The Economics Of Peter And Paul

The Economics Of Peter And Paul
David Stokes
Sunday, April 11, 2010

Maybe they’re on to something across the pond. It was announced the other day that the next national election in Great Britain will take place on May 6, and the stakes will be high. A 30-day campaign—can you imagine that?

Of course, the reality over there, as here at home, is that political posturing is a 24/7 proposition—relentless and unmerciful. But just the idea that an actual election can be set for a single month cycle is (pardon the pun) a foreign concept to us. Prime Minister Gordon Brown and his leftist Labor party have been gaining ground on David Cameron’s Conservatives, closing what was once a 20-point gap to single digits—lately around 7 per cent—so the timing seemed right.

And while America is being dragged kicking and screaming to the statist left, our increasingly distant cousins could possibly be on the verge of an ironic power-shift. One that has been described “as potentially the most pivotal since the one in 1979 that brought the conservative Margaret Thatcher to power and recast the fundamentals of British politics and society.”

In other words, the culture that gave us Lloyd George, Churchill, and Lady Thatcher, could soon witness “the fundamental transformation” of their nation. Some are calling the campaign of the Tories a “back to the future” effort. Indeed.

Of course, conservatives in the United Kingdom are nowhere near clones of their nomenclature counterparts in the United States. Tories there would barely qualify as “moderate” Republicans here. But the trend is unmistakable and it is not being sufficiently noticed in our neck of the political woods.

Emerging as the hot button issue in the British election is a Labor-backed planned 1% increase in the National Insurance Tax. The Tories oppose this and have countered with an “efficiency saving” program that would address the chronic financial hemorrhage situation in the National Health Service. The NHS, by the way, remains an object of envy to many in our government. Go figure.

Most Americans—especially the nearly half who will pay no income tax this year—haven’t a clue as to how a single payer system works in places like Great Britain. Over and above already oppressive income tax rates, workers must pay a National Insurance Tax, with exemptions only for those who earn, say around 105 pounds per week, then it increases immediately to 11% of income up to 770 pounds per week. Over that, it costs an additional 1% of each worker’s income. So under the new Labor proposal most British workers would be paying a minimum of 12% of their income to fund their single payer system—in addition to already high income taxes.

Even a cursory examination reveals that this is a tax burden that falls squarely on the middle class—something the Brits have been more honest about than some in the current administration in Washington. Of course, the “official” position of the powers that be here is that a single-payer system is not on the table. But for anyone willing to think this political chess match through a few moves ahead, it is clear that there is gleeful hope in many quarters that the recent “reforms” will so stress our current system as to bring it and the country to its knees, paving the way for our own European-style set up.

What Americans need to note is that for a government to operate here as it does in other places will eventually require a great sacrifice on the part of the middle class. We are being sold a bill of good these days, one that some Americans seem all-too-willing to accept. The big lie du jour is that we can have all the purported “benefits” of socialism without the burdens. Tax cuts for low and middle income families were expanded when Obama signed the massive economic recovery package last year. As a result, nearly half the country will benefit from everything the government does without paying a dime for it! And it is not just the poorest of the poor. There will be people who made $50,000 or more in 2009 paying no income taxes. In fact, 47% of workers in America will pay nothing.

And this is, in many ways, a cancer eating away at our national character. We are almost at the place of critical mass where those who derive a benefit from the government outnumber those who pay the bills. And as the old saying goes: “If you rob Peter to pay Paul, you can always count on the support of Paul!”

The irony is that this house of cards will ultimately collapse. Americans who think it’s all a pretty cool deal today—the idea of getting a free ride paid for by someone else—need to look closely at places like Great Britain. Yes, they have exemptions for some in their tax system, but you have to earn less than 6,000 pounds to qualify (roughly 12K in U.S. dollars, give or take). Everybody else pays. In fact, that family making the equivalent of 50K in U.S. dollars over there will pay heavy income taxes plus an 11% National Health Insurance tax for all that “free” stuff.

The other day, the New York Times wrote about the “growing power of the state in British life” noting that “more than half of all those in employment have government jobs, and just over half of the economy is accounted for by government activity.” Is this really what we want for America?

The truth of the matter is that the programs being touted today as to be paid for by the very rich will soon start costing all of us. In fact, it will be a rude awakening one day—if current trends persist—when a worker making an income that had long kept him below a tax-paying threshold sees a big chunk of change taken out of his paycheck.

Yes, they plan to soak the rich right now. But one day, they’ll come for everyone else needing dollars to feed the big entitlement machine. Saul Alinsky, in “Rules For Radicals” talked about the struggle between the “haves” and the “have nots.” And this became the basis for the kind of political energy that brought Barack Obama to the White House. People were trying to get their perceived “fair share.” Social Justice is now all the rage—let’s reshuffle the deck and give everyone a New Deal.

