Thursday, September 20, 2012

My View

Random ruminations from your resident curmudgeon...

Lots of folks all atwitter about Mitt Romney stating that 47% of the population are dependent on the federal government and would never vote for him anyway. While most folks are focused on the effect of this statement on his candidacy for the White House, the reality is that he is right. Look at this chart:

The data compiled by the Office of Management and Budget show a startling trajectory in our federal spending, and that is that nearly 70% of our total spending is some form of transfer payments to individuals. For perspective, realize that in 1952, less than one out of every six dollars collected in taxes was transferred to individuals. Now it is roughly two of every three dollars. Think those folks are going to vote for a candidate that wants to change this system? Absolutely not, because it is a pretty sweet deal.  As I have said previously in other blog posts, some of these payments, such as Social Security, are obligations that should be fulfilled. However, failing to reform these entitlements will lead to their ultimate demise. Why do I say that? Take a look at this chart:

The other side of this problem is that at the end of 2010, 41% of federal tax filers had zero or negative income tax liability after taking their deductions and credits. From 1950 to 2000, this number hovered in the 20-25% range.

The problem is obvious. A growing segment of the population that is dependent on the entitlements distributed by the federal government and a shrinking base of tax payers is a formula for fiscal disaster. To do nothing means that we not only will we break the promise that we have made to present and future beneficiaries, but the probability of those programs failing is almost certain.

The more fundamental problem with our government today is that first and foremost, it has become a gargantuan wealth transfer apparatus. Money is extracted from the working class and transferred to groups that can provides the most benefits- read: votes- to the political class.

This makes controlling federal spending exceedingly difficult. Reforming entitlements and reining in spending means that some part of that 70% receiving payments is going to be affected. Reform entitlements and spending, and part of that gargantuan wealth transfer apparatus that is the federal government can be dismantled.

Mitt was right. His percentages were a bit off, but as the OMB data shows, there is a huge segment of the population that benefits from the current system of wealth transfer. Reforming that system will be a fight.

A fight of, well, gargantuan proportions.

It will require a re-ordering of our priorities as a nation. Fundamental to that will be the debate over the role of government. If government is limited in power; if power and decisions are pushed out of Washington and back to the states and municipalities where they can be more effectively made and executed, then we can begin to reverse this process.

As a nation, we can continue on the path where we find ourselves today. That is the choice of this election. Continue on the path to a European style welfare state, or begin to restore the vision of of a nation that allowed individuals to strive to succeed and to reap the rewards of their efforts.

I will tell you that the move to the European style welfare state will not end well. No nation or economy that has undertaken the massive transfer of wealth as a guiding principal has grown and thrived.

Unless this trend is reversed, the economic future of our nation is grim.

It is up to the 59% that is paying for this to demand change.

That is what this election is all about.

And that, my friends, is my view.

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