Pocket Gofer 14

POCKET GOFER 14

Download the Pocket Gofer 14 here.

ON RESPECT FOR TAXPAYERS’ MONEY

• HISTORY
• THE SITUATION TODAY
• A FEW SPECIFIC (AND GRISLY) EXAMPLES
• WHAT WE TAXPAYERS WOULD PREFER
• CONCLUSION

P.T. Barnum, the circus impresario, once said, “There’s a sucker born every minute.”  We figure Barnum was inaccurate: when it comes to taxes in this country there’s a sucker born every seven seconds around the clock.

Maybe we should make that every 7.2 seconds or so, because there are a few folks who pay very little in taxes thruout their lives.  This makes it tougher on the rest of us, who pay a lot.

Someone said “We put the petty criminal in jail, but the really big thieves we elevate to high public office.”  We looked into this and came out concluding there is truth to that observation.

HISTORY

How long has this been going on?  Charles Adams wrote a damn good book in 1993: For Good and Evil: The Impact of Taxes on the Course of Civilization.  His research showed that there have been taxes almost as far back in history as there have been people.  Over the eons it has been mostly evil.

He argued that what he calls “dumb taxation” first robs citizens of their liberty.  Then it drains away the wealth and strength of a nation.  Adam Smith in 1776: “There is no art which one government sooner learns from another than that of draining money from the pockets of the people.”  Government is always a parasite.

The framers of the Constitution worried that some group or class of people would rig the tax system to favor themselves, or to mistreat some minority.  They stuck a uniformity clause into the proposed document, so that everyone would be taxed at the same rate.  (Many years later the Supreme Court effectively nullified it.)

Thomas Paine said it like this: “If, from the more wretched parts of the old world, we look at those which are in an advanced stage of improvement, we still find the greedy hand of government thrusting itself into every corner and crevice of industry, and grasping the spoil of the multitude.

“Invention is continually exercised, to furnish new pretenses for revenue and taxation.  It watches prosperity as its prey, and permits none to escape without tribute.”

Tom wrote it like that in 1792.  That’s no typo, friends: it’s not 1972.  We mean 1792.  Big Government was into people’s pockets at that time, just as were the Egyptian pharaohs thousands of years before.

But he liked what he saw in this country: “If there is a country in the world, where concord, — would be least expected, it is America.  Made up, as it is, of people from different nations, accustomed to different forms and habits of government, speaking different languages ——.  ——-.  Their taxes are few, because their government is just.”

Inspired, Adams wrote another book: Those Dirty Rotten Taxes.  “Using the ideas of the Enlightenment (17^th-19^th centuries), our founders propounded the political concept of limited government and low, indirect taxes (no tax on income).  That wisdom found its way into the Constitution.  But somewhere along the way in this century (20^th) these ideas were abandoned in favor of big, paternal government.”

Adams continued: “There were easily a dozen revolts in America and Europe during Jefferson’s lifetime, and all of them were over taxes!”  In the colonies there were the Stamp Act, the Townshend duties, the Boston Tea Party, and finally the Intolerable Acts.  Then there was war.

“And revolts are still ongoing today, tho we revolt in less violent ways.  We evade taxes, and emigrate to avoid them.”  Also, the super-rich buy tax relief from members of congress, who are delighted to sell it if the price is right.  (So Paine’s “permits none to escape without tribute” is inaccurate today.)  Avoiding is legal, while evasion is not.

Was our country’s tax system truly as Paine described it?  Well now, wait a minute. Just what the hell has happened during the past 230+ years?

Interesting question.  Let’s dig into it.

In the early years of our country we had an outstanding Chief Justice of the Supreme Court, John Marshall: “That the power to tax involves the power to destroy; that the power to destroy may defeat and render useless the power to create …..”  He and others knew back then that the taxman could eat our lunch, and our dinner too.

In Federalist Paper #10 Madison sounded off on taxes.  “Yet there is, perhaps, no legislative act in which greater opportunity and temptation are given to a predominant party to trample on the rules of justice.  Every shilling with which they overburden the inferior member is a shilling saved to their own pockets.”

Turn the time machine ahead around 100 years. Having a look, we see much the same America as Paine described.  Adams reported that attitudes of the founders and 19^th-century leaders “—– seem strange, almost bizarre.  But just about all of them, for well over a century, believed that taxation — except for the essentials of government — was nothing more than ‘legalized robbery,’ a phrase they used repeatedly.”

During the Civil War the union government had to borrow huge amounts of money.  But afterward there was an equally huge push to retire the national debt.

A member of the British embassy observed: “——– the majority of Americans would appear disposed to endure any amount of sacrifice rather than bequeath a portion of their debt to future generations.”  Friends, there surely have been some changes.  Jefferson: “The dead rule from the grave.”

Montesquieu (Adams): “The real wants of the people ought never to give way to the imaginary wants of the state.”  We got curious about the Baron de Montesquieu, so we checked him out.

Here is a small piece of the freedom-loving Frenchman: “In republican governments, men are all equal; equal they are also in despotic governments: in the former, because they are everything; in the latter, because they are nothing.”  Well, now.

The Economist 2/2015: “The president’s budget was innovation of the 1920s.  Before then, congress set the budget as the Founders, ever suspicious of a strong central authority, intended. 

“Early government budgets were consistently in surplus. In fact the first personal income tax was levied during the Civil War and it was canceled when no longer needed, not to show up again for some 40 years.

“During the nation’s first century the government subsisted on what we would today call “sin” taxes.  During the early 20^th century the fun began (for government, that is).

Friends, after digging into the question we conclude that thruout history a big bunch of deep thinking leaders spoke from their hearts about the dangers to liberty and society that spring from excessive taxes.  It is hardly strange that today’s public officials see fit to keep this history hidden from us.

Members of congress who pushed for the 16th amendment to the Constitution in 1913 assured everyone that any income tax levied under it would never be more than a few percentage points.  We’re fighting it, but we keep getting the feeling that we have heard stories like that one before from politicians.

We wondered about the need for an amendment here.  The Constitution originally gave to the congress the power to tax: Article I section 8.  We stopped wondering when we saw that in 1894 a second income tax law was passed, but the Supreme Court struck it down as unconstitutional.

Income is property, and the Constitution protects private property.  Jefferson: “—– and shall not take from labor the bread which it has earned.”

Adams wrote that the attitude toward the income tax in 1913 was “—- very much of an honor system with rates that were fair and reasonable for all.  The America of his day wasn’t trying to police the world or fight offensive wars; nor was it trying to tax and spend itself to death.

“—- some paid the tax even if they didn’t owe anything.  They wanted to pay something toward the costs of the government they enjoyed.”  (Did the man say “enjoyment of government???”)  But others rebelled when the tax rate was pushed above two percent.  TWO PERCENT!!

These cats were afraid of the implications, and it didn’t take long to prove them right.  The law provided for a progressive tax, where the rate increases for taxpayers with higher incomes. 

This was seen as logically sound as government typically sought ever more money.  But it was also unconstitutional and still is.

“By 1921, the top rate had escalated from 7 percent to 77 percent, eventually rising in peacetime to over 90 percent.  But in 1913 congressmen promised the public the rate would never rise to more than a few percentage points.”  Yeah; perhaps one of the original political promises.  Today voters suffer an avalanche of these every two years.

“Moreover, death taxes increased to 70 percent.  ———-.  Worse still, the battle cry of the American Revolution of taxation by consent became a fraud.”

Look happened come WWI (1916).  Adams: “Of course, money is the heart of war, so the income tax system, which was verbally guaranteed to never be more than a few percentage points, kicked into high gear ——-. 

But a strange thing happened.  “Instead of increasing revenues by 1100 percent, as the rates increased that much for the million-dollar earners, the revenue collected was about the same at 77 percent as it was at 7 percent.  ———-.  Nine out of ten top-bracket taxpayers disappeared, ——-.”

The strategy has been and still is to slowly ratchet up the tax rates over time (the increases above were too rapid), while trumpeting the high marginal rates that presumably ding the rich far worse.  They don’t, of course, as we will show.  It is the middle class that regularly gets shorn: millions of sheep.

In 1990 senator George Mitchell got a luxury tax passed; it was aimed at socking it to the rich.  A year later he was back, demanding an end to the tax.  It had ruined his home state of Maine’s boat-building business, throwing workers, managers and salesmen out of work.

Adams: “By the beginning of the 20^th century the income tax was on its way to becoming the engine for running the modern state, for financing wars, and introducing socialism in its many forms.  This was not the kind of world the founders had envisioned, ——-.”

Seems like today most folks assume the personal income tax always was and always will be.  We don’t accept that assumption.

Time machine ahead another couple of notches and let’s have a look at what Harry Truman did when he was a county judge in 1928.  Money had been borrowed for years before that from Kansas City banks at six percent. Harry shopped around and eventually found money at 2.5 percent.

Kansas City bankers were bent.  They claimed that Truman was cheating their shareholders out of profits.  The judge allowed as how taxpayers also had some rights in this matter.  Truman’s genuine concern inspired us to call this pocket gofer “On Respect for Taxpayers’ Money.”

Adams: “No tax was justified for military purposes — except for defense.  This view, as we shall learn, found expression in the US Constitution, but nobody ever took it seriously except Alexander Hamilton and a few Vietnam war protesters.  The latter refused to pay taxes for an illegal war, and, as might be expected, went to prison —–, even tho they had a very sound historical case for not paying.”

Standard political procedure, established over decades, requires that more and more goodies be dispensed, so that our public servants can get themselves re-elected.  This is called pork-barrel politics.  So they go for more and more taxes, until we scream, and then they get still more goodies to spread around through borrowing.

They borrow such sums as to defy comprehension.  Because they defy comprehension they figure we don’t want to hear about the flip side of what they are doing for us (or is it to us?) and so, cooperative as always, they don’t tell us.

Today the national debt is up to $23 trillion, and counting.  Yes, counting.  All the rhetoric we got over the past 20-30 years from public officials about balanced budgets is unadulterated baloney.

Jefferson: “—– it may meet within the year all the expenses of the year, without encroaching on the rights of future generations, by burdening them with the debts of the past.”

From William Bonner’s book Empire of Debt: “All empires must pass away.  All must find a way to destroy themselves.  America found debt.”  Paul Kennedy agreed.  His 1988 book, The Rise and Fall of Great Powers: Economic Change and Military Conflict from 1500 to 2000 very capably reinforces Bonner’s points.

In June 2010 the Economist published a special report on debt.  “In the past 100 years the moral battle has moved in favor of the debtors.  Bankruptcy is no longer stigmatized but simply regarded as bad luck.

“At the end of WWII in 1945 consumer credit in America totaled just under $5.7 billion; —-.  ——–.  The peak, so far, was almost $2.6 trillion in July 2008.  Some wise wag once said, “If I owe you a thousand dollars it is my problem.  If I owe you a million dollars it is your problem.”  As far as we know he did not comment on a trillion dollars.

Here are two surprising developments emanating from this trend.  “This is not unalloyed joy for the creditor nations.  Once the exposure of a creditor to a borrower gets sufficiently large, the two sink or swim together.”  This is similar to when a gambler gets in too deep.

The other surprise has economists creating a concept they call “odious debt,” where citizens ” —— should not be forced to repay money borrowed by tyrannical or kleptocratic rulers.”  A huge percentage of the national debt was run up by spendaholics in government in the total absence of “consent of the governed” (from the Declaration of Independence).

Bonner continued: “—- by the beginning of the 21^st century, the tax code exceeded 7 million words, about nine times longer than the Bible; and the IRS was sending out about 8 billion pages of forms and instructions every year — at a cost of about 300,000 trees!” 

In fall of 2010 and an election close to hand politicians want to be seen as trying to reform the monstrous tax code.  But political sclerosis reigns as the economy weakens.

Adams reported that there are over a million US citizens living in Europe today, who do not file tax returns.  “President Clinton has even reminded us that we are an undertaxed nation, and should accept ever-increasing taxes on our labors.”

We beg to differ.  In 1900 the total annual tax load — including all levels of government — on a typical family was 5-6 percent.  Today it is nearly 45%.  And when we add in estimated costs to us consumers of government administrative law (regulation of business) the total load on us gets to about 55%.

In 1900 the society was far poorer than now, even after figuring in inflation.  But the typical family made out okay with one breadwinner.

