To Raise or Lower Taxes?

Dick McDonald

It is time to ask the question: Should we raise or lower taxes? In other words, should America continue on its path to create an enormous central government which needs to tax almost one-half of the annual income of its citizens to fund it or should America look to its Founders for guidance to lower taxes and reduce the role of the central government in their lives? In other words, should the Federal (central) government continue to increase the benefits it gives its citizens? The citizens know that their politicians have technically bankrupted the Federal government before this recession with $56 trillion of promised benefits in excess of projected receipts. What with the recession and the current administration’s belief in redistributing wealth there is every reason to believe that $25 trillion will be added to that amount in the next few years.

We know what the citizen taxpayers want. They want to increase benefits and decrease taxes. There is no way they want to get rid of Social Security and Medicare in spite of their bankrupt condition, yet they no longer want to pay for them along with higher costs of energy triggered by dependence of foreign oil and global warming concerns.

To date, the politicians on both sides of the aisle and their think tanks have only considered raising taxes and reducing benefits as a solution to this “have your cake and eat it to” wish of their citizens.

No one and no party or institution we have heard of has been advocating lowering taxes and increasing benefits other than the people themselves and the Ownership Society Institute (OSI). See here for the latter’s plan. Theirs is a plan that is fashioned after the principles of our Founders.

The political and vocal leaders of our country seem universally committed to raising taxes and/or reducing benefits not the reverse. That is easily illustrated by the article referenced above – $56 trillion. There, the ex-Controller General of the United States, David Walker states his recommendations to cure the debt problem.

First solving the Social Security problem is a walk-in-the-park for David – he calls it an “easy layup.” His solution is:

He believes gradual increases in the retirement age (Benefit Cut), a modest change in cost-of-living payments (Benefit Cut) and raising the cap on income subject to payroll taxes (Tax Increase) would solve its long-term problems.

There is no contest between Walker’s solution to cut benefits and raise taxes and OSI’s massive increase in benefits and enormous decrease in taxes. The people will opt for OSI’s solution if given the option.

Regarding Medicare, Mr. Walker admits that if we don’t do something about “reform” our current policies will take us over the cliff. The WSJ article stated:

As for health care, Mr. Walker says he had hopes for comprehensive health-care reform earlier this year and met with most of the major players to fashion a compromise. "President Obama got the sequence wrong by advocating expanding coverage before we've proven our ability to control costs," he says. "If we don't get our fiscal house in order, but create new obligations we'll have a Thelma and Louise moment where we go over the cliff." Mr. Walker's preferred solution is a plan that combines universal coverage for all Americans with an overall limit on the federal government's annual health expenditures. His description reminds me of the unicorn—a marvelous creature we all wish existed but is not likely to ever be seen on this earth.

Currently, the deficit for just Medicare and Medicaid is $48 trillion dollars. Now here comes Mr. Walker advocating to add the cost of and inefficiencies of a government-run universal health care system to that figure as soon as we get costs under control.

Who does he think he is fooling? The costs of health care will continue to go up because tort reform is impossible because of the lawyer’s lobby, insurance capabilities are being limited by regionalization and no one and no institution will ever stop man from trying to increase his lifespan.

However, Mr. Walker is not unique. The Heritage Foundation, the conservative’s think tank, claims that we can’t afford to privatize Social Security and Medicare because we can’t find the taxes to pay benefits under the old plan and fund personal investment accounts of taxpayers at the same time.

Now privatizing both Social Security and Medicare would substantially increase retirement benefits under OSI’s plan. See here to illustrate what benefits can be generated by privatizing. The nest egg generated would not only be more than enough to live affluently in retirement but would enable the elderly to afford the best medical care on the planet.

In light of the fact that the current administration is wasting trillions on ineffectual programs we sure could afford to privatize just using part of their waste. On top of that, OSI has another and maybe simpler way of doing it here.

The American people have allowed their politicians to run up what may turn out to be $100 trillion in promises they can’t keep. That is if they don’t change the existing entitlement laws. OSI has a plan that will immediately lower that potential debt to less than $10 trillion with a chance to make it a surplus rather than a deficit within 5 years.

All things considered the people want two things the politicians haven’t figured out how to give them. They want increased benefits and lower taxes and they are in the streets screaming their lungs out about it.

Last November, many voted for change that would deliver the American Dream of financial independence. What they got was a reversion to the failed socialist and collectivist policies of the past – policies that have proven time and again to make countries that adopt them poorer.

The American people are waking up to the fact that Barack Obama didn’t do his homework in school. He didn’t take enough business classes and has no idea how to run a free enterprise society. The question is will he capsize our system before we have a chance to save it. We know he is determined to raise taxes and cut benefits and that is not what people want. They want what OSI is offering; they just need to have it explained to them.

FamilySecurityMatters.org Contributing Editor Dick McDonald is a career financial analyst, accountant and champion of establishing Personal Accounts for American workers in place of the outmoded, inefficient Social Security program. Dick maintains a website at http://www.riseupwarrior.com/.