Fiscal cliffs and taxation without representation
With all of the talk about the impending “fiscal cliff”, it’s a good time to step back from the trees and take a good look at the forest and how we got here to begin with.
For the last sixty years or so, Congress has been on an ever growing spending binge, guided by a political philosophy that government should play an ever growing role in our everyday lives – a role which requires more of our substance. In fact, it increasingly requires more than we can spare in any given year and maintain a healthy economy. So we borrow the rest, year after year.
This year’s federal deficit is 1.2 trillion, last year’s was 1.2 trillion and next year’s is projected to be over one trillion as well. Our national debt, the sum total of our annual deficits, is well over 16 trillion. And all of that is on top of the tens of trillions of dollars in “off-the-books” future obligations to entitlement programs.
When you are in a hole, stop digging, or so the advice goes. But what do you do when voters keep electing politicians who won’t put down the shovel, but hold to the insane notion that we can somehow dig our way out?
The current “fiscal cliff” is just the latest symptom of our larger “financial cliff”. Whether or not they reach some sort of compromise by the end of the year, it’s safe to say that the result will not change the downward direction of our finances, perhaps just the speed they deteriorate, (sort of like Thelma and Louise arguing over how fast they should drive over the cliff).
As Ronald Reagan suggested, we don’t have a taxing problem, we have a spending problem. And the spending problem has led to a chronic borrowing problem. The coming “financial cliff” is the point at which we can no longer borrow enough money from Peter (aka China, et al) to pay Paul (aka our entitlement programs).
Of course, it’s not a matter of whether or not things will change. It’s simple arithmetic. The question is when, and how abruptly. How much of a shock will it be to the lives of Americans? What changes will taxpayers (and lenders) demand?
The future is playing out before our eyes on the evening news.
Some countries are farther down this path than we are, (Greece comes to mind), and the people they have been borrowing from no longer have faith that they will be repaid, so they are being charged increasingly untenable interest rates, leaving citizens with a burden that will drag their economy and their families down for decades.
Since our current path is fiscally unsustainable, it is therefore immoral, and reducing our debt and balancing our budget becomes a moral issue in the sense of how it impacts the opportunities and liberties of those alive today, and those yet to be born.
Proverbs tells us that “a good man leaves an inheritance to his children’s children”, but all we are leaving today is a bill. Every child that is born today will start out over fifty-two thousand dollars in the hole; their share of our national debt. Children born tomorrow will inherit even more.
When you consider the level of taxation that will be necessary to repay our debt – future taxes that have essentially been mandated by excessive spending – you have to seriously consider whether or not our children and grandchildren will be willing to accept the reduced standard of living that will be necessary to pay for what we have done and failed to do.
It will be hard to blame them if they are not.
We should remember that the catalyst for the revolution that gave birth to our country was a tax revolt whose rallying cry was “taxation without representation”.
If preemptive steps aren’t taken now, the end could ultimately resemble what we’ve seen in negotiations between a corporation and its employee unions. Management (aka taxpayers) will demand drastic cuts, and unions (aka entitlement recipients) will refuse and pitch a fit. So management finally decides to declare bankruptcy and wipe the slate clean.
As Republicans begin to think about the political future and how they should position themselves, they need to be mindful that there is a tax revolt unlike any we’ve ever seen coming in our nation’s future. And the GOP had better be on the right side of it when it happens.
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