Fear the Day Government’s Great Fiction Lies Exposed by Steve Stanek

“Government is the great fiction through which everyone endeavors to live at the expense of everyone else,” wrote the celebrated French legislator, economist, and political theorist Frederic Bastiat 165 years ago. With recent reports out of the Census Bureau indicating nearly half of all Americans are receiving some form of direct government subsidy – Social Security, Medicare, Medicaid, food stamps, unemployment benefits, housing assistance, veterans’ benefits, etc. – can there be any doubt he was right?

Among the Census Bureau’s findings: More than 100 million Americans (more than one- third of the population) were receiving “means-tested” welfare assistance at the end of 2012, including 51 million on food stamps and 83 million on Medicaid. Many households received both. If we include Social Security, Medicare benefits, and veterans’ benefits, which do not depend on means testing for eligibility, nearly half of all households are receiving money from the other half.

That’s really what all this comes down to: some Americans taking from others. There is no doubt some Social Security recipients are already beginning to sputter with fury: “I paid into that!”

Yes, you did, and your payments – even with supposed investments – don’t come close to covering what you’re taking out of it. One of the great fictions of Social Security (and Medicare, which is part of Social Security) is that the government takes money from us while we work so that it will be there for us when we retire. In fact, no money is set aside. It’s all spent to pay for benefits or siphoned away to finance other government projects in years when tax revenues fall short of benefit payments.

If our tax dollars were really set aside for our retirement years, the government should have no problem letting Americans opt out of Social Security, right? The government wouldn’t need other people’s money to fund our benefits. But suggest an opt-out to someone in Congress and see what response you get.

As for the means-tested welfare programs, astonishingly, the number of welfare recipients has climbed since 2009, when the recession supposedly ended. The economy is growing and unemployment is falling, at least according to the Obama administration. Yet the government’s own records show government dependency is climbing.

In 2013, according to the Federal Bureau of Fiscal Services, the federal government paid more than $2 trillion in social benefits, nearly 70 percent of which went toward Social Security and Medicare. This is out of federal spending totaling $3.4 trillion. Far more money is spent on social programs than on everything else the federal government funds, including the military, education, agriculture, and transportation systems.

During the George W. Bush presidency, from 2001 to 2009, the federal debt climbed from $5.7 trillion to $10.4 trillion. Since 2009, trillions more have been added, and it’s now nearly $18 trillion. If the government’s promises are being properly funded, the debt would not be soaring.

President Lyndon Johnson launched the “War on Poverty” 50 years ago. Have we won the war? Are we about to win the war? Is there any end to the war in sight?

“Government is the great fiction through which everyone endeavors to live at the expense of everyone else.” The War on Poverty promoted the fiction, with new chapters added regularly since then, including those added by supposedly stingy Republicans. The Medicare drug program during Republican George W. Bush’s reign was the single largest entitlement expansion since the 1960s, and it was done without money being designated to fund it.

Fear the day when reality shatters the fiction. The longer the fiction lasts, the more shattering the reality will be.

Steve Stanek is a research fellow at The Heartland Institute

We Need a Real Flat Tax by Richard A. Epstein

I was heartened recently to see Edward Kleinbard’s op-ed in the New York Times, with its alluring title, “Don’t Soak the Rich.” But as I read the piece by Kleinbard, a law school professor at the University of Southern California, it became clear that his proposed solution was a classic bait-and-switch operation. Kleinbard’s so-called flat tax soaks the rich by a different route. He proposes a tax hike on everyone evenly and then suggests that the government spend most of the extra revenues on the poor, either by direct grants or public expenditures from which they derive the lion’s share of the benefit.

The flat tax deserves a better send-off. Historically, the tax was championed by such notables as Aristotle, Locke, and Hayek as a device to reduce the government’s role in the lives of its citizens. Even a limited government must do many things—provide national defense, preserve internal order, and supply the infrastructure on which a well-organized private sector markets run. Accomplishing these daunting tasks requires public revenues. The challenge for the defender of limited government is to find that set of taxes that minimizes the distortions of a market economy while generating revenue to accomplish government’s necessary and proper goals.

In general, a two-pronged approach offers the greatest hope. First, whenever possible, the government should impose user fees to defray the costs of public services. These include, for example, highway tolls, which ideally should cover the costs of running the system, by apportioning expenses so that those who place the greatest burden on the roads pay the greatest amount. But user taxes are not feasible for standard public goods, i.e. those indivisible benefits that must be supplied to everyone if they are supplied to anyone.

The flat tax proportionate to either income or consumption offers the most attractive option, because it allows the government to set the overall levels of revenue as high or as low as seems necessary,….

