By Rich Kozlovich
I'm going to start with something I've been saying for years. My grandfather was one of the world's great economists. He said if you spend more than you make, you'll go broke. What did he do for a living? He was a coal miner and a farmer. Economics isn't all that difficult, unless you're an economist.
Every Saturday I receive John Mauldin's free newsletter dealing with economics called Thoughts From the Frontline. I recommend subscribing. As I've said in the past, I like his analysis, even when I'm in disagreement, I like his offerings because it's not presented in arcane verbiage. The problem all these professional economists have is they all are part and parcel of a culture, and as Herodotus noted, culture is king, and it's difficult for them to see or think entirely outside the box of their culture.
Economics and economists make my eyes roll up into my head. Statistics has often been called an 'arcane' science. I'm a firm believe economics and statistics share that definition. Both can turn reality into a pits of doom, or paradise, depending on which side of the street they're walking on. Most importantly, depending on who's it is paying for their analysis and predictions, and if ever there was evidence of that, listen to the Biden administration talking heads, who claim "your" bad attitude is the only thing wrong with the economy. Otherwise, according to them, everything is just as rosy as can be.
In his December 8, 2023, Thoughts From the Frontline, Fair Shares of Debt piece today Mauldin John he breaks down just who it is who actually is paying all the federal taxes in America, and he starts with this old saw:
He follows that up with this statement, which I think is right on:
One thing you learn when writing about the debt
problem, as I have been in recent weeks, is that many people think it’s
not a problem at all. They believe we could easily balance the budget
by .........(insert simplistic idea here)..............In my October 27
Debt Catharsis letter, I talked about the difficulty of balancing the federal budget with
only spending cuts or
only
tax increases. Those paths are closed now. That’s one consequence of
waiting too long; the available options grow narrower and more
difficult.
I agree the actions of Congress and the Administration have been so extreme, they've destroyed some "paths" to fix this creating fewer options which will be "narrower and more difficult."
I'll tell you what, we'll come back to that, but in the meantime, let's look at what's being presented as the "go to" solutions, starting with taxing the rich, and making them pay their fair share! According to the IRS the bottom fifty percent only pay 9% of all federal taxes.
In this year (which is typical), the top 1% of taxpayers collectively
earned 22% of the total adjusted gross income and paid 42% of the total
taxes. The next 4% had 16% of AGI and paid 20% of the taxes. Below
that, tax paid is proportionately the same or less than earnings.......For those who think the wealthy should pay more, I invite you to get
specific. Should the top 10% of taxpayers bear 80% of the tax burden?
90%? 100%? If the current 73% isn’t fair, what would be?.....
As things are going right now, the national debt is allegedly at $32 trillion, which is projected to be $52 trillion by 2033. But those a false figures, as it doesn't include all the obligations of the federal government, such as government retirement programs, Social Security, Medicare and Medicaid, all which may be in the 50 trillion dollar range. There are those who claim the real number of debt, including borrowed many and government obligations, is in the 120 trillion dollar range, right now! Is that true? I have no idea, and truthfully, the numbers are so massive, I don't think anyone knows for sure.
What we do know is it's massive, and growing so rapidly taxes alone will not fix it. We're taking in over 4 trillion dollars a year and spending almost six trillion dollars. Where does the money come from? Printing presses. The fact is more taxes would make it worse as more taxes will have a negative effect on the economy. That's especially true for the VAX taxers, all of which he states. He goes on to cite
CRFB, claiming they're:
"about as dedicated to fiscal rectitude as any organization in
Washington. Its bipartisan board includes names like Erskine Bowles,
John Kasich, Alan Simpson, and David Stockman. This is a serious group
that knows the stakes. Yet earlier this year, CRFB published what I can
only call a
note of frustration."....
But as I read their suggestions, it's clear what they support is nothing more than schemes to kick the can down the road, and having John Kasich on their board is in no way reassuring. I've met him and find him to be weird and arrogant beyond belief, and his idea of conservatism is almost as far left as any Democrat in Congress.
When he was the Chairman of the Budget Committee in Congress he was responsible for balancing the budget. How did he do that? Higher revenue from new taxes passed by Bill Clinton. It wasn't done by massive spending cuts, and in fact spending went up. When he was governor of Ohio, while claiming he cut taxes, what he did was shift those taxes he cut from one group and put the burden on another, Ohio businesses. All smoke and mirrors.
There is one solution, and one solution only. Stop borrowing, and stop spending, and do it now! Not spread out over time, as that can and will be curtailed by some future Congress, and do it massively!!!!!
Where to start? Start with eliminating the number of federal employees, massively, all of whom are making more than those in the private sector. Eliminate 80% of the 438 agencies and sub-agencies of the federal government, and do that by "massively" cutting their funding in the budget.
Remember, culture is king, and when you read what economists say they're not really talking to you. They're talking to their peers, and most of them will not say anything that will get them kicked out of their peer group, i.e., their culture. I like John, but he's one of them, just a little better than the rest, but, he's still not a coal miner and a farmer.
My Commentaries for fixing government:
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