that it is too late.