Today the two-income family is becoming more and more prevalent.  And latchkey kids are getting into more and more trouble.

The divorce rate for first marriages is now up to 50 percent.  The percentages above probably have something to do with these negative social trends.  See Pocket Gofer 9.

Adams concluded with an indictment of the unconcerned citizen: “Once you accept the unbelievable absurdity that American law actually sanctions taxation without representation, it is easy to see how tax laws that flagrantly violate the Constitution persist to this day.”

THE SITUATION TODAY

THE GRIM RESULT, A $23 TRILLION DEBT: We figured out why politicians don’t kiss babies anymore.  It must be difficult to hang one on a tiny cheek while at the same time hanging a huge debt around the wee one’s neck.

The best guess over the next 10 years is another $9 trillion in deficits, which take the debt up to about $30 trillion.  And that’s just what is on the books.

The Economist (3/2010) asked who will pay and listed several possibilities: taxpayers, public sector workers, entitlement recipients, foreign investors and future generations.  It offered two thoughts, neither of which mentioned tax increases and spending cuts.

“The first is to be honest about the size of the problem.  Public sector accounting is Enronesque (our emphasis).  The kicker is that asking career politicians to be honest is like asking the Mississippi River to stop flowing, as we shall see below.

The other thought focuses on economic growth.  But Reinhart and Rogoff in a recent book This Time is Different conclude that “—- the evidence offers little support for the view that countries simply grow out of their debts.”

See the late Peter Peterson’s books below: Will America Grow Up Before it Grows Old? and Running on Empty.  This deeply concerned citizen pulls no punches as he agrees with Reinhart and Rogoff.

The Economist continued: “Canada had three failed attempts at fiscal reform ——–.  ———.  on the fourth attempt departments were encouraged to suggest sacrifices — and told that budgets would be cut by 10% across the board if they failed to agree.

“The budget went from a deficit of 6.7% of GDP in 1994 to a small surplus in 1997.”  So there, US congress!  Put that one in your pipes and puff on it.

The AARP Bulletin (2/2006): “Baby Bob Gerdes is still in diapers, but he already shoulders a $156,000 debt.  That’s the estimated debt that every American owes the federal government, courtesy of the annual budget deficit, plus the national debt accumulated over the past century, plus promised but long-term unfunded commitments like his parents’ Medicare and Social Security payments.

“Not only just that, but the burden is growing.  By the time Bob reaches working age, that amount could double or triple if nothing dramatic is done ——-.”  And nothing will be done UNLESS the public rises up on its hind legs and raises hell.  This prospect scares us; it could lead to violence.  We think a government buried under an avalanche of pocket gofers is a better way to go.

What benefits will come to Young Bob when he is an adult, as he/she is forced to pay on this stupendous debt while supporting a family?  None, because the benefits were given to someone else long beforehand.  Career politicians were spending tomorrow’s dollars today.

Both parties over the past, say, 30 years have tried mightily to outdo one another in spending.  Then came the crises in 2008.  President Bush tried to recover economic growth with a $168 billion stimulus plan.  Then his lieutenants piled on a $700 billion TARP (toxic assets recovery program).

With Obama in office the government piled on another $787 billion in stimulus.  TARP was considered effective and necessary.  As for the rest, the crises provided cover for the spendaholics to go crazy.  All that got stimulated was the growth of BIG GOVERNMENT (Chicago Tribune 12/2009).

In the preface of his book Running on Empty, Pete Peterson: “In January 2004 the ——- IMF (International Monetary Fund) ——— warning the world that we are careening toward insolvency.  Its long-term structural deficit now exceeds 500 percent of GDP.

“Closing that gap, ——-, ‘would require an immediate and permanent 60 percent hike in the federal income tax, or a 50 percent cut in Social Security and Medicare benefits.’”  This gut-wrenching cure presumes nothing will be done.  Can anyone visualize today’s politicians doing either of these things?

Here’s one we haven’t figured out.  The law doesn’t require the adult child of a dead parent to take on responsibility for any outstanding debts of the deceased.

But if the government borrows and spends the money to buy our elderly parents’ and grandparents’ votes and we are forced to assume the resulting debt burden after they die this is okay …..??  President Herbert Hoover: “Blessed are the young, for they shall inherit the national debt.”  We would say “Hide from the young,” because when they learn what has been done to them they will come after us.

Harry Browne from his book Why Government Doesn’t Work: “Politicians don’t plan to repay what they borrow in our names.  They spend whatever they want, and the amount exceeding tax receipts is simply put on our tab.  When they leave office, —– no personal responsibility —–.  They just collect enormous pensions and praise themselves for a lifetime of ‘public service.'”  Does anyone else praise them?  A politician with a conscience is an endangered species.

“—— don’t feel the burden of debt — only the elation of spending.  So they have no incentive to restrain themselves.  They can spend your money without limit to reward their friends.”

Our cousin Jim said he’d like to be a friend.  But he can’t find out where to sign up.

Pundit Charles Krauthammer, News & Observer [Washington] 4/2013): “Washington has rediscovered the beauty of the boring.  It’s called ‘regular order,’ using the normal, routine, constitutional process to arrive at, for example, a budget.

“Normal had disappeared during the Obama years.  Republicans duly submitted annual budgets, which the president then used for target practice, ——–.  Meanwhile, the democratic-controlled senate simply stopped producing budgets for four years.  And the ones the white house put out were so preposterous that, for example, the 2011 version was rejected by the senate 97-0.”  Little to discuss here.

Another thought on the national debt reveals the fact that those who hold the paper are generally wealthy folks, both American and foreign.  The workers who are being taxed to pay the interest are generally not wealthy.

So this arrangement amounts to a roughly $200 billion annual transfer of wealth from the relatively poor to the rich.  And the relatively poor see no benefit from those hard-earned bucks that are taken from them by force.  The money was spent yesterday, and not on them.

Also, every $billion taken off the debt saves many times that over coming decades.  Even at just a 4% annual rate of interest, the total interest cost of every $billion of debt is another $billion over 17 years, and the original $billion is still owed at the end of that period.

This is how compound interest works against any debtor, including government.  When a person saves the same process works in his/her favor: $100 saved becomes $200 after 17 years at 4 percent.

In January 1997 columnist George Will commented on a book by John Steele Gordon: Hamilton’s Blessing: The Extraordinary Life and Times of Our National Debt.  “In 1916 the national debt could have been paid off by the nation’s richest man, John D. Rockefeller.

In 1997 the two richest Americans, William Gates and Warren Buffett, working together would go nearly broke trying to pay even six months’ interest (our emphasis) — approximately $170 billion — on the national debt.  (Today these two would get socked for $200 billion.)

“Does that get your attention?”  Yes sir, Mr. Will.  That does indeed get our attention.

“There have been, Gordon notes, seven periods in which the debt steadily increased, six when it declined and three when it was stable.  Six of the seven periods of increase involved either a major war or depression. It is the seventh period, which began in 1960, that is ominously different ——.  It took a few years after the end of WWII for career politicians to siphon big $$.

“In the last 36 years business fluctuations have been, —– remarkably mild and the Vietnam war was, —– a small burden.  Yet the national debt has increased 17 times, more than in all the nation’s first 184 years.”

All this by 1997.  Our attention has not wavered.

“Gordon —– does cite ‘the transformation of politics into a lifelong profession’ as part of the problem, along with —– tax code full of vote-buying deductions and credits —– a code that has been amended more than 4,000 times, an average of more than an amendment a day, in the 10 years since the Reagan simplification of the code.”

Forewarned is forearmed: we will not look at this book right after a full meal.  Pocket Gofer 3 elaborates on that “lifelong profession.”

Here are some “Things to Know About the Debt Ceiling,” News & Observer 10/2013: “The current debt limit is $16.699 trillion.  The treasury dept can borrow that much and no more, ———-.

“So when will the govt reach its ——- limit?

“—– some time after Oct. 17.  What happens on Oct. 17?  At that point, the federal government will only bring in enough revenue to pay about 68% of its bills for the coming month, —-.  (———- bring in roughly $222 billion and owe roughly $328 billion between Oct. 18 and Nov. 15, assuming the government is open.)

“The first default wouldn’t necessarily happen right on Oct. 17 — but it would likely happen soon after.  —— computer systems would keep making payments until its checks started bouncing.  And it’s hard to predict in advance who would get stiffed.

“Can’t the government just pay the important bills and delay the rest?

“—— Shai Akabas and Brian Collins of the Bipartisan Policy center in a recent re[port.  ‘It would involve sorting and choosing from nearly 100 million monthly payments.'”  WHAT??!!!  The Great Leviathan is even huger than we thought. 

“What —— economic consequences of breaching ——-?  —— could result in a massive dose of fiscal austerity, putting a dent in economic growth.”  CHEERS!!  This is precisely what is most necessary: forcing government to do just like the rest of us: live within its means.  “——— almost certainly roil financial markets.”  They can  handle this;  these folks did not become rich without being smart.

“If  congress refused ——, then the federal goveernment could only spend as much as it takes in taxes.  Overall outlays would drop by 32%, ———-.”  A good start, we would say.  This event would get the nation started on the long road to responsible government and a moral society.

Jim Kuhnhenn on Obama’s 2015 budget proposal News & observer 3/2014)

He knows that hardly anyone trusts him, so he must throttle down the testosterone.

“There’s no push to overhaul health care as he did in 2009, no drive as in 2010 to restrict Wall St., no attempt to increase taxes as in 2011 and 2012, and no move to halt automatic spending cuts as in 2013.”  Looks guardedly encouraging.

“——- will not be an austerity budget like last year’s.”—– proposes $56 billion in spending above the caps agreed ——.  —- extra spending will not add to the deficit —— pay for it with a mix of program cuts and eliminating tax breaks.”  We will believe this when we see it.

“House speaker Boehner ——-.  —— ‘president has no interest in doing the things that he got elected to do,’  —–.  ‘His budget will make no effort to address the drivers of our debt and our deficit.'”

The tax code included 400 pages in 1913.  Today it is about 70,000 pages of gobbledygook.  We blow 7.6 billion hours a year grappling with it.

This about equals 3.8 million skilled workers working full time year round just to complete the paperwork.  The Economist (4/2010) claims that this makes the tax compliance industry six times larger than the car/light truck industry.

“Every wrinkle in the tax code represents a favor to some group.  ———.  —– passionate defenders but no opponents.  Those who benefit from it, benefit a lot.

Those who would gain from its repeal (taxpayers in general) have never heard of it.”  We peasants must pay more to make up for these purchased favors.  Is this sneaky, or what?  See PG19.

George Will (News & Observer 12/24/2010): “‘Targeted’ tax cuts are popular —— serve a bossy government’s agenda of behavior modification: You can keep more of your money if you do what Washington wants.  ————.  Serious arguments about taxes are never just about taxes.  They are about government’s proper size and purposes.”

David Walker, former comptroller general, is crusading around the countryside warning of the fiscal train wreck coming at us.  He created a documentary film entitled “I.O.U.S.A.,” which became available on 8/21/08.

The tax code is such a colossal bucket of worms that we don’t know which worm to pull out first.  Each year the central government takes $2.3 trillion from us and that is only what they admit to.  What they put off-budget is another bucket.

They actually spend about a billion an hour to keep us taxpayers happy and make sure we vote for them.  (Bloody inconvenience these damned elections.)

Are they making us happy, spending our money like this?  Well, a lot of us are jumping up and down …..

Some politicians will no doubt object to the above, saying we don’t pay all of that in taxes and that companies pay a major portion of it.  We don’t believe them.

While the government sometimes creates money out of thin air, companies can’t do this.  Therefore they must treat taxes as a business expense and get reimbursed through higher prices to other companies and eventually to us.

Taxes take money from the productive private sector and move it into government spending.  This is mostly consumption (buying votes) instead of investment, so there is little future payoff.

Economist 10/09: “Seventeen Uncle Sam’s were seen begging on the streets of Washington DC this week.  —— cardboard signs with the hand-scrawled plea: ‘I WANT YOU to give me $12 trillion.'”

Seniors among us recognize DefeatTheDebt.com’s efforts to replicate the WWII Army recruiting posters that used an image of Uncle Sam (this explains our use of caps.)

