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Sunday, October 14, 2007

The Mommy-State cult

As delirious and dangerous as the Eco-Marxist cult.

by StFerdIII

The economy needs liberation. What is instructive about left-wing, Marxist, class-warrior politics, is the utter poverty of the main ideal. Government coercion, regulation and over-taxation retards economic growth and cultural efflorescence. In almost any sector, program, or idea, government is the problem, not the solution. Nothing illustrates this more than the irrationality of those who hate tax cuts. Unsurprisingly those who subscribe to the eco-cult, also subscribe to the deluded scribbles of Marxist fallacy. Irrationality informed by paganism.

The welfare cult is wrong on almost any measure. Revenue generation is one such key measure. It is lesson that is ignored for many reasons. The rule is simple; you will generate more revenues and more economic growth, the lower the tax burden is. Since some public works and welfare are necessary a tax burden of somewhere between 25-30% of GDP – for all governments – is the optimum size of government extortion.

Take the last 4 years of US economic growth as an example. Thanks to the 2003 tax cuts the US economy has grown by 30% in the past 4 years – Europe's about 4%. US federal tax revenues have increased by 30% from $1.8 trillion to $2.5 trillion revenue and these now constitute 18.8% of GDP. It is no accident that unemployment is at a natural rate of close to zero. The US economy is working, and working very well.

Ah but what about deficits and debt? The US does have a spending and debt problem – but so does every other industrialized nation. Western Europe and Canada have higher debt per capita than the Americans – when all on and off balance sheet costs and obligations are dutifully added up. The Americans are however, overtaxed and overreglated. The tax code is a monstrosity and spending on social security, medicare, medicaid, and non-military items, out of control.

But the deficit is now at half of the historical average. Since 2004 the deficit has been reduced by $251 billion. This is the second fastest three-year decline in US history. Individual income-tax receipts have gone up by 46 % in the past four years – even as dividend and capital gains taxes were cut. Income is up on average, by 6% per year, or about 4% after inflation. Times are not so bad after all when you cut taxes and get the ugly heel of government coercion off of your neck.

It is also a myth that Americans are getting poorer or that the middle class is disappearing. The tax burden still falls mostly on top earning Americans with the top 20% paying 65% of all income tax. The middle class is getting larger not smaller. The problem for the middle class is that this 'class' needs more tax cuts not less. They also need relief from the extreme over-regulation of US society, and the attendant, omnipresent, and carnivorous user fees. The costs of living and the heavy burdens of paying various fees, seems to be on an endless upward arc for most Americans.

Not only do Americans face direct taxation, but they face a mounting and increasingly greedy system of indirect taxation in the form of user fees and other state and municipal costs. Along with out-of-control health and education costs, these burdens are the real issues that need addressing. Most states have record revenues, and most municipalities are increasing their tax base – both at the cost of the average homeowner and wage-earner.

Along with higher energy costs, it is the weight of indirect taxation and fees, along with government regulated messes in education and healthcare which gives most Americans the impression that their incomes are stagnant or that the middle class is disappearing. Both assumptions are false. But they give rise to populist pressures and political meddling – just the sort of thing that political demagogues and posturing political Marxists love.

So it is no suprise to see aspiring politicians and their left-wing mainstream media supporters ignore the good economic news and focus on the imminent destruction of the economy, the family and the middle-class. In the place of what galvanizes economic growth and higher wages, namely, a reduction in tax and spend and freer trade, we have the spectacle of hearing endless recitations by Hillary Clinton, Obama Hussein Barrack, and other demagogic hopefuls proposing the opposite. The fact that raising taxes and decreased trade hurts the middle class and the poor the most, is of course lost on the chattering main-stream news media.

The US does have some economic challenges. America needs more open trade; it needs to recognise that the Chinese currency cannot float [it will only depreciate if it does]; it needs to stop printing money destroying its currency; entitlement programs need privatisation; and needless spending must be totally eliminated. It also must increase its small [3.5% of GDP] military budget. One of the parties – the Republicans – more or less understands this. The other has no clue. The Americans don't need the 'other', with its cultish trappings and silly propaganda. They need more supply side economics and a reduced money supply.