But the problem is that eventually the “have nots” will get all they can extort from the “haves.” Then the “pay nots”—those who have grown accustomed to someone else paying the tab—will have to become “pays.”

The other day, I was listening to BBC America on satellite radio and I heard a round table discussion bemoaning the fact that America has so much more entrepreneurial activity per capita than the U.K. These bright bulbs pondered the reasons and never seemed to have an “A-Ha!” moment. They talked about how maybe if the government gave more “grants” to those who wanted to start businesses.

Clueless.

Years ago, I heard a quote, I don’t remember where—or from whom—to the effect that if you want to see what the U.S. will be like in 40 years, look at the UK now.

Come to think of it, I heard that said just about 40 years ago.
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America Becomes a Two-Class Society
Phyllis Schlafly
Tuesday, April 13, 2010

Income tax day, April 15, 2010, now divides Americans into two almost equal classes: those who pay for the services provided by government and the freeloaders. The percentage of Americans who will pay no federal income taxes at all for 2009 has risen to 47 percent.

That isn't the worst of it. The bottom 40 percent not only pay no income tax, but the government sends them cash or benefits financed by the taxes dutifully paid by those who do pay income tax.

The outright cash handouts include the Earned Income Tax Credit (EITC), which can amount to as much as $5,657 a year to low-income families. Other financial benefits can include child tax credits, welfare, food stamps, WIC (Women, Infants, Children), housing subsidies, unemployment benefits, Medicaid, S-CHIP and other programs.

This is both a massive transfer of wealth and a soak-the-rich racket. The top 10 percent pay 73 percent of the income taxes collected by the federal government.

Rep. Paul Ryan, R-Wis., has become the congressional leader in explaining details of the recently passed Health Control Law. He says that, based on Congressional Budget Office figures, taxes to pay for Obamacare will have to skyrocket to an 88 percent income tax rate within 30 years.

Although all wage-earners help fund their own Social Security and Medicare benefits, only federal income taxpayers pay the costs of running the federal government, and are responsible for paying off our $12.8 trillion national debt and for bailing out Social Security, Medicare, and Fannie and Freddie when they collapse.

Even the recently passed Health Control Law contains financial subsidies to unmarried couples that are denied to married couples. This rewards the unmarried women who were the second largest demographic constituency that voted for Barack Obama for president in 2008.

When Obama told Joe the Plumber he wanted to "spread the wealth around," Obama wasn't kidding. That's exactly what he is now doing: taking money from taxpayers and spreading it around to non-taxpayers.

Nor was Obama kidding when, on the eve of his election, he threatened, "We are going to fundamentally transform the United States of America." Converting the earnings of American workers into handouts for those who voted for Obama in 2008 is certainly a fundamental transformation.

Obama's promise not to raise taxes on middle-Americans is already down the drain. Obama brought former Federal Reserve Board Chairman Paul Volcker out of obscurity to serve as chairman of an Economic Recovery Advisory Board and announce that we need to raise taxes.

Volcker was blunt in predicting that the new tax increase will be a Value-Added Tax (VAT). That's the tax European socialists love because its rates can be hidden and frequently raised, while producing rivers of revenue for the bureaucrats.

Volcker claimed that a VAT is "not a toxic idea." It really is -- Charles Krauthammer called it "the ultimate cash cow" because it transfers so much money from individuals to the government.

Having already co-opted the executive and legislative branches of government for his fundamental transformation, Obama now wants to use the judiciary, too. The retirement of Supreme Court Justice John Paul Stevens gives him this opportunity.

On Jan. 18, 2001m on Public Radio WBEZ-FM, Chicago, Obama complained that the Earl Warren Court "wasn't that radical" because "it didn't break free from the essential constraints placed by the Founding Fathers in the Constitution. ... The Supreme Court never ventured into the issues of redistribution of wealth and serve more basic issues of political and economic justice in this society."

Calling for the Supreme Court to participate in the "redistribution of wealth" is shockingly revolutionary. Any judicial nominee who agrees with Obama's theory should be rejected.

Obama's game plan to "fundamentally transform" America is based on both Saul Alinsky's modus operandi for community organizing and on the Cloward-Piven spending strategy. Saul Alinsky was a famous Chicago radical, and Richard Cloward and Frances Fox Piven were less-well-known Columbia University sociologists.

The goal of all three of these agitators was the overthrow of the private enterprise system. The Alinsky strategy is to use community organizing and mass demonstrations by those he labeled the "Have Nots," and the Cloward-Piven strategy is to overload the bureaucracy with enormous demands for entitlements, thereby causing a financial crisis.

Obama used Alinsky methods by taxpayer financing of ACORN and subprime mortgages. Obama used Cloward-Piven methods by massive deficit spending for entitlements for more and more millions of people.

Fortunately, hardworking, taxpaying Americans are beginning to understand how they are being ripped off and rushed into bankruptcy. The one way to save ourselves and our country is to elect a Congress in November pledged to stop the spending.