Ways to reduce the debt include default, boosting economic growth, raising taxes and cutting expenditures.  Default is catastrophic.  In view of current deficits, future promises to old folks including health care and the outlook for slow growth at best, we are down to the last two ways.

Economist 4/10: “The IMF’s calculations, ———.  The average structural deficit (excluding interest costs) —— must swing from 4.3% of GDP to a surplus of 3.7%.  They must then maintain that surplus.”  The kicker here is that career politicians practically always spend the budget into deficit in order to get re-elected.

“— spending cuts are more sustainable and friendlier to growth than —- tax hikes.  ———-.  Many cuts, from raising pension ages to slashing farm subsidies, have a double benefit: they boost growth by improving public finances and by encouraging people to work harder or promoting more efficient allocation of resources.”

But here we slam up against the same problem.  Wimpy career politicians will not cut spending because this will surely cost them votes.

WASTE: There is no other way.  Though some taxes are hidden we pay all of them.  Does any one of us have a good grasp of what “our” government does with that annual $3+ trillion?

Robert Stone, project director for Vice-president Gore: “As a rule, virtually any task being done by government is being done by 20 or more agencies.”

The average citizen today figures that 48 cents of every tax dollar is wasted.  This makes possible a rough estimate of what Washington wastes of our tax dollars: 0.48 times $3 trillion is $1.3 trillion.  That’s around $15,750 for each taxpaying family of four, and that is only what’s in the budget.

P.J. O’Rourke is an acid-tongued observer of the Washington scene.  “It is a popular delusion that the government wastes vast amounts of money through inefficiency and sloth.  Enormous effort and elaborate planning are required to waste this much money.”

Maybe that 48 cents is low.  Peterson: “When ——– Bush entered office, the ten-year budget balance was officially projected to be a surplus of $5.6 trillion — an unexpected blessing, which the new team ———– used ‘as a means for shoring up the economic and fiscal environment that our children and grandchildren would inherit.’

“By August (2003) the CBO (Congressional Budget Office) officially projected the ten-year fiscal balance at a deficit of $1.4 trillion.”  P.J. was right, of course.

P.J.: “So when can we quit passing laws and raising taxes?  When can we say of our political system, ‘stick a fork in it, it’s done’? ——–.  The mystery of government is not how Washington works but how to make it stop.”  We are working on this one.

THE CENTRAL GOVERNMENT BUDGET: In 1996 Peter Peterson published a book called Will America Grow Up Before it Grows Old?  “If you look at the history of the federal budget from George Washington thru Dwight Eisenhower (and exclude only years of declared war and catastrophic depression), the fiscal record is remarkable: a mere 30 years of budget deficits versus 106 years of budget surpluses.  ————.  Since 1960, however, we have registered 35 years of deficits and only 1 year of surplus ——-.”  And that one was not real.

As mentioned, whenever we grow too grumpy about taxes the government just borrows.  During President Reagan’s 1980 campaign he trumpeted big tax cuts.  They turned out to be unreal, just like parts of the rest of his administration (as we shall see).

In order to fight the terrible looming menace of the Communist pussycat he needed more than just phony tax cuts.  When he made his grand entrance into the White House the national debt was $994 billion.

When Bill Clinton made a similar entrance 12 years later it had ballooned to $4.4 trillion.  Now, how’s that for flashing plastic?

As we saw, the debt is now $23 trillion and counting.  In September 2007 for the first time in 90+ years America began paying more to foreign creditors than it receives from investments abroad.

Today the total US foreign debt is high and growing rapidly.  This trend suggests a vicious cycle as interest payments take more money and require still more borrowing.  If foreign lenders get antsy and demand higher interest rates we could be in deeper soup.

Taking inflation into consideration, the budget has tripled since 1955, but the population of the US has increased by only 65 percent.  In 1938 the budget was about 11 percent of GDP, or the total value of all goods and services produced in this country.  Today Big Washington takes more than 24 percent of what we produce each year.

Author Harry Browne on the prospect of a balanced budget (1995): “Not long ago Congress passed a program to balance the budget within a few years —–.  —– congressmen cheered and congratulated themselves, and their friends in the press hailed the historic event.  But the following year, congress discarded the plan and resumed its old, deficit ways.

“In 1990 —–. —– projected a $156 billion surplus in 1995 —– which turned out to be a $192 billion deficit.  We still pay the oppressive taxes, but the spending cuts disappeared —– and the —– projection was off by $348 billion.  That’s not close enough —– not even for government work.”

Are we starting to get the drift?  “And the budget was not balanced in 2002.”

“Even if Congress tries to stick to the program, the plan will be aborted by the automatic spending increases that kick in during the next recession —– surely before 2002.  “In other words, the ‘balanced budget’ plan is a sham, pure and simple.”

Referring to our narration above, the bushies must have noted a precedent as written by Browne just above.  They probably figured that if elder Bush-Clinton got away with the “balanced budget” scam we can also.  Let the record show that we peasants will not allow this skullduggery to continue.

Government cannot create a strong economy.  This must be done by the private sector.  All government can do to help is get off the backs of private business.

Deregulation and the “Fed’s” interest rates helped to create the economic boom of the 1990s.  But whenever the economy picks up and especially when it stays strong, politicians will leap to seize credit.  And we are supposed to re-elect them every other November.

The Economist 6/1997: “Economic booms bring governments more revenue, as well as more breathing space.  These can be frittered away, or they can be used to tackle deep-seated problems and invest in future growth.  America at present, like the proverbial summer grasshopper, is doing more frittering than stockpiling.”

Was the government actually in balance during fiscal year 1998, as politicians and the news media claimed?  The reality is no.  There was so little mention of the role played by the Social Security surplus that we could not determine whether or not the congress had once again raided the trust funds in order to hide yet another deficit.

In any event the off-budget liabilities were not factored into the mix.  These combine with the government’s most recent wild spending plans to keep the balanced budget notion in dream status.

So we complete an update with Browne’s forecast just above still intact.  It’s a sham.  We note also that the hype about a balanced budget diverts our attention away from the total tax burden on us.

In 1991-92 the National Taxpayers Union looked at the cost and savings of every bill introduced during that period.  They found that for every dollar of cuts in spending $80 in new spending was proposed.  And we will see below that most cuts were not for real.

Riedl (4/2004 column): “—— government is projected to spend $21,671 per household in 2004 ——–.  Tax revenues will reach $16,981 per household ———.  The remaining $4,690 represents the deficit per household, which will be dumped in the laps of our children.”

Krugman (8/2000) inserted some reality into presidential campaign rhetoric on the budget.  “So our political debate is based on projections saying that in the years ahead the federal government will run average annual surpluses about 10 times as big as this year’s actual surplus ($20 billion, not counting off-budget liabilities of possibly as much as $18 trillion).  Doesn’t that sound a bit like counting your chickens before they’ve hatched?”

Krugman read a report by Auerbach and Gale, which concluded “—– that those projections are unreasonable, that the huge future surpluses we’ve been taking for granted are figments of our imagination —–.”  No prize for guessing why this report went unreported in the news media.

The two men did project a surplus, but only if nothing goes wrong, like a recession or military emergency.  But the reality is that rosy or unrosy projections beyond the next election mean nothing to career politicians, and should therefore mean nothing to us.

Career politicians love to say what we want to hear: PG3.  Krugman concluded: “And when the chickens that didn’t hatch come home to roost, we will rue the days when, misled by sloppy accounting and rosy scenarios, we gave away the national nest egg.”

Budget surpluses seem to ebb and flow, according to the media hype.  When George Bush, Jr. took office we forecasted that his huge projected surplus would never arrive.  In August 2002 The Economist agreed.

“It is a startling reversal.  When George Bush became president in January (2001), he was looking forward to a $5.6 trillion budget surplus in the decade to 2011 —– more than enough to fund his ambitious tax-cutting strategy.

“Yet when the CBO released its latest forecasts on August 27^th, most of the surplus had mysteriously vanished.”  And we didn’t even need a crystal ball.

Shades of Reaganonics and its rosy future scenarios!  How soon we forget.

In September 2003 Bush requested and got an additional $87 billion for Iraq next year.  The result of a Washington Post poll found that 61 percent of respondents opposed this grant.

The OMB (Office of Management and Budget) projected a deficit for 2003 at $450 billion.  This did not include the $87 billion.

Prescription drug coverage is projected to cost $400 billion over the next 10 years.  Bush expanded entitlement programs just as the massive baby-boomer generation approaches retirement.  Therefore that $400 billion is pie in the sky.

Damn!  We’re not done yet.  In 2004 the budget deficit was forecasted at $520 billion.  But this omitted the cost of keeping soldiers in Iraq and Afghanistan.

Budget projections also include the usual huge savings from eliminating “waste, fraud, and abuse.”  Friends, this is a crock.  Without competition and accountability to citizens these bugbears can only mushroom.  See PG15.

In July 2006 the estimated budget deficit for fiscal 2006 was $296 billion, which is $22 billion less that for FY 2005.  President Bush immediately congratulated himself publicly, claiming that tax cuts and Bushonomics were responsible.  (The actual FY 2006 deficit was about $400 billion).

The economy sped up during this time, but this had nothing to do with tax policy.  And the “tax cuts” were phony as usual.  Bush actually reduced tax rates a bit; he did not eliminate taxes.

Broder (News & Observer 3/2008): “The budget resolutions approved last week both envisage an increase in the deficit next year.  The senate predicts $366 billion, the house $340 billion.”  The actual 2009 deficit was $1.5 trillion.

“—- over the next five years, independent estimates are that the national debt, already $9 trillion, will grow by $2 trillion more.”  In five years?  It was already $12.7 trillion in March 2010.

Economist 2/2010: “Most states are legally barred from running deficits, so when their revenues fall in times of recession they make painful cuts, firing workers and ending programs — thus exacerbating the downturn rather than offsetting it.”

Enter Big Brother.  But Washington is also strapped for cash.  The Economist continued.

“More stimulus is probably necessary: ——–.  ——.  In the short term the primary threat to the economy remains a too-rapid reversal of government economic support.”

No prize for guessing where the next $800 billion or so will come from.  We think there will be a giant slapping sound as hundreds of millions of wallets slam shut.

Krugman (News & Observer 2/2010): “—– hard for many people to tell the difference between cynical posturing and serious economic argument.  And that is having tragic consequences.”

Sound-bite news media ignore nearly all of the latter because politicians waving arms and pounding fists makes more exciting copy.  This does not make the whole mess any easier to understand.

BY THREAT OF FORCE: Taxes come in many guises, and disguises.  President Clinton’s 1993 health care program included a mandatory grab on small businesses to help pay for insurance for their workers.  Some businesses could not afford this, and managers admitted it to their workers.

They told them they would understand if employees quit and found employers that pay part of their health insurance premiums.  But if the government forces the issue thousands of businesses will be forced to fold their tents and then nearly everyone is out of a job.

Clinton and his staff didn’t call it a tax, but we know better.  A thorn by any other name …..

Members of congress and the administration rip off taxpayers by granting themselves huge pensions.  This was forced on them by Ralph Nader and others, who inconveniently exposed their activities in granting themselves whopping salary increases (at least once during a secret midnight session, to avoid journalists).

Now, we know we are paying those inflated salaries and perks.  Some of us may not know we are also paying for those bloated pensions, because what our illustrious public servants pay into their obese pension plan is zero, absolutely zilch.

Also, they were forced to limit their take from speeches, books, and other actions where they take advantage of their office.  If one of us were running a business and his/her workers got together and granted themselves doubled wages, how would he/she react?  We pay the salaries and pensions of congressmen; how should we react?

We wonder if the idea of forcing anything besides elections on an arrogant central government is unique in recent history.  Rather, government forces us, even though the theory of democracy states that we are the bosses and therefore should do the forcing.  PG4 addresses this force farce.

Congressional pensions start at $160,000 per year, which is about equal to the salary of a rookie.  “Nice work if you can get it,” we might say.

LEGALIZED THIEVERY: Charles Adams referred to history and human nature in this observation: “But the biggest problem, as old as civilization, is that when governments spend too much, they will resort to anything that fills their spending pot, even stealing or plundering.”  Peter Schweiker’s book Throw Them All Out exposes mind-boggling thievery.

We enjoy reading a British publication called The Economist.  Not long ago we saw an article about the USA described as “How lawyers, lobbyists and assorted non-criminals (including government) legally steal Joe Public’s money, and why he lets them do it.”

