"Any significant movement of wealth from taxpayers to tax consumers will not enhance prosperity; it will crush it, and it will breed dependence on a government that is fiscally out of control. But the recipients will no doubt vote to re-elect those who gave them these payments."

Republicans for Big Government

by Andrew P. Napolitano

Do you know anyone who voted Republican this past election in order to further President Obama’s big government agenda? Or is it more likely that Republican voters sought to advance a smaller version of the federal government? And if they did, why are Republican congressional leaders offering to help the president spend us into oblivion?

I suspected that those questions might be asked when Mitt Romney was nominated to oppose Obama. My view of his campaign then and now has been that he presented a choice to the voters of big government versus bigger government, and bigger government prevailed. Romney argued during the campaign that he was at a disadvantage because the president had distributed federal tax dollars to persons and groups critical to his re-election. He has since argued that he lost the election because nearly half of Americans – some by chance, some by choice and some by force – are dependent on government for much of their income or subsistence.

His argument sounds harsh, but it’s true. A formerly working and now retired couple in their mid-80s who are receiving monthly payments from the Social Security Administration into which they were forced to make payments while they were working can hardly be considered slackers. But they can be considered dupes. All of us who have fallen for the government’s nonsense about it holding our money for our future use have been duped. The government doesn’t hold anyone’s money for him. It spends whatever it collects as soon as it receives it. When its entitlement bills come due, it uses current tax revenue, or it borrows money in order to acquire the cash to make the payments.

The president knows this. Congress knows it. The courts have endorsed it. In endorsing it, the courts have held that the government’s decision to pay entitlements is a political, not a legal, one. Stated differently, the federal government has no legal obligation to pay any money to any Social Security or Medicare or Medicaid applicant. That’s why those who have relied on the political wisdom of politicians, rather than their own prudential judgment, are dupes. Let me rephrase that: Those who have permitted politicians to use the force of law to compel us all to contribute our hard-earned income to a bankrupt government Ponzi scheme are dupes if they think this can work without end.

When FDR first proposed his Social Security scheme, he knew that only force and duplicity would get enough people into the system to generate the cash flow at the entry side of the Ponzi scheme to make it salable to Congress and to the American people. LBJ knew the same was the case for his expansions of Social Security with Medicare and Medicaid. What LBJ probably did not anticipate is that health insurers would largely cease offering products of primary insurance to seniors, and thus seniors would require the government entitlements into which they had mistakenly believed they were contributing, because the government would become the only game in town.

Now that the emperor has no clothes, and we are confronting more and more seniors who have been lulled into this false sense of security, and fewer young workers are even entering the job market, the government’s voracious need for cash is difficult to fulfill. Earlier this year, when members of both parties in Congress recognized this ticking time bomb, they agreed to address it by punting. Now, that punted political football is falling to the earth, and no one wants to catch it. The punt they bequeathed to themselves is a tax increase for everyone and reductions in spending that even they find to be odious. The odor they dislike is the realization, to paraphrase Margaret Thatcher, that they are running out of other people’s money.

The president was re-elected on promises of more of the same: more borrowing, more spending and new taxes on the rich. The Republicans who got elected did so on promises of lessened spending and no new taxes, to paraphrase George H.W. Bush. The president, who is the most liberal president since Woodrow Wilson, is largely ignorant of economics 101. But his ignorance is consistent with his beliefs that the feds can continue to spend more than they collect and continue to borrow without ever repaying.

The Republicans in the House are largely more conservative than at any time since Wilson left office. One would expect them to understand the intent of the voters who sent them there and thus say no to more taxes, no to more spending and no to more borrowing. Instead we have Republican leadership in the House that actually proposed raising more revenue by eliminating deductions on income taxes. They somehow claim that they are being faithful to their stated mission of fiscal conservatism by making you pay more money but at the present tax rates. They, too, have failed economics 101.

Any significant movement of wealth from taxpayers to tax consumers will not enhance prosperity; it will crush it, and it will breed dependence on a government that is fiscally out of control. But the recipients will no doubt vote to re-elect those who gave them these payments.

Link:
http://lewrockwell.com/napolitano/napolitano79.1.html