Entitlements, Fair Taxes, And The Blame Game

Ah, the blame game; its fun for the whole family and has an appeal that jumps every racial, ethnic, or socio-economic boundary. All you need to play is a problem you want to solve (in your mind), and someone you either don't like or don't know and, voila, problem solved. It is always easiest to group people together into large problem-creating monsters; Republicans, conservatives, Democrats, liberals, progressives, immigrants, poor people, rich people, corporations, lawyers, bankers.

There are of course people who profit from our collective assignment of blame; if we blame Republicans for the housing bubble and crash, Democrats benefit. If we blame Democrats for terrorism, Republicans benefit. But times of economic crisis really do bring out the creativity in us. When things go really bad, economically speaking, we blame the poor (and usually, ourselves even if we don't realize it at the time). If only they took personal responsibility for their plight and didn't rely on what I have paid for with my taxes, then all would be well and beautiful again in our land. My father-in-law has a saying that describes this perfectly; "Ah Puke!"


A recent column included this darkly amusing line of garbage;

"If I’m paying their salaries and benefits, I’d like a little more say in what they do. How come I have no more say (one vote) than someone who has never contributed a nickel to big government, moreover who has never earned the nickel the government is paying them for so called entitlements?"

I have read and heard this before, and from many different sources. Several questions immediately leap to mind:

1. Have you read the Constitution, if so, did you find the spot where the Founders allowed for a modification of voting rights?
2. Whose salary and benefits are you paying, and on what salary do you claim preeminence over others?
3. How do you define entitlements?

Is Social Security an entitlement? The proceeds from annual FICA taxes are enough (in a normal economy) to cover the outflow; but the math is not in your favor if you are a current recipient. If you are a senior, than I am paying for your benefits. Does that mean seniors shouldn't vote? How about Medicare, that socialist program that so many seniors would fight to keep? Is Medicare an entitlement? FICA taxes are no longer sufficient to cover the full program; should it be suspended or should we just stick with seniors losing their vote? Unless of course, those seniors are as wealthy as you.

Are we entitled to national defense? The DOD, VA, and Homeland Security absorb almost three-fourths of all discretionary spending in our nation. How much money are you contributing to our national defense? Something on the order of 80% of Medicare and Social Security costs are paid for via a regressive tax; everyone pays the same rate up to $102,000 or so. Since many middle and (presumably like you) upper-middle class folks pay less than 12% in effective income tax, lower income wage earners and illegal aliens are paying a higher percentage of their discretionary income to Uncle Sam than you are. Nobody gets away without paying FICA, unless their employer is cheating.

Perhaps education is an entitlement, poor and lower middle class folks send their children to school all the time. Wealthy folks such as yourself are undoubtedly picking up that tab. Education represents one half of the investments in the U.S. welfare state, which totals around 35% of our annual GDP. Lower middle class, the working poor, and the lazy probably pay less than 40% of the costs of those programs. Of course, since most education (at least at the elementary level) is paid for via property taxes, this might not count. You of all people know that no one (illegal or otherwise) escapes property tax, unless they live in a box. But maybe it does count; maybe two public school teachers in their late twenties who send their two children to school should lose their vote. After all, the statistics are clear; two teachers at that stage of life probably make less than $60,000 combined. Happily for you, they won't qualify for food stamps, but they probably contribute very little income tax compared to a man of means like yourself.

All of those disgusting poor people, and those filthy retail clerks and farm laborers! Minimum wage types may think they are working for a living, but you and I know that since they don't pay income tax, like you and I do, their vote shouldn't count; right? You know what I do, when I am having nightmares about the loss of the American Dream (as I know you are), I justify these programs (as liberals will sometimes). I say to myself; "Those tax dollars (or more accurately, proceeds from government note sales), being paid to losers and lowlifes really aren't going to them." "Those dollars pass through the dregs on their way to convenience store tills, restaurant deposits, and mortgage companies." Small business and big business alike reap the benefits of aid to the poor and working class.

Moody's is where conservatives go when they don't trust the CBO, and they found that the economic benefit of unemployment payments is twice that of tax cuts. Not terribly surprising; no one has ever explained to me how an income tax cut will help a business reporting pre-tax losses or an individual with no job (and therefore, no income). To be certain, there are dogs in the system; the original incarnation of welfare formed an economic trap for its recipients. Fraud is all around us (of course we could be looking at bankers when we say that). The recession blew a $500 billion hole in federal tax revenue, and a potentially larger one in state receipts. The cost of unemployment insurance could add $200 billion to that tab, the two facts combining to explain one half of the federal deficit.

People are slowly finding jobs, and the middle class is slowly recovering. It is the working class, that 60% slice of American households that earn less than $80,000 per year, that will take the longest to recover. It will be a long hard trek, and as with other recessions, we won't recover all the wealth lost. But the point here is simple; while there are a lazy few who cost the many $200 billion per year, an even smaller number took $1 trillion last year from us and our children. If Wall Street insiders continue to convince good Americans that the debt crisis is real, and that the poor are to blame, they will succeed with their ultimate goal; the dismantlement of Social Security and Medicare and the transfer of $1 trillion dollars to their accounts every year.

I am angry also, but read the federal budget summaries for the last few years; they are not difficult to find or follow. Understand what costs are truly driving our difficulties, and which costs generate real long term benefit. It will take more work than the blame game, but the results are much more satisfying.

The Rational Middle is listening...