Because Joe Public is us, this one perked up our antennae.

” In 1960 there were 365 paid lobbyists registered with the senate.  Today there are around 40,000, or 400 for each senator.

The folks who populate “Gucci Gulch” (corridors outside government offices) are in the business of seeking favors from legislators, so the groups that they represent can gain unearned advantages in the marketplace.  Not only are they siphoning funds and not contributing to the nation’s productivity, the unearned advantages also siphon funds because they are unearned.

We don’t imagine there is any need to remind ourselves that we must earn our money.

“There are —— two ways to get rich.  You can either invest in some productive activity and so create new wealth, or you can try to get a share of somebody else’s existing wealth (a home burglar for example).

“Transfer-seeking, which is what the second activity is called in polite circles, differs from productive investment in that it does not create wealth.  At best it redistributes it; at worst it destroys it.”

A lot of us own shares of stock in companies who hire lobbyists.  When indirect ownership thru pension funds and insurance companies are included, half of us citizens own shares.

Therefore these lawyers and lobbyists take it from Joe Public, who earns around $50,000 a year and put it in the pockets of those who take in something like $400,000 a year (often a lot more).  Here we say it like it is: “take in” does not mean “earned.”

“For if everybody indulged in transfer-seeking, just as if everyone took to thieving, all would end up impoverished.  Of course, transfer-seeking can be perfectly legal —– provided that legislators and courts agree to it.  Hence the need for lobbyists to influence politicians and for lawyers to influence judges.”

Legislators, lawyers, and lobbyists may agree to plunder, but we sure as hell don’t.  This is yet another massive transfer of wealth from us ordinary blokes to the filthy rich.  We smell rotten, stinking corruption. We don’t like it.

“—– each new lawyer now added to the American economy equates with the destruction of about $2.5 million of GDP (total domestic output of goods and services each year).

“It is true that a high percentage of lawyer-politicians might be tempted, through their legislating, to make more work for other lawyers.”

Until 1970 the number of lawyers per 100,000 Americans had remained at a fairly constant 120 or so.  That number has since more than doubled, to over 300.  Moreover, the number of central government lawsuits has roughly tripled in the past three decades.

There could be such a temptation.  We cannot avoid feeling that these people are not caring, concerned, productive citizens.

They are thieves.  Because their actions have gradually become so ingrained into the Washington culture, we suspect that few of them see themselves as such.

Isn’t everybody doing it?  Those who are doing it quite probably look around them and conclude that this is so.  It has become that rotten in Washington.

It looks very much like both of the major political parties are into the pockets of the special interests, to the point where the entire American economy is dragging a humongous sea anchor.  This makes a rational explanation why trickle-down economics has not worked (rich folks’ investments make jobs for the rest of us).

During his 1992 election campaign Mr. Clinton denounced Reagan’s and Bush’s policies for this lack, but the fact is both major political parties must bear equal shares of the blame.

This Economist article we are tracing is a ding-wowser.  Strange that we don’t read truth like this in the American news media. Curious citizens will find an explanation in PG’s 5 and 19.

Bill Clinton’s campaign promise to “soak the rich” was a crock.  Rich folks wouldn’t be rich if they were not smart.

If government raises tax rates for high-income people to win our votes they simply reach for their congressmen, accountants, and tax lawyers.  They own a lot of these types.

When will they ever learn?  Babington (News & Observer  3/1/2009): “The wealthiest 5 percent would pay $1 trillion in higher taxes over the next decade, while most others would get tax cuts.”  This is political hype; the reality is different.

In 1989 what has been called a “privileged person tax law” enabled 1,081 people with incomes over $200,000 to pay no national income taxes.  In 1994 a prominent economist estimated that 1993 tax rate increases will bring in about $3.4 billion extra a year, rather than the nearly $30 billion estimated by the government to impress us country bumpkins.

Congress changes the law each year to give breaks to every business and other organization whose lobbyists bring enough big ones when they drop by their offices for a cup of coffee.  There is no problem in hiding these changes.  PG7 elaborates.

Interesting to observe that this action was apparently not lost on the Clinton White House.  Occupants quickly noticed the suddenly enhanced value in a cup of coffee: a $50,000 donation to the Democratic Party.  So they acquired a big urn and sent out invitations.  Then there was the cost of a one-night flop in the Lincoln bedroom; around $100,000 was it?

Many people got faked out, including professors at Harvard’s Kennedy School of Government.  These super-brains described the 1981 Reagan tax cut as a “case study in good government.”

What it actually did was to slightly reduce income taxes on the average working person while simultaneously installing step-by-step increases in payroll or social security taxes.  These obliterated the reduction in income tax and added much more onto the total take. How much more?  Let’s have a look:

	1935	1955	1975	TODAY
Payroll tax rate	2%	4%	11.7%	15.3%
Portion of wages tax is applied to: the first	$3,000	$4,200	$14,000	$90,000
Share of central government revenue from payroll tax	1%	12%	30%	43%

From 2% of the first $3,000 earned or 60 bucks a year, to 15.3% of $90,000 or $13,770.  Patching inflation into this jacks that $60 up to about $720 in today’s dollars, so the increase in real terms for those making $90,000 or more is about 1,812%.

What really ticks us off is that somewhere around 1970 the government began raiding the Social Security trust funds to buy votes.  This is where payroll tax money goes, and it is supposed to stay there until needed for widows, retirees (including baby boomers), and disabled folks.

But politicians systematically looted every dollar up to about 20 years ago, leaving IOUs in place of the money.  About then this sneaky practice was  exposed, so now the looters are having second thoughts.

Also armed with second thoughts, Peterson visited Clinton: “—– I asked him, ‘Mr. President, you’re not buying this trust-fund story —– are you?’  Without hesitation, he answered: ‘Oh my, no Pete.  You and I know that this is a pure cash-in, cash-out program and that it will be draining revenue from the Treasury decades before the formal bankruptcy date.  We have to act soon.’

“I switched on CNN to watch him praise the audience for wanting to become better educated on this daunting policy issue — and then lo and behold saw him hold up a chart showing how our ‘trust funds’ would ‘totally safeguard’ Social Security until 2037.”  WOW!

Today the average taxpayer shells out more in payroll taxes than he/she does in income taxes.  But this gouge is not nearly as visible as the income tax, so politicians flog this one, promising cuts while on the campaign trail.  We will learn that since Reagan most if not all tax “cuts” are actually phony.

Sneaky! Should we believe that government has been plotting against taxpayers for at least 70 years?  We should.

Should we believe that only we taxpayers can stop this rape?  We should.  See PG19.

In summer 1999 here came a lot of ink about a fantastic tax cut.  The kicker here is that we have learned that the true dictionary meaning of “fantastic” is unreal.

David Broder (8/1999 column): “Congress is playing charades with the American people, and the way the game has been rigged guarantees even greater distrust of government.  The tax cut bill passed in varying forms by the House and Senate purports to promise a $792 billion reduction in federal levies over the next 10 years.”

Friends, this is pedigreed bilge water. In the past 40 years when have we ever seen a commitment in tax collection policy over ten years actually carried out as trumpeted?  We know from grim experience that politicians jack the tax code around every year.

Broder continued: “The trillion dollars is not cash in hand. It is an educated guess at the excess revenues that may be generated if this wonder of an economy, ———– keeps on expanding without pause for another ten years.”

And “—- holding to the (spending) caps will require a 38 percent reduction in real-dollar spending for all other domestic programs.”  Maybe politicians would call it a nostalgia trip: we remember the Reagan administration’s economic projections.  Even at the time analysts referred to them as pie in the sky.

Do government officials really believe we citizens will swallow this line?  They apparently did for a while, but then they backed off.  Have they learned anything?  We’d better not count on it.

“FICA” means Federal Insurance Contributions Act, passed in 1935 under Roosevelt.  Anyone who thinks that such payments are contributions doesn’t understand Washingtonspeak (also covered in PG19).

According to economists the portion of Social Security paid by employers is indirectly paid by workers, as their wages are reduced to cover it.  This means that three out of four workers pay more in total social security taxes (taxes they are, not contributions) than in income taxes.

Fewer businesses start up under these conditions, because payroll taxes must be met whether or not the business makes a profit (when income taxes kick in).  With a minimum wage law employers cannot cover this expense for low-wage employees by reducing their wages.

This restraint creates massive unemployment among the young.  The news media like to report what unemployed teens do with all that free time.

Payroll taxes take two bites out of workers.  Income tax withheld is calculated on base pay, before payroll tax is deducted.  Then the payroll tax hits what remains: double taxation on pay never seen.  (Withholding is a wonderful invention: the worker is led to believe that he/she did not earn that which is withheld.)

We could mention that if taxpayers created their own tax laws the benefits and costs would be clear to them, or a particular tax would never make it into law.  We could also mention that this approach to creating taxes is a part of democracy.  But, that is another story (PG’s 4 and 20).

Career politicians suffer from an illusion.  They persist in thinking that they can fool all of the troops all of the time.  They can’t, of course, and they must learn this valuable lesson.

We will soon ring the school bell.  All we need is enough taxpayers pulling on the rope: discussing what is in the gofers.

Greider’s book Who Will Tell the People: “The next bait-and-switch transaction — the celebrated ‘tax reform’ legislation of 1986 —– involved the same elements, including active collusion between the two political parties.”  Recall Tom Paine about 1790: “While they appear to quarrel they agree to plunder.”

“Bait and switch.  Once the wealthy achieved a lower tax rate, they started to work on getting back the loopholes and exceptions they had given up.  ——–.

Members of the congress know we are upset about the tax system.  Therefore “tax reform” is a subject that generates exceptional quantities of windbaggery.  This one from The Economist 1/13/96:

“The republicans will campaign in the coming election against America’s warped tax code.  Can they convince enough voters it is worth scrapping?”

They surely hoped they could not.  They probably planned the whole charade with the democrats in order to be sure this idea doesn’t fly.  For from the warped tax code comes many of the millions that every congressperson needs to win the next election (and the next one after that, etc.).

“—— the republican party’s leaders —– kill a tax system they have always loathed.”

Don Boroughs in US News 4/8/1996 commented on the IRS: “Tax collectors have been dodging stones ever since biblical times; indeed the history of the nation begins with a tax revolt.  But the chorus of voices challenging the IRS today is rising to a pitch not heard in decades.

“—– entire existence of the current tax collection system is undergoing tenacious scrutiny in Washington.  Bill Archer, chairman of the tax-writing Ways and Means committee, pledges to ‘remove the IRS totally and completely from every American’s individual life.'”

Friends, talk is cheap.  Furthermore, he doesn’t mean a word of it.  Nor does any of the congressmen, as practically all are slopping themselves at the public trough.

“Political leaders say they are just following the mood of the public.”  If this be true how do they explain: “—– IRS employees have received an average of 718 threats of violence annually in the 1990s.”

Something is fishy here.  But the odor does not remind us of dead fish.

Big flap in congress in 1997 on this one.  Media hyped arguments for a flat tax were stacked against those for a national retail sales tax.

But both quantities of windbaggery were carefully balanced to make the total impact zilch.  Today’s screwed-up code prints just too much money for members of congress.

So, let’s look at a year later.  Was that huge, nasty, sleazy, corrupt tax code scrapped?

Not hardly.  Strange: We did not hear bitch #1 from any republican leader.

Ahead to 2004, and we see what career politicians in Washington learned from the 1996 charade.  Will they take The Economist’s advice and pitch the whole bucket of worms into Chesapeake Bay?

In August we heard some rumblings.  The republicans apparently wanted to abolish the IRS and replace it with a tax on consumption or maybe a value-added tax (popular in Europe).

Speaker of the House Dennis Hastert: “We have the opportunity if Bush wins —–.  ———.  I think we may have one chance in a generation.”

This sounded great, until we looked at the date: three months before a presidential election.  These characters had no intent whatsoever to ditch the system.  The rumblings we heard were only rhetoric, fishing for votes.

They and other career pols have grown fat over the past 60 years by selling tax breaks, subsidies, credits, etc. to other fat cats.  The fact that this is unconstitutional and also dirty, rotten, stinking corruption bothers them not at all. 

Furthermore, the democrats are just as deeply in bed with these obese purchasers of illicit favors, so it does no good to vote the republicans out of office.  See PG19.

