Opinion
By Leslie A. Rubin
We are in financial trouble. Many recognize the enormous debt we have; the $35 trillion in interest-bearing debt has been well publicized. And we now spend over $1 trillion per year on just the interest on that debt, and that number grows annually – it is more than we now spend on defense. And what do we get for that? Nothing.
Perhaps not as well publicized are the multi-trillion dollar deficits projected by our own government as far as the eye can see. Our debt will exceed $55 trillion in 10 years, at a minimum, on the present course. It will probably be worse as those projections do not assume any new programs, recessions, wars, pandemics or other unforeseen events. And in 10 years, the trust funds for Social Security and Medicare will be exhausted. Under current law, that will mean mandatory benefit cuts of 21% and 11%, respectively.
This has been the subject of many of our weekly emails. My overriding concern is that the American public does not realize how serious this problem is, and neither political party is addressing this. They continue to “appease” the voters with “goodies” that “sound good” but are not affordable and just make the problem worse. Neither of our presidential candidates have offered a credible program for dealing with our federal debt – just platitudes with no viable plan to lower future deficits.
Then come the demagogues who say “tax the rich,” let them pay their “fair share.” Do you know that the top 5% of the income taxpayers pay more than the other 95% combined? We already have the most progressive income tax structure in the industrialized world – meaning that the top 1% of taxpayers pay on average 25% of their income in taxes, while the bottom 50% pay on average about 3% of their income in taxes.
Or let’s tax wealth, which has been tried in other countries with no success – but it did succeed in driving many thousands of the wealthy out of the country where it was tried. Or let’s tax unrealized capital gains, or raise the tax rates on corporations, capital gains, and the income of the wealthy. If you want to grow the economy and raise our standard of living, there could be no worse economic policy, and could easily be counterproductive in the long run.
Did you know that corporate tax revenue increased after cutting the corporate tax rate to 21% after it had time to work? Incentives matter – a lot. We have quoted Churchill previously, but it is worth citing him again: “a nation trying to tax itself into prosperity is like a man standing in a bucket trying to lift himself up by the handle.”
What no politician suggests is to reform entitlements so they work financially – it can be done without major benefit cuts. Social Security, Medicare and Medicaid alone cost the government well over $1 trillion every year and the cost gets bigger every year. No one has suggested cutting the size of the federal government to what our founders intended – a limited federal government. This was specifically stated in the Constitution. We grew to be a wealthy, powerful nation when our government was much smaller. Our founding fathers understood that too much power in the federal government would lead to tyranny and loss of freedom. They were right.
Are we going to wait for our country to fail before we act? It seems so, as our complacent public seems content to watch the world burn. But when the fire gets too hot and catastrophe strikes, it will be too late.
There are 2 short pamphlets available free on our website. One is Failure is Our Option: America, We are Choosing Failure by Default. It is a 15-minute read and will wake you up. The other is Restoring Fiscal Sanity, A Common Sense Approach. It is less than an hour to read and delve into solutions to bring fiscal sanity to our nation.
Our politicians will only act to “fix this mess” if we the people are informed and tell them we want to get to fiscal sanity – before it is too late. It is up to us to get our elected officials to do the right thing. On our website, there is a link to Contact Congress, please use it, it will take less than one minute to send a message to your representatives.
Leslie A. Rubin, who is based in Clearwater, Florida, is a professional accountant, entrepreneur, and real estate developer. He has a clear understanding of what makes economic systems work, the power of incentives and is the founder of MainStreetEconomics.org