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Recent Scandals Show It’s Time To Abolish IRS By LEWIS K. UHLER AND PETER J. FERRARA

The Constitution states in Article I, Section 8: “The Congress shall have the power to lay and collect taxes … .” The 16th Amendment enacted in 1913 restated: “The Congress shall have the power to lay and collect taxes on incomes … .”

There is no mention of a presidential role in either imposing or collecting taxes.

Congress abdicated its constitutional role in tax collection in 1862, when it prescribed an income tax to be collected by a newly-created Internal Revenue Commission in the Treasury Department. Since then, there have been a series of presidential abuses of the IRS, which now has lapsed into virtually a campaign arm of “Team” Obama.

Today, IRS bureaucrats directly flout Congress and stonewall investigations of abusive, partisan political activity, with technologically impossible claims of lost emails. What would the IRS say if you filed your tax return claiming your computer crashed and you hopelessly lost all records of your income a year ago?

The only solution is to return to the Constitution, abolish the IRS under presidential control and replace it with a congressional tax collection bureau reporting to Congress. Lois Lerner and all her IRS colleagues who refuse to cooperate with Congress would then simply be fired — instead of called to testify.

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Mastering the art of B.S. By the Bear

You know how to tell when a politician is lying? His lips are moving. Fear mongering and dooms day scenarios are all part of the art.

Here is what some of B.S. experts told the public would happen during the government shutdown occurred in 2012 ( Sequestration) and remember Chris Matthews, the guy with the tingle up his leg, he called “Sequester a doomsday machine”. Needless to say that the tingle gave him permanent brain damage.

• The Congressional Budget Office predicted 750,000 jobs could be lost. So, the CBO missed the target estimate by 749,999 because ONLY ONE JOB was lost.
• When Congress agreed to cut $37.8 billion in 2011, it was called “the largest annual spending cut in our history” by President Obama, and lethal austerity by many liberal economists.

Well our crack government economist must have been smoking crack at that time because $ 37 billion dollars represents about three days of government spending.

These are but two examples of many and now let’s change subject to how to cut government waste.

Anytime the subject of “cuts” in government spending comes up the political establishment gets hysterical over the possibility of cutting the budget or even ONE JOB!

Billions of dollars have been wasted on “Green energy” and no one seems to be concerned, but cutting three days of spending out of the budget and B.S. artists go into high gear telling the public about the looming disaster this will cause.

Now I not in favor of cutting ONE JOB, I am in favor of cutting whole departments and here is the first two I would start with:

The Department of Education… School curriculums should be left up to local school boards and the parents of the children and we don’t need Washington dictating school lunches. Their budget is $ 67 billion dollars.

Internal Revenue Service (IRS) Their budget is $106 billion dollars.

I am in favor of what I call “pay as you go” … you can call it a flat tax or a consumption tax, it doesn’t matter, your tax obligation is paid for in full when you purchase something that is taxable.

And finally this factor should not be ignored.

The cost of preparing and filing all business and personal tax returns is estimated to be $100 to $150 billion each year. According to a 2005 report from the U.S. Government Accountability Office, the efficiency cost of the tax system—the output that is lost over and above the tax itself—is between $240 billion and $600 billion per year. For tax return preparation, Americans spent an amount equal to roughly 20% of the amount collected in taxes.

My final comment: The amount of money wasted here is astounding; especially when you consider that the country borrows money to finance this madness.

So why are we doing this?

Because the B.S. artists must keep control over the people no matter what the cost is.

American Companies Think The Unthinkable — Leaving The U.S.

Taxes: Walgreen, America’s venerable drug-store chain, is thinking the unthinkable: relocating to Europe. Not because it sees growth and opportunity there, but because of onerous taxes here in the U.S. It’s an ominous trend.

The Financial Times of London calls it “one of the largest tax inversions ever.” That is, a company seeking to avoid punitive taxes in one market by moving to another.

No doubt the FT is right. And after its recent $16 billion takeover of Swiss-based Alliance Boots, it would be easy for Walgreen to remake itself as a Swiss company.

If it did, the Democratic Party’s liberals would no doubt call Walgreen unpatriotic for wanting to lessen its tax burden. In fact, they are responsible for an economic environment so hostile to capital and investment that companies now find it intolerable.

As we’ve noted, corporate tax rates in the U.S. are the highest among the developed nations. The average rate in America in 2013 was 39.13%; for all of the Organization for Economic Cooperation and Development nations, it stood at 28.2%.

In short, being headquartered here is a major competitive disadvantage for American firms.

According to an analysis by UBS, Walgreen’s U.S. tax rate is 37.5% — compared with Alliance Boots’ rate in Europe of about 20%. That’s a huge gap, worth billions of dollars a year.

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