The experience with the Reagan tax “cuts” taught the government valuable lessons.  Hype the hell out of a tax cut.

Then either don’t actually pass it, “backload it,” (so it will not take effect for years down the road) or load it with future increases that more than nullify any benefit to taxpayers. Officials can count on the news media to spread information about the cut all over creation, and then squelch any info about the increases.

We might describe this practice as “the unkindest cut,” or “You sure know how to cut a guy.”

Greider continued: “—— the monied elites —— can afford to accept trade-offs in one season because they will be back again next time, with new reasons to plead for tax relief.  If political parties were reliable organizations, they would defend the citizenry against these perennial raids on the public treasury.  The present reality is that both political parties collaborate with the raiders.” 

In May 2003 Krugman outed the most recent incarnation of Greider’s argument.  “—– tax package the House is expected to pass — a package that relies on exactly the same bait-and-switch tactics used to sell the 2001 tax cut.

“Since the scam involved in the 2001 tax cut remains one of the wonders of modern political economy, it is a measure of our leaders’ contempt for the intelligence of the public — or maybe the press — that they think they can use the same tricks a second time.

“In 2001 a tax cut that delivered about 40 percent of its benefits to the richest 1 percent of families was marketed as a tax break for ordinary folks.  The same is true this time.

“In fact, the extent to which the House bill favors the rich is breathtaking: The typical family would get a tax break of only $217 next year, but families with incomes above $1 million would get an average of $93,500 each.”

SNEAKY!!! PG19 is all about sneakiness.

We see now how the fox guards the chicken house.  The elites are always at the well, where less privileged groups (like us) cannot afford to hang in there.

If the political parties were representing our interests they would be in there just like the elites, fighting them tooth and nail.  But, both major parties share the same bed.

Adams laid down one that we had not previously heard of, and it rots our sox.  “Informers are not used in the modern world except in the US.  Like the informers in the ancient world, —– receive a percentage of the tax recovered.

“It is ironic that the America pursues a policy of promoting informers, when the American Revolution was sparked by a similar practice instituted by British revenue authorities —–.”

This sneaky practice is built into the tax code.  “It is all reminiscent of the Soviet Union, where children were taught by parents that ‘the walls have ears.’”

And not just a percentage.  “—— huge penalties have been levied against some of our biggest banks for not informing on customers that use cash —–.  ——-.  Your banking records are not just an open book; they are a family photo album as well.”

And now to the potentially biggest heist of all.  This is stealing from our children, grandchildren, and generations not yet born.

The American Enterprise Institute published a paper that suggested a measure of the sustainability of the current (2003) budget into the future.  It attempts to estimate the amount of the bill that we who are alive today are handing to generations yet unborn.

Today the situation is far worse.  Author Larry Sabato: “—- the interest group that is the weakest politically is the one that is even more difficult to organize than taxpayers — the unborn.”  Millennials, hark!

The paper’s authors estimated that future spending will exceed projected tax receipts by $44 trillion, or 20 times the current national budget.  They claimed that projected Medicare expenses alone will transfer more than $20 trillion to us from future generations.

The longer the government puts off the inevitable the worse it gets.  The authors claimed that waiting until 2008 increases that $44 trillion to $54 trillion.

The Economist (8/2003): “One way or another, America’s budget gap will have to be closed.  ——— will it be done responsibly, by coming clean ——- taking the necessary, if painful, steps ———?  Or will the top management, like Enron’s, stave off admitting the true state ——- until it is forced to do so by some spectacular collapse?”

Entin (Wall Street Journal 3/14/2007): “Paygo was deliberately fashioned in order to make opponents of tax hikes into villains for blocking new entitlements; it also makes it harder to avoid tax hikes and trim government spending.

“The paygo rule is a direct threat to the extension of the Bush tax cuts — or the enactment of any other tax cut in the future.  ————–.  Paygo is a twisted crutch for a crippled budget process.

“It is bad government and bad economics.”  Stephen J. Entin is president of the Institute for Research on the Economics of Taxation.

(WSJ 3/20/2007): “Mr. Conrad, the senate budget chairman, pulled off the neat magic trick of claiming his budget includes ‘no tax increase,’ even as it anticipates repeal of the Bush tax cuts after 2010.

“How does he pull that rabbit out of his hat?  By positing what amounts to a giant asterisk where the tax increase is supposed to go and hoping no one will notice.”

In the 19th century French economist Frederic Bastiat defined a government as “—– the great fiction, by which everyone hopes to live at the expense of everyone else.”  We apparently need PG6.

In 2010 the Tax Foundation estimated that 60% of all citizens now receive more in income benefits from government than they pay into government.  New policies suggest that this will expand to 70%.  Thinking citizens can see Bastiat’s ghost hovering over Washington.

We haven’t had enough yet, so we now turn to more flimflammery.  This gets a bit technical in spots, but we can tune in when it’s our money.

THE TAX SYSTEM: Jean-Baptiste Colbert was French King Louis XIV’s treasurer.  “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”

The Economist 1/31/1996: “Consider the three things that most governments now demand of their tax systems.  First, — they expect to raise enough revenue to pay for their own activities.”

“Second, they want to redistribute income from those with more to those with less.  Lastly, they want to give tax advantages to causes deemed worthy, or at least popular.”

None of these can work well if they undermine incentives to produce, to work hard and smart.  The first was a proven failure in all Marxist countries.

The second has too much potential for political manipulation to be workable.  A prime and glaring example may be found in tax-exempt foundations set up by senators, into which special interests pour dirty money.

As for the third, who will do the deeming?  The government?  But we know we can’t trust thieves to deem in our favor, even when it’s our money.

“After a half century of eager experimenting, it is clear that these goals are simply too much for any one tax system to deliver.  Indeed, the first objective is taxing enough.  —-.  Unfortunately, it is also a necessary cost of government, ——.”

The Economist summarized: “If America truly wants a new way to pay, it should send its entire tax code — every last scrap — to the bottom of the harbor.”

YO!  Didn’t our ancestors dump tons of British tea into Boston harbor a couple of centuries ago?  As we recall, they were unhappy with a tax and the system from which it came at them.  And here is a British publication urging us to dump it; how ‘bout them apples?!!

The Economist 11/2010 commented on a new report for “—the ideal tax system.”  “A group headed by James Mirlees, a Nobel-prize-winning founder of the modern theory of optimal taxation, this week urged governments to do more than tinker at the margins.”

Friends, bear this in mind: a Nobel-winning tax expert.  His group recommended variations on the income tax, and a (unconstitutional) progressive one at that.

Yikes!  Surely a least one member of that august group must have read at least a bit of the tons of historical tax literature that nearly uniformly claim that a direct (or income) tax is bad.  It may start off low, but with passage of time it slowly rises until it has severely damaged the economy.

Ah, well.  No reflection on the Nobel committee, which has done excellent work in the past.  But here comes this one right after war-monger Obama was awarded the peace prize.  (After receiving it the president sent another 30,000 troops to Afghanistan.)

Today there is another tea party going on, and for the same reason: another of Charles Adams’s tax revolutions.  Unlike their ancestors, these people see no need to dress as Indians.  The looters in Washington caught this effort towards freedom:

“Lois Lerner, who was at the center of last year’s so-called Tea Party targeting scandal, declined to answer questions from Darrell Issa, the Republican chairman of the House of Representatives Oversight and Government Reform Committee.  Committee names like this are designed to mislead citizens.

In May 2013 —- “she issued a public apology, in answer to a planted question from the audience at a legal conference, in which she said the IRS had done ‘inappropriate’ targeting of political groups with the words ‘Tea Party’ in their names.” 

This was not the first in modern times.  In April 2007 6,000 anti-tax activists in Minnesota stomped down to the capitol to complain.  A couple of days later citizens in Michigan rallied against governor Jennifer Granholm, carrying signs saying “Not another penny Jenny!!”

At this time Reed (WSJ 6/2007) provided some useful history leading to Michigan’s tax situation.  Generations of Michiganders grew up believing that tough unions would protect jobs and secure higher incomes.  It was therefore an unlikely place to ban the closed shop ——.

“A 2002 study by the Mackinac Center for Public Policy, of which I am president, —–.  ——– found that from 1970 to 2000, right-to-work states (open shop)  created 1.43 million jobs.  At the same time non-right-to-work states (closed shop) lost 2.18 million jobs.

“Michigan lost a quarter million jobs since the start of this decade.  ————-.  High-profile companies like the Big Three auto makers, Pfizer and Comerica are slashing workforces or moving operations out of state.  Tax revenue is down and the state budget is hemorrhaging red ink.

“But what’s really dumb and getting dumber is the persistent reluctance of the administration of governor Jennifer Granholm to tackle the union issue, even as signs swell —— sea change.”

Cut to the 2007-8 financial crisis and we see that GM and Chrysler went belly-up, Detroit is nearly a ghost town and unemployment is at a record high.  We have often thought the union movement did a lot of good during the late 19th century and the first half of the 20th.

But it can be overdone.  California seems to be following Michigan’s “lead.”  And America, apparently, as unemployment hits 10% and Washington is spending us into oblivion.

In 2007 taxpayers and preparers were up against 66,000 pages of tax laws.  Tax preparation had become one of the fastest growth industries altho this contributes nothing to economic growth.

Moore (WSJ 4/13/2007): “In 1914 the total income tax collections were $10 billion (in today’s dollars).  Now ——— roughly $1 trillion, —- requires a massive collection machine.  The original IRS enforcement office had 4,000 employees.  Now the IRS has 100,000 agents, —–.

“We should have listened to the advice rendered by the New York Times, which while editorializing against the income tax in 1909 warned: ‘When men get in the habit of helping themselves to the property of others, they cannot be easily cured of it.'”  In PG4 we showed why this is a disease.

We need to remind ourselves that every buck the rich avoid paying must be made up by someone.  We’re getting that sinking feeling again.

When the top tax rate was 91 percent, Ronald Reagan was an actor.  He would work about half a year and play golf for the remainder.  He felt no incentive to work longer when 91 cents of every extra buck he earned went to Uncle.

Reaganomics argued that cutting tax rates would stimulate the economy.  But many studies showed that when tax rates are up around today’s level only little more than half of the revenue lost due to the cuts would be recovered through taxing increased economic activity.

Young Bush lieutenants believed the public still thinks the famous Reagan tax “cuts” were real.  Rosen (4/2001) commented: “—– helped unleash an unprecedented era of prosperity.  Current projections of $5.6 trillion in government surpluses over the next decade, they say, vindicate Reagan’s supply-side promise that cutting taxes would ultimately increase government revenue by fueling investment and creating jobs.”

During the Reagan era supply-side economics was hyped with the promise of big surpluses, a huge tax cut, the largest defense spending in US history, and no fiscal deficits.  What we got was huge deficits, higher unemployment, inflation, and a massive shift where the country went from being the world’s biggest creditor to being its biggest debtor.

Never mind all that.  Young President Bush continued to promise that we can have it all.

There was a change: the Bush tax cuts were real.  They are due to expire at the end of 2010, at which time everyone will get it in the keester unless Obama can fulfill his promise to keep them for taxpayers getting less than $250,000 per year.  Rotsa ruck.

The kicker here is that if he does there, once again, goes the deficit into a deep power dive.  But citizens are currently pitching a colossal bitch about the deficit!

Obama was caught between a rock and a hard spot.  We taxpayers know the feeling.

There is another intriguing thing President Bush did with our tax money.  The top 0.1 percent of earners includes 145,000 people, and their average income for 2002 was $3 million.

That is 2.5 times the average income for the same 0.1 percent in 1980, adjusted for inflation.  Once in office, Bush apparently wasted little time in directing big bucks to the already filthy rich, among whom are many of his friends.  These numbers came from a study by the NY Times.  No prize for guessing where those megabucks came from.

Author Harry Browne on the current tax system: “The income tax is the biggest intrusion suffered by the —— people.  It forces every worker to be a bookkeeper, to open his records to the government, —— to fear conviction for a harmless accounting error.  Hundreds of billions of dollars are wasted on attorneys, accountants, —– other costs.” 

Jefferson: “These covering our land with officers, and opening our doors to their intrusions, had already begun that process of domiciliary vexation which, once entered, is scarcely to be restrained from reaching successively every article of produce and property.”

