Posted on 11/03/2014 7:13:54 AM PST by SeekAndFind
For Ben Franklin, death and taxes were certain; for Washington, debt and taxes are. Succinctly, Washington has reached a debt-to-tax ratio unseen since WWII. The fundamental difference in composition and trajectory make this a far greater concern today than it was 60 years ago.
Often a different perspective is needed to truly understand what directly confronts us. This is true with the federal budget. Too often reduced to a dry fiscal discussion, or elevated to a hyper-partisan one, its true essence - and enormity - is lost.
To understand its real importance, we must reduce it to its essentials. A government's ability to borrow is underwritten by its ability to tax. This ability to tap its society's wealth - i.e., resources it does not own - makes governmental borrowing unique among debt. It also creates unique challenges.
A government's ability to tax appears carte blanche, but is constrained both politically and economically. As a nation's tax burden grows, it becomes increasingly difficult politically to increase it, as acceptable tax sources disappear. Simultaneously as tax burdens increase, they have increasingly negative economic impacts over time.
Therefore, there is a debt-to-tax ratio that is politically or economically unsustainable. How close America is to these levels can be debated; how unprecedented its current position is, cannot be.
As percentages of GDP, 2014 federal debt held by the public is 4.3 times greater than federal revenues. That ratio is close to the recent peak of 4.6, reached in 2012, which was the highest since 1950's 5.6 in the Korean War/WWII aftermath.
While the debt levels of 2014 and 1950 are quite close (74.4% and 78.5%, respectively), 1950's tax burden was far lower - 14.1%, versus 2014's 17.5%.
(Excerpt) Read more at realclearmarkets.com ...
In sum, Washington could find itself unable to either tax or grow its way out of a historically high debt level. Such a predicament’s ramifications run well beyond just the federal ledger and into the nation’s - and the world’s - economy for the foreseeable future. It also underscores that reducing spending is Washington’s only viable way out of its predicament.
And, another carefully parsed equivocation. It does not include undocumented debt which the Federal Reserve has issued on behalf of the US, nor does it include the trillions and trillions more in obligated Federal entitlement programs to which government has committed itself.
It’s a simple Joe Blow “What is my next paycheck and what is my most prominent bill?” Doesn’t look at ANYTHING long term and hidden.
As Margaret Thatcher so aptly said, eventually you run out of other people’s money.
The unfunded liabilities amount to nearly $1 million PER TAXPAYER. And that does NOT include another $150,000 per taxpayer for their share of the national debt. We are screwed big time.
Yes. And the realization will eventually dawn on them. The first calls will be to take everything those ‘rich white people’ have and redistribute it - Stocks, IRAs, Bonds, savings, assets, 401Ks and on and on. You won’t be allowed to have anything that isn’t on an EBT card.
Well, war is a viable answer. This is the classic cause of war.
Certainly not as desirable as cutting spending, but like a Greek tragedy it is apparently the inevitable result.
Yes, and for being a responsible citizen they will also likely “means test” your social security and confiscate your life long contributions.
Well, to be fair, they’d probably give you a chit for a half-off Arby’s meal once a week for something, then when you actually start costing them real money, give you a ‘pill’.
...then when you actually start costing them real money, give you a ‘pill’.
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No doubt this will be (like everything else) cast in the form of more government “assistance”. They really “care” when you have no more to give.
The one big fault of small D democracy is that once all others have been subverted to the collective will, the collective becomes dinner. This is because small D democracy always falls to tyranny, and when voting is no longer needed, oppression replaces it, and what the small D democrat wants, needs or desire doesn’t amount to jack squat.
when voting is no longer needed, oppression replaces it
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An excellent observation on your part that never crossed my mind. The idiots are only useful until such time as the voting process is no longer needed to support those in power. First, they buy the people off to make them dependent, then they bring out the chains and enslave the same people that were so weakened by their dependence.
There’s a price to be paid for everything. And sometimes that price can be your freedom.
The Founding Fathers tried to warn us about the growth of government power but we failed to learn the lessons of history. So here we are, on the door step of tyranny.
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