I don't mind the idea of balancing the budget by goring one class of people or even corporations. If the decision is made that all government spending is necessary, we are going to have to gore someone and we should get on with it.
We are 1.4 trillion in the hole for this year alone. President Obama's budget recommendations have us one trillion in the hole for the next 10 years. Based on this "keep spending & raise revenue" model, we have some ox goring to do.
Although the rich or wealthy (a complicated definition distinction) own the politicians, they are still the easiest to gore based on pitchfork and torch numerical superiority. Let's go after the top 2% which are those with income over $250K per year.
With this target, that gives us 1.7 million households to hit. Let's say we need to raise one trillion dollars a year from them.
We need to raise an average of an additional 588K USD per year from every household that makes more than $250K per year. Clearly it would need to be progressive taxed and a flat tax won't work.
We could broaden the target to the top 6% of households and that would be those over $150K per year. That would lessen the burden a bit.
Regardless of whether we gore the top 2% or the top 6% or even some other larger group is that to transfer that one trillion dollars to the Federal government, all that money now comes out of the economy. Keep in mind that the entire US economy is around $15 trillion (including government deficit spending) so when we extract the one trillion in economic activity to eliminate the deficit spending, that still subtracts one trillion from the economy. That means 6.6% of the economy vanishes.
Now I grant you that the top 2% or top 6% will be able to keep on living just fine after being gored and they aren't all going to pack off in masse to the Caymans or some other low tax location but one trillion dollars still just vanished from the economy. I don't know what they spent that money on.....cars, boats, vacation homes, tax-free muni bonds, CDs in banks that made SBA loans, new business ventures, etc. What I do know is that when 6.6% of the economy vanishes, there absolutely will be a trickle down affect.
I don't know what sectors will get hit the hardest. It will not be the case where all businesses simply contract by 6.6%. and lay off 6.6% of their employees. Some that are under the Obama Cone of Protection will be unaffected. Other sectors will be destroyed.
Democrats know they can't eliminate 6.6% of the economy to balance the books and preserve government size and spending. That is why they still want to borrow a trillion a year.
Republicans know they can't freeze the debt ceiling and cut one trillion in government spending without slashing every program including the military. Even if we eliminated one trillion per year in Federal spending, that still eliminates 6.6% of the economy.
My only point is when we seek to gore one segment of the population, inevitably we are going to gore a lot more than we expected. It is the Law of Unexpected Consequences.
Everybody is going to get gored one way or another. Get ready for the pain.
Edited by user
15 years ago |
Reason: Not specified