Jefferson understood human nature.  Today the taxpayer is financially stripped naked.  He and Tom Paine were friends.  See our comments on his pamphlet, called Common Sense II.

Someone figured all this costs high flyers and us about 400 million person-hours each year to prepare tax returns (estimates range up to a billion).  This too contributes nothing to economic development.

Nor does the government pay us anything for this service.  If we had a totally new and different tax system nearly all those person-hours would be diverted to productive efforts (see below).

But that would mean all those lawyers and accountants would have to scratch around and find something productive to do with their time. Incidentally, that 400 million doesn’t include IRS employees.  We pay them for their time, of course.

The IRS blew another $4 billion of our money on a new computer system that has recently been officially declared a failure.  We’re not surprised.

We are amazed at the genius of our country’s software people, but can any of them efficiently computerize 70,000 pages of constantly changing gobbledygook?  Well, we guess it’s back to the drawing board.  They will find the money somewhere …..

Charlotte Twight quoted from James L. Payne’s book Costly Returns: The Burdens of the US Tax System: “When all the monetary costs of operating the US tax system are added together, the total comes to 65 percent of net tax revenues, or over $500 billion in 1990 —-.”

He estimated that for every $100 collected $65 worth of resources are wasted.  Furthermore, the government forces employers to enter a different business: that of tax collector.  Government pays them nothing for this “service.”

The beauty of the withholding tax, of course, is that the sucker, —- er, worker thinks the money was not earned by him or her.  Therefore he does not think the government is exerting force to take away his property.

Imposed in 1941, the clever technique was sold to the public as convenient and also patriotic.  Once entrenched, people thought little of it, right up to today.  But the thieves, —– er, politicians love it.

So much for tax systems in general.  Oh, one more thing.  There are indications that the “underground” economy in wealthy countries has grown on average three times as fast as the official one since the 1960s.

When tax evasion, which is illegal, grows at this pace the message is clear. The system has become oppressive and unfair.

Malpass (WSJ 2/2007): “The net effect of the current system is a strong upward ratchet in tax rates and tax complexity.  ——-.  Budget baselines built in repeated tax increases, as if those are normal, ——– (our emphasis).

“——- proposed legislation pairs the small business provision with tax increases in other areas.  The result will be higher tax rates and payments in 2007 than in 2006 — but it will be called a tax cut.”

We jump ahead to record how a new President handled this one.  The Economist 9/2017: “—— proposes the most significant change to the federal tax code since 1986.  Whether it can be turned into passable legislation, or whether it instead meets the same fate as republicans’ health policy ideas, remains to be seen.

“—— he promises a near-doubling of the standard deduction, ——–.  ———.  ——– much less generous than it sounds, because —– also abolish the personal exemption, ———–.

“The top rate of tax —– fall from 39.6% to 35%.

“—- cut to corporation tax, from 35% to 20%.  Mr. Trump argues —– flow primarily to workers, in the form of higher wages.  ———.  ———.  Most tax experts ——- around four-fifths ——– go to investors.” 

News & Observer 7/2018: “Trump signed ——– just before Christmas.  Six months later, it is losing popularity.

“American families are unsure if they are actually benefiting from ———-.  A recent poll ——- just 34% of adults approved of the tax cut now, a slide from January ——–.

“So far, spending on equipment is lower than it was at the end of last year, and overall business investment was 6.3% in the first quarter, not much different than 6.3% —- last quarter of 2017.

“—- the tax bill has left America more than $1trn deeper in debt, according to the CBO.  There’s also been no acceleration in wage growth.

“The hope was that companies ——– invest it in new equipment ———.  But the evidence so far is —— giving cash back to shareholders.”  This suggests that, in spite of government- forced media hype the economy is not doing all that well.  And/or:

“Many executives say Trump’s trade war is causing them to pause on big investments until they see what happens.”

Charles Adams chimed in again.  “Some years ago, the Reader’s Digest published a series called ‘The Tyranny of the IRS.’  It shocked the country at the time, so much so that congress held a hearing on the charges.

The hearing turned out to be a total fraud.  No one from Reader’s Digest was invited to appear.  The author was not invited ——–.”

Alan Eram, News & Observer 3/2013: “An exhausted senate gave pre-dawn approval Saturday to a democratic $3.7 trillion budget for next year that embraces nearly $1 trillion in tax increases over the coming decade but shelters domestic programs targeted for cuts by house republicans.” 

Friends, we think we have uncovered a major flaw in our system.  We have the same branch of government taxing and spending.  In any company or volunteer organization these functions are separated.

But in the organization with the biggest budget in the world it is not.  This is arguably the biggest mistake in the Constitution, but the congress loves it.  We should put this one in our pipe and puff on it.

Columnist George Will (4/2010) commented on a plan by government of adding a VAT (value-added tax) to the current mess.  He advised that taxpayers should consider this plan only after congress had repealed the 16th Amendment.

This act would obliterate the income tax, which is congress’s steak and lobster.  It funds a huge variety of expensive activities that we citizens did not authorize, so it will not happen.

Will: “Because a VAT potentially taxes everything, it would be riddled with exemptions.  This is because it maximizes the political class’s opportunities for showing favoritism —-.”

COOKING THE BOOKS: There are two broad types of accounting.  One is called cash and the other is called accrual.  BIG GOVERNMENT uses the cash method, and we are going to see why.

Back in 1974 the central government reported a budget deficit of $6.1 billion.  On an accrual basis the deficit for that year was $95.1 billion.  In 1984 the national debt (accumulated deficits) was $1.3 and $3.8 trillion, respectively.

By reporting on a cash basis, politicians are able to continue to dangle goodies in front of us while ignoring future costs.  The central government requires accrual accounting, which doesn’t permit this deceptive practice, from every publicly held company (corporation, with shareholders).  This information must be independently audited and published.

Peterson did not pass this one up, either. “During the Clinton years, the government’s official deficits did go down.  But the ——- accounting (or ‘accrual’) deficits, which include charges for unfunded liabilities in Social Security and Medicare, continued to climb.  And President Clinton did nothing to stop them.”

Congress even passed a law about 40 years ago requiring accrual accounting by the administration, but the White House has ever since gotten away with ignoring the law.  We show in PG13 that presidents frequently consider themselves above the law.  Here is another example.

The US Constitution was built on the principle of Rule of Law, where everyone must obey the laws and no exceptions.  We shouldn’t wonder why so many of us are breaking the law these days.

It’s been going on at the top for years.  “Lead by example” ….. ??

Friends, this isn’t about accounting.  It’s about accountability.  Our representatives in Washington aren’t conforming to the laws that they pass to restrain us.

The Congress has combined with the president to create a national debt of $23 trillion, and another maybe $18 trillion of potential off-budget obligations (the latter includes national, state and local levels).  If we think today that we have a serious problem with the generation gap, well we ain’t seen nothin’ yet!  (Once again: millennials should be reading, thinking and joining us.)

THE SPENDAHOLICS: Beginning right after World War II the congress showed us time and again that whenever we permit taxes to be raised to balance the budget members just spend more.  This is a main reason why the national budget deficit keeps growing every year.

That is almost 70 years of spend and spend, including money that the government didn’t have.  We need not repeat what happens to us when we do this.

With every passing year it only gets worse.  This is because the leftover budgetary dirt from previous years must be swept under the rug, in addition to new gimmickry for the coming fiscal year.  The proof follows.

“Experts say democrats, GOP have colluded to mask the size of the spending binge, —– (Pianin and Hager, 10/1999 column).

“As the —– congress struggles to complete work on the budget by its deadline next Thursday, it is relying to an unprecedented degree on creative accounting tactics aimed at boosting spending beyond what its rules now allow.  All told, congressional budgeteers have manufactured an additional $46 billion to spend this year ——–.

“—– underscores the immense difficulty of writing budget discipline into law — and how easy it is for congress and the president to circumvent what were supposed to be ironclad limits ——.  Under the 1997 balanced budget agreement, the central government was supposed to spend only $592 billion on the 13 spending bills funding government’s daily operations this year, but congress is on target to spend roughly $640 billion.”

For these characters, spending is a drug and officials in charge are addicts.  As they have done so often previously, they figure where’s the problem?  It’s not our money.

Any limits agreed to or passed into law are gutted almost in the next breath.  The congress in 2004 approved another $8.7 billion for farmers.  This made a total of $22 billion in spending “emergencies” which do not count against the limits.

In June 2002 (Economist): “With both chambers narrowly divided, and elections close, congress is in the mood to spend — and there is little to stop it.  In the 1990s, strict controls curbed the politicians’ appetites to write checks.

“Sadly, when surpluses began to appear in the late 1990s these rules were increasingly ignored.”  There was no intent to stick to any controls.  And the surpluses were not real.

In 2004 Peterson calculated the combined projected unfunded liabilities for Social Security and Medicare, both of which cater to frequent-voting geriatrics.  He got “—– $1.7 trillion, or about $170,000 of hidden debt per family.”  And this figuring occurred before the prescription drug law.

Peterson wrote that by 2040 these two programs could take 35-55% of each worker’s paycheck, and that is before he/she pays for the rest of government.  This will of course cause widespread tax evasion, and much of the economy shifting into the tax-exempt “grey” market.

Peterson continued: “Consider that the federal government has already promised to today’s adults $8 trillion in future Social Security benefits beyond the value of the taxes they have paid to date — a figure more than 250 times greater than the much decried ‘unfunded liabilities’ of all private-sector pensions in America!”

In 2006 the news showed President Bush hassling companies about keeping their pension plans fully funded.  Politicians deflect blame from themselves by jumping on the private sector with both feet.  Nothing new here; Roosevelt did the same thing during the Great Depression.  Government bit the hand that fed it.  Even a dog knows better.  BIG GOVERNMENT, anyone?  See PG15.

No business can go into debt beyond a certain point or it will fail, but government can go into deep debt and then force citizens to pay for it.  So we peasants have been victimized twice over.

We have to ask: aren’t there many of us citizens who are concerned enough about this situation to complain about it?  The answer is yes, definitely.  We have been complaining.

But we have no intention of stopping there.  The pocket gofers demonstrate in detail just what BIG GOVERNMENT has been doing to us.  They help us to know in grim detail what we are unhappy about.

But they go beyond this.  They encourage us to get together and get organized against monster government.  They will help us only if we put them to work.

This means lots of discussion, free and open debate, and constructive criticism of the ideas in the gofers.  Then we will be ready to show Washington the door and build democracy from the bottom up.  Also see PG21.

Young republican President Bush was the biggest spending president since Lyndon Johnson.  In his first three years, adjusting for inflation, government spending increased by 15.6 percent, or about $230 billion.  But then democrat President Obama outdid him.

Did Bush’s rhetoric during his first term match his behavior?  Peterson pointed out that both Reagan and young Bush hammered away on the need to cut non-defense spending.  Both presided over considerable increases.  We would not buy a used car from either one of them.

Now, he had to deal with 9/11 and had 2-3 wars going, but he also increased nonmilitary spending by 21 percent in three years.  Thru 2006 he did not veto one single bill presented to him.

A taxpayer might ask, does the CBO (Congressional Budget Office) attempt to inject some truth into this tawdry business?  Alas, no.  A November 2003 projection showed a deficit of $1.4 trillion over the next 10 years.

Law forces the CBO to make unrealistic assumptions about taxes and spending.  Well, the White House also does projections.  Any improvement here?

No again.  Both organizations are totally politicized.  The experts just roll their eyes.  The CBO was a fraud from its beginning.

What really grabbed us as we wrote in 2004 was neither major candidate for president said a thing about this mess.  Maybe we should pray for our children?

The only candidate that seemed to recommend some semblance of sanity was a guy named Michael Badnarik, who represented the Libertarian party.  But we did not hear anything from him, as the two major parties monopolized the press and air waves.  His book is titled Good To Be King.

FINANCIAL CRISIS:  In summer 2008 financial hell broke loose.  The government hit taxpayers for megabucks to take over IndyMac Bancorp, which was the second-biggest bank failure in American history.  During the previous March government rescued Bear Stearns, an investment bank.

The Economist 7/2008: “Capitalism rests on a clear principle; those who get the profits should take the pain.  For the system to work, bankers sometimes need to lose their jobs and investors their shirts.”

