It used to be, in a not so distant past, that Americans rallied together to help their fellow man. In 1933, the Catholic Worker Movement was created to provide hospitality to those on the margin of society. There were 185 different, local Catholic Worker communities providing these social services. Neighborhoods pooled enough money together to help their fellow man during rough times, and families and friends joined together to see to it that their people didn’t go hungry or without clothes and shelter. This type of brotherhood is not over, but a shift has occurred in the mindset of most Americans.
The Tax Foundation estimates that 60% of all Americans now receive more in income benefits from government than they pay into government, and that with all of these new policy directions, the number will grow closer to 70%.
The Tax Policy Center has found that while everyone is expected to pay payroll taxes, but only 47% of American households now pay federal income taxes.
The shame of being on welfare, so prominent in that not so distant past, has lost much of its hold on a man. The idea of existing almost solely on Social Security or unemployment insurance no longer carries the stigma it once did. People now buy into the myth that they have paid into these programs, and they deserve whatever they withdraw from them. They believe, it appears, that these two programs are some sort of extension of a checking account that they should be able to withdraw from when the need arises. They believe that it is their benefit, a benefit that they have paid for. They want security, and who can provide greater security than the federal government?
In that day, not so long since passed, we used to realize that all the entitlements, the benefits, and the security that the government provided was not done so with the government’s money, or a leader’s money, or a politician’s largesse, but that it was the people’s money. That it’s our money. An old boxer James Braddock (i.e. the Cinderella Man) made a boxing comeback at one point in his career, and he not only returned the welfare he was forced to apply for as a result of injury and the Great Depression, but he made donations to the Catholic Worker Houses.
Wealthy liberals are also pleased at the current lack of shame involved in stepping before a government bureaucrat to ask for money, because they can always say that they voted Democrat. They no longer need to relieve their guilt by giving to charity, and they can maintain their wonderful person status by simply pulling the left lever. If they run into one of these people they consider poor wretches, they can now say: ‘Sorry brother, I gave at the office.’ Voting Democrat, to their mind, is a get out of guilt free card.
No one knows precisely when the societal shift began. Some believe it dates back to LBJ’s Great Society legislation, others believe the mentality started with FDR’s New Deal, and still others believe it’s a more recent phenomenon born from our non-judgmental, overly emotional, Oprahified society. Whatever the case, we’re bleeding our coffers dry.
The European Union has stated that a country’s debt should not exceed 60% of its GDP, but Congressional Budget office projections state that we should hit this “dangerous figure” by the end of the year, and that it’s possible that we could hit 100% of the GDP by 2020 if we maintain our current course of spending.
States and federal government representatives are running out of things to tax. They’re redefining sin tax to cover tanning salons, high salt products, and sodas. They say they’re ‘trying to cut down on such aberrant behavior’ by taxing it. Does anyone still believe this? Very few people argue against sin taxes, so politicians are now seeking to broaden its definition. They can’t stop spending. It’s what they do. What would they tell their constituents at election time, after all, if they weren’t able to promise them goodies?
The one sentence, it seems, that is verboten in the political of lexicon of the day is, “we’re out of money.” That’s cold, mean-spirited and thoughtless. That alternative is that we continue borrowing from China and Japan, we continue printing money to the point of inflation, and we raise debt ceilings to allow for more spending. The state of California has put out a call to place all government employees on the minimum wage. California citizens have stated that this is unthinkable, cold, mean-spirited and thoughtless. It’s impossible, they say, for an individual to live on the minimum wage in their state. What they don’t appear to grasp is the enormity of the sentence: “we’re out of money.”
New Jersey Governor Chris Christie is not under such delusions. A state task force has just submitted a finding to New Jersey governor Chris Christie: “let what they call ‘for profit’ companies run state parks, psychiatric wards, toll booths, and preschools.” This task force has estimated doing so could save the state of New Jersey $210 million per year.
A for profit company is a company that employs people on a cost benefits basis. A for profit company provides products, and in this case services, for a fee to its customers, and after dollar cost averaging the costs versus the services this company hopes to make what it called a profit. A for profit company is not out to provide a service just to provide a service. A for profit company is not out to employ people just to employ people. A for profit company wants money for its CEOs, it’s employees in the way of bonuses and raises, its shareholders, and for set asides that allow it to improve its company in the future.
Detractors claim that New Jersey tried the “for profit” method of saving money, and it failed. They claim that allowing private companies to run such cherished tasks leads to corruption, crony capitalism, and ineptitude. They also claim that “fee” is another three letter word for tax. The beauty of private companies, or for profit companies, is that if one doesn’t work you can always try another. If one charges too much in the way of fees, ineptitude, or corruption, you can announce that company XYZ has failed in their duty, and we’re now accepting bids for someone to take their place.
Chris Christie understands that the current path we’re on cannot be maintained. We cannot continue to just find different taxes for discretionary and entitlement spending on federal and state levels. We cannot continue to discourage private sector growth and discourage investment and discourage people from spending their after tax income with promises of tax hikes in the future.
The little secret of our current malaise is that if you tax something enough, you can slowly bleed it to death. Economic models show that when you cut various taxes, you not only spur growth in the private sector, but you increase revenue receipts to the government. These results are not seen in the short-term though. The results require a few economic cycles to produce results, and politicians are not patient. They have disasters to cause and cure. They have power on the line. They have elections to win, but don’t bother telling your representative this little secret. Most of them know it already.