But in the case of big banks government concluded that they were “too big to fail,” and so it took from us peasants to save big bankers from big pain.  Friends, do we see where this is going?  Big bankers will in the future take huge risks, knowing that if they get in trouble the taxpayer will bail them out.

As of January 2010 the government had done nothing to change this extremely dangerous situation.  It was too busy screwing up health care reform and keeping two wars going.  Richard Reed’s 2011 essay raised the same red flag.

Fannie Mae and Freddie Mac are public organizations formed years ago by congress to spread home ownership by offering mortgage loans at lower interest rates than the market.  Like today’s big banks a belief gradually came into being that Uncle would bail each out if they got into trouble.

This belief had no basis in law, but it enabled F&F to become huge organizations.  The cost of mortgage money dropped only a little, but the organizations sent lobbyists to congress with gobs of money in order to keep it from terminating them.

Along came the financial crisis and, — guess what?  Yep, the taxpayer once again.

Have we had enough?  Sadly, we are not done yet.  Congress has over years placed $trillions of potential future obligations off the books: more bennies for today’s voters that young folks will have to make good down the road.

Moneymen call these obligations contingencies, which means our children may have to pay them.  This means we must depend on guestimates; somewhere around $53 trillion or $175,000 for each citizen including babies.

In 10/2008 government took $700 billion of our money to prop up the failing banking system.  Maybe it needed to do this, but how did conditions deteriorate to cause this situation?

There were a couple of causes.  First, beginning in the late 1980s the Fed lowered interest rates (price of money) below what a free market would have set.  This made money too plentiful and Wall Street jumped on it, making billions.

Another cause was bad government regulation (PG8) and Wall St. further distorting the market as it dodged the intent of this regulation in order to make billions for the rich.  The kicker here today is the government busy hatching still more regulation to fix what its own bad policies created in the first place.  Oh, MAMA MIA!!  (Cicero: The more laws the less justice.)

With over-cheap money banks lent furiously and people believed asset prices (houses, etc) would keep going up so they accepted loans that they could not afford to pay on.  Well, millions defaulted when the bubble burst and house prices plummeted.

This development caused trillions of dollars in the economy to disappear.  The Fed printed money to fill this gap.  Banks were and are not made of money, so they failed and government used our money to bail them out.

Irresponsible home owners were in deep doodoo as they owed more than their homes were worth.  Government tried to bail them out by taking another $787 billion of our money and leaning hard on lenders to lighten up.

Prudent home owners who did not overextend themselves were taxed to help out those in trouble.  Understandably, they were seriously bent.

As of January 2010 people were afraid.  The government-controlled news media were claiming that the recession is over, but they didn’t believe it so they were saving.  (Who can say what big government will do to us next?  Better prepare.)

Now, before the crisis people were spending way too much and saving far too little for retirement.  The goofy aspect of this situation is that by claiming the crisis is over government hoped people would spend to get the economy moving again.

But unemployment was still 10 percent so they kept hunkered down.  This might drop the economy into deep recession again.  (A January 2009 study analyzed past crises and suggested that this one will be around for a good while yet.)

Many experts were convinced that BIG GOVERNMENT wanted to take over the entire $14 trillion economy.  If we let them get away with it the result would be something like Soviet-style socialism.

Economist 10/2008: “Indeed, history suggests that a prejudice against more rules is a good idea.  Too often they have unintended consequences, helping to create the next disaster.

“And capitalism, eventually, corrects itself.”  But only if government would butt out and give the market a chance to work its magic.  Politicians love to meddle, primarily because they love lobbyists’ money.  Way past time to t’row da bums out, we’d say.  Schweiker’s book titled Throw Them All Out springs to mind.

DEMOCRACY SACRIFICED: We mentioned that William Greider wrote a book called Who Will Tell the People.  You have some really good stuff here, Bill, so we thought we would help out.

“Behind all of the confusion and complexity of the tax debate, democracy’s natural inclinations were literally thrown into reverse —— rewarding the few at the expense of the many.

“Therefore, in order to accomplish such distorted outcomes, the governing elites and monied interests are required to create a series of elaborate screens around the subject of taxes ——- a moving tableau of convincing illusions that distracts the public from the real content and gives politicians a place to hide.  Meanwhile, behind the screens, the action proceeds toward the results they seek.

“In public, the two major parties struggle contentiously over tax issues.  Yet the reality is the collaboration between them.”  Paine: “While they appear to quarrel ——-.”

“Expert opinion is marshaled on behalf of broad economic goals that seem desirable to everyone — economic growth and jobs.  Meanwhile, elites work out among themselves how these broad goals can be translated into reducing their own tax burdens.”

A May 2006 study by Martin Feldstein showed that a set of higher tax rates being considered would cost the economy about $60 billion in lost incomes and jobs.  This consists of job-creating businesses not started, plants not built and raises not granted because government would have taken the necessary capital out of the private sector.

BIG GOVERNMENT has honed the old smoke-and-mirrors trick to a high art.  What is this “elites” krud?

If we’re paying the tab we should be the bosses.  Aren’t public servants supposed to behave like servants?

On most issues we actually have single-party government, similar to Russia, China, North Korea, and others.  No wonder folks don’t vote.

We get the same brand of fluff no matter which scoundrel we vote for.  And today there are more dollars voting than people.

“Republican Revolution?”  “Contract With America?”  Sorry, Newt.  We don’t buy it.  We have already demonstrated in other pocket gofers that any successful revolution must come from outside the system.

In Nov. 2010 a huge bunch of republicans stomped into Washington promising to restore fiscal discipline and stop job-killing tax hikes.  They vowed to shrink the government while keeping its most expensive parts: Social Security, Medicare and defense.”

By now thinking citizens can accurately analyze political promises.  Talk is even cheaper in Washington than it is elsewhere.

It is common knowledge: entitlements must be cut.  But we would have to wring his neck to get any career politician to say this.

The potential for abuse runs deep.  Doubters can check in with any Igor or Galina over in Russia.  That huge and poor country suffered under a single-party government for 75+ years, and it’s still there.

Seems there really is a sucker born every seven seconds in this country.  We are figuring a way so we don’t have to spend our entire lives in this condition.

A FEW SPECIFIC (AND GRISLY) EXAMPLES

DOWN ON THE FARM: Big Government has several programs among many others, which pay farmers for not farming.  (We are looking for the one that pays us for not knocking over liquor stores.)  The fact is that government steals from us in order to make rich farmers richer.

Subsidies guarantee minimum payments to farmers.  If the market price drops below a specified minimum we taxpayers make up the deficit.

Subsidies also help to make sure that we pay higher prices for food than we would without them.  So we get it in the keester coming and going.

Subsidies cause farmers to produce more (they see they can’t lose money), so in 1989-90 there were too much milk and other dairy products.  So the government in its infinite wisdom paid big dairymen $1.1 billion to slaughter some of their herds.  Of this sum, 144 farmers each got more than $1 million of our money.

But in spite of the slaughtering cattle prices dropped ten percent and cattlemen were hurting, so the government promised to buy 4 million pounds of beef.  Some dairymen killed their oldest, least productive cows and transferred ownership of young cows to relatives.  There was still a surplus, so the government bought 5.4 billion pounds of milk for $1.2 billion.

No need to mention who paid for all this, but we’ll do it anyway.  First, we paid for BIG GOVERNMENT to foul up the market with subsidies.  Next we paid for BIG BROTHER to correct the resulting and predictable distortion of the market.  And then we paid for another distortion to correct the previous distortion.

We remember when there was a boom in agricultural land and, just as sure as night follows day, a bust.  Farmers are people, so they believed there was no end to it.  Lenders did not help, as they poured money into farmland.

Come the bust, and predictably many farmers went under.  They were asking for it, but were they?  They knew that Uncle (that’s us) would bail them out, so they went for it big during the boom (just like today’s big bankers).

Why not?  There was no risk.  Little or nothing to lose, and a lot to gain.  (Looks like we missed our calling.)

The press jumped on the issue so a congressional committee heard testimony from Jessica Lange and Sissy Spacek, the heroines of two farm crisis movies.  Are these people experts on the problem?

Or did the congressMEN simply want to meet some attractive female celebrities in front of the cameras?  Or were they actually trying to help destitute actresses?

We admit to some confusion.  What we’re not confused about is that our tax money floated this whole stupendous charade.

In 1990 part-time farmers received 18 percent of $26 billion, or about $4.68 billion.  This was on top of what they made farming, and that was on top of what they made doing something else.  The remaining $21.32 billion went to about 600,000 full-time farmers, or about $3.55 million to each of them on average.

Why does the taxpayer assume farmers’ risks of loss when they already grow far more food than is needed?  Where did we get the idea that every business has a risk of failure that is accepted as part of its existence in a free market?

Sticky questions, but we will take a shot at them anyway.  We noticed that three and a half mil going to each rich farmer to make him richer.

But the money doesn’t make him that much richer.  Some of that loot ripped from taxpayers gets kicked back to the congressmen who so kindly provided that fat subsidy.

Apparently their backs itch as ours do, so they need scratching.  But they receive a different kind of scratch: bucks from rich farmers to go into their re-election campaign war chests (and sometimes into their pockets).

There’s been a lot of talk lately about public financing of election campaigns, so each congressperson will not have to spend 40 percent of his/her time raising money for that war chest.  Those who argue against the idea apparently don’t realize that we already have it.

We bet that a lot of us who watch those dumb political ads on TV don’t know that some of our tax dollars paid for those spots.  Those of us who do know cannot recall having been asked if this is okay.

Over the past 20 years or so the price of chicken has dropped by almost a third (adjusted for inflation).  The prices of dairy products have increased. No prize for guessing which has enjoyed government subsidies over that time period.

We conclude that farmers don’t farm the ground anymore.  They farm the corridors of Washington.

It’s a different kind of business now.  Profit has very little to do with it.  Just maximize the take from the taxpayers.

THE MILITARY: Drug lords generate megabucks, but they are smart.  They know how to manage them to avoid getting ripped.

They keep their money dispersed over the landscape.  They also keep it moving, usually by prompt laundering and distribution.  They understand human nature, and so they conduct their business so as to minimize temptation.

But then, legalities aside, it’s their own money.  Not so in the pentagon.  Nobody spends someone else’s money as carefully as they spend their own.  Would a drug lord spend $700 for a toilet seat?

Friends, reach for your wallets.  We are about to show in detail how much the pentagon respects taxpayer money (Donnelly in a 3/2000 column).  “The military makes $7 trillion in adjustments to balance its budget.  Accountability remains low because of a lack of records.”

WOW!! $7 trillion???  That huge lump approached the national debt in 2000, and it is called adjustments?

“The Pentagon could not show receipts for $2.3 trillion of those changes, and half a trillion dollars of it was just corrections of mistakes made in earlier adjustments.”  (Well, what-the-hey; it’s not our money.)

“Each adjustment represents a defense department accountant’s attempt to correct a discrepancy.  The military has hundreds of computer systems ——.  But they are not integrated, don’t produce numbers up to accounting standards and fail to keep running totals of what’s coming and what’s going out, said pentagon and congressional officials.”

Jefferson paraphrased: “Government should keep accounts like a merchant’s books, so that any citizen may examine them in order to identify errors, and act to correct them.”

Donnelly: “Without sound costing data, the pentagon can’t make good decisions.”  Now, there is a profound observation.  This one swamps any previous talk we have heard about a loose cannon.

Economist 2/12/2011 reported on pentagon spending: “—- in the past 10 years it has grown by 67% in real terms.  The Brookings Institution’s Michael Hanlon: “America may indeed be taking larger security risks with its fiscal than its military policies (our emphasis).”

Economist 2/2019: “Other debt-burdened western countries have embarked on a stringent diet.  America continues to gorge.”  Much more in PGs 11 and 18.

Excellent!  Friends, this is President Eisenhower speaking to us from the grave.

ENTITLEMENTS: Since 1940 inflation-adjusted GDP per person has increased a little over five times, but government spending per person during that period has increased more than 25 times.  We wonder how many old folks’ votes were bought with all that taxpayer money.

Entitlements such as Social Security and Medicare are permanent and so not subject to review each year.  They have growth built into them, so this is exactly what they do and there’s the kicker.  The Economist called them “the entitlement cuckoo in the congressional nest” with good reason.

“When Congress began legislating for ‘mandatory’ spending programs —–, it also began legislating away its own power to control government spending.”  This lack of control lies at the heart of the central government deficit and our current congressional ills.  (Big banks have recently been added to this mess.)

“Entitlement checks today make up half of America’s central government budget, up from a tenth of the budget 40 years ago.  ——.”  Furthermore increases are built in.

The total of about 21 entitlement programs takes 12.5 percent of GDP.  Unless someone bites the bullet these will suck up 21.5 percent by 2040.  Can we depend on courageous public officials to tackle this monster?  Don’t ask.

Peterson commented in 2004 on a commissioned report.  “—— concluded that if we did not reform tax and spending policies, the benefit outlays for just five programs —– would exceed total revenues by the year 2030.

“America’s political leadership thanked us for the report, shook our hands, and walked away.  Then something amazing happened: we received roughly 350,000 preformatted ‘outraged’ postcards from seniors even before we had discussed a single reform.”

Good Lord a-mighty.  Peterson did not say who engineered this campaign; we hope it was not AARP.  Could there be that many seniors in this fair land who care little or nothing about their children and grandchildren?

This reminds us of a Scottish historian in the 18th century when modern democracy was an infant.  He said, “No democracy can exist indefinitely.  It can exist only until the point where the majority discover they can vote themselves largess from the public treasury.”

Old folks are not yet a majority in our society.  But they vote a lot, so the potential is there.

We can bet our bippy that government officials didn’t miss the entitlements gravy train.  In 1992 operating the congress cost us $2.8 billion, including privileges and perks.  In 1970 that figure was $343 million.

No other part of government has discovered a more effective growth hormone.  Over the past 30 years members of the congress have increased spending on themselves by 705 percent.  This is more than twice the 280 percent rise due to inflation.

In the 1950s congressional staff numbered about 5,300. Now it’s up to around 40,000.  Each member of congress has voted (with a couple of rare exceptions) to get paid $162,000, and extra perks come to $40-45,000 a year.

Pensions begin at $155,000 a year.  Then there’s free parking, subsidized meals, gyms, attending doctors, valets, florists, hair stylists, video producers, upholsterers, etc.  Tough life, really.

This means our public “servants” collect pensions about equal to “salaries” after they stop “working” for us.  And all of it is our money.  The ghost of PT Barnum hovers in the mist around us.

Up until 1855 members of congress received no salary.  They were given a travel and per diem allowance, to reimburse their expenses in going back and forth to Washington from their homes.

Surveys have shown that many of the millions of us who receive entitlements don’t need them.  Some of these say they are willing to give up much or all so that their and other descendants will not get stuck with the bill years and generations down the road.

Today’s arrangement has us sending shiploads of money to Washington.  Bureaucrats skim 20 percent off the top and route another 20 percent to national debt service.

They then send some of what remains right back out to us (in much smaller ships).  They call them entitlements so we will believe we deserve them and will not question this vote-buying arrangement.

Far more efficient would be an arrangement where we hang onto that money and make local decisions concerning who truly needs help.  See PG2.

We have a problem in visualizing a trillion dollars (a thousand billion).  If we took that many one-dollar bills and stacked them, would it reach to the moon?

Hell, we can’t even visualize a billion.  What we can visualize is when we’re being ripped.

IS THIS TRIP NECESSARY? We feel like we are getting the message.  Here is the last example, although surely not all there are.  It’s about a public agency called NASA (National Aeronautics and Space Administration).

Taxpayers gave officials there $22 billion to start for a space station.  We emphasize that this was to start, and it is a figure for political use only.  It never stops here.

Soon came a revised figure, $94 billion.  A prominent physicist wrote: “—– the only thing (space station) Freedom might discover is a bag of human waste tossed overboard” by the Russian space station.  This may be a bit harsh, but he made a point.

The central government said sorry.  What NASA is all about is glamour, Buck-Rogers-type intrigue, giant stacks of taxpayer money, and jobs all over the country (pork), so we’ll build our own.  Never mind the fact that NASA scientists were scrambling hard to come up with some experiments to do up there that would contribute significantly to useful knowledge (almost none so far).

The Economist 11/2002: “—– in the bloated, late, over-budget and largely useless human space-flight projects that it has been pursuing since the Apollo program.

“The only good reason for NASA to be involved in human space-flight is to lay the ground for opening space up for everybody.  ——–.  Space, like the Wild West, can be truly opened up only by the private sector.  NASA’s central goal in human space flight should be to make that possible.”

In June 2004 private enterprise launched SpaceShipOne that put a man into space for $20 million.  The Economist: “For that NASA could barely launch a kite, let alone an astronaut.”

Thus the launch of space tourism.  The Economist concluded with, “In this context the government does have a role — getting out of the way.”

In August 2005 Space Adventures offered a private trip to the moon for two travelers.  While the price of a ticket is a mite steep at $100 million, the new age is off to a good beginning.  And all this in spite of NASA, not because of it as mentioned above.

In December 1995 the Russians proposed that extra modules be added onto their space station Mir, but this idea did not sit well with NASA.  If adopted there would go most of those billions of taxpayer bucks, the high salaries, the perks, high drama, the junkets, etc.

Congressmen also flipped out: far less pork handed around to buy votes, and here comes another one of those damned elections.  No; this Russian idea was far too efficient.

We understand that the executive director of Taxpayers for Common Sense believed the Freedom project would stumble and fall, and he was very happy at the prospect.  Us too.  Unfortunately, ……….

A prominent space scientist demonstrated that 90-95 percent of the work being done by astronauts could be done with unmanned rockets and robots at less than one third the cost.  And no dramatic deaths, either.

The Economist 7/1997 reported that Russia’s failures will run the cost to us of the space station up beyond $100 billion.  “Meanwhile, as its robot explorer scours Mars, for a piffling $266 million all-in, the contrast between what the agency is doing right and what is doing wrong cannot be more glaring.”

But the glamour of manned space travel helps tremendously in prying loose tons of taxpayer bucks for ever more scientifically questionable projects.  Launch an unmanned vehicle and the public reaction is a huge, collective yawn.  And the giant slapping sound we would hear is that of millions of wallets and purses slamming shut.

We suggest that if astronauts want to continue with their glamorous exploits, welcome.  We will watch the show on the tube and cheer them on as always.  Just don’t do it at taxpayer expense.

We will now demonstrate how much respect NASA has for our tax money.  (Not all of these particular losses are fully charged to taxpayers, but we omit several others.)

1. $980 million Mars Observer lost in space just as it was about to begin its work
2. Stuck main antenna on Galileo probe of Jupiter
3. Lost contact with a $67 million weather satellite
4. The horror of the 1986 Challenger disaster
5. The fiendishly expensive Hubble telescope thrown up there with a bum mirror (and the multi-million-dollar repair job)
6. Explosion of a Titan rocket
7. From Time magazine: “A $220 million Landsat…satellite launched on Tuesday was lost by Wednesday…the fourth such disappearance in two months….”
8. The space station boondoggle
9.  Six rocket failures in less than nine months, with losses totaling $3.5 billion, and
10.  On February 1, 2003 another seven astronauts obliterated.

We wrote to our congressmen, showed them the above and pitched a bitch about abuse of tax dollars.  One did not reply.

A second gave an evasive answer.  The third sent a nice letter thanking us for sharing our thoughts on election campaign finance reform.

In August 2002 a $159 million space craft that was intended to chase comets took a wrong turn somewhere and got lost.  When will all this end?

There are other NASA scandals being investigated.  Ten bucks says we will not hear much about them.

Recently we heard about a $30 billion number called “Take the Planet’s Pulse.”  It is supposed to measure ecological damage worldwide.  Maryland Senator Barbara Mikulski is chair of a subcommittee that splashes out NASA dollars, so the Goddard Space Flight Center in that state will get a lot of the pork.

Other politically important pork states such as California, Pennsylvania, and New York will also get large slabs.  Seems a program will go if it addresses a popular cause, spreads pork around liberally, and routes big bucks to contractors who kick back a lot of them to Washington.  Reminds us of PJ O’Rourke’s book title: Parliament of Whores.

If the project will take the pulse of the entire planet it should logically be a United Nations project, not American.  Or, maybe we shouldn’t have mentioned this?

Recently the latest tidal wave of frugality washing through Washington has NASA funds being cut.  The talk is loss of 55,000 jobs, many of them highly technical.

We say this is a good start.  Businesses need highly trained scientists and engineers.  Space Adventures may hire a few.

We splashed out 40 billion 1960s dollars to put a man on the moon.  Forty-one years later we are still trying to figure out what was accomplished with that mountain of our money.  And President Bush boldly announced that he wants astronauts to go back there.

The Economist again, 10/1997: “—– nonmilitary side of space —– remained with the government for much too long.  With other technologies (computers, for instance), the state tended —— to hand over the industry to the private sector, where it would be taken over by people looking for profit, with practical goals.

“This did not happen for the space flight industry.  Rather, egged on by politicians and the adoring public, and with no motive but the glory of doing it, engineers were encouraged to solve problems by throwing money at them.”

Ahead to 11/2002: “—– scale back —– human space flight and to try and stick to a budget.  The danger is that, even if scaled back, most of this program is pointless, and it would be unreasonably expensive even if it had a point.

The shuttle was hyped for its presumed efficiency, but instead it went the other way.  Originally it was to fly every week for about $14 million each trip.  “In fact, the 4-6 launches a year —– cost roughly $400 million each.”

The space station was originally hyped at $8 billion of taxpayer money.  The final tab is well over $100 billion.

“And the $400 million marginal cost of a launch is ludicrous compared with the $60 million that the Americans pay for a (Russian) Soyuz mission.  —– really needed is an ‘exit strategy’ from the whole sorry mess.”

We deeply regret that none was found (nor probably even attempted).  It probably would have prevented the tragedy of February, 2003.

Immediately after this tragedy (2/8/03) The Economist wrote that we should first admire the astronauts and then reconsider the shuttle.  The article mostly repeated the above arguments, but there was a quote referring to an exit strategy.

“In September 2007, a writer for the Orlando Sentinel summed it up, by saying of the space station, ‘It’s too bad we can’t crash the thing into the ocean, throw the shuttles in after it, and redirect those billions to more pertinent research.’”

The latest word has in place a retirement program for the shuttles.  After the February 2003 tragedy NASA spent $1.5 billion to solve the foam problem.

But with the launching of Discovery in 2005 another chunk of foam came off anyway.

“HOUSTON, WE HAVE A PROBLEM ……”

A June 2006 column by Robert Boyd, titled “New Moon Plans Backed.”  “Not lunar lunacy, space experts say.”  What say those who will pay for this lunacy?

Seems that President Bush had this vision about returning to the moon.  If he really had this fantastic vision, we say let him pay for it.  He could tap into the massive taxpayer wealth that he gave to his rich friends during his 8 years in office.

So often the young among us ask, why should we toe the mark so perfectly when your generation has fouled up so terribly and unforgivably?  What will they say to us a generation down the road, when we are trying to quietly draw our retirement benefits while they work so hard to keep that money coming to us and, on top of this, to repay a by then at least $15 trillion debt?

We suspect they will say little.  Rather, they will force us to get off our lazy duffs and put shoulder to the wheel while ignoring any infirmities that will dog us at that time.  We shall deserve nothing better.

On June 17 2020 a Space-X falcon rocket carried two astronauts to the space station. To our knowledge this is the first privately-financed such trip.  Maybe we will finally and belatedly put NASA out to pasture.

THE MONSTER: The huge money pit in Washington attracts special pleaders for all manner of unearned favors.  These characters are concentrated, talented, and organized.  They are after truly big bucks.

We taxpayers are spread far and wide.  There are millions of us and we are not organized.  We are not talented at grabbing unearned loot because we are honest citizens and we have other things to do besides devote full time to this task.

We think if enough pocket gofers find their way into enough pockets and phones we can get organized.  This is because unless we talk to each other about our government and what it is doing to us we will never know the truth.  The news media will help but little; see why in PG’s 5, 8 and19.

Finally, each of us gets stung only a little with each new sneaky tax or debt laid on us by BIG GOVERNMENT, so it is not worth our while to raise a stink about it.  The result is open season for politicians as they spend our money, which is collected through threat of force.

The Tax Foundation stated that in fiscal year 1999 taxpayers contributed (?) nearly $1.8 trillion to national, state, and local governments.  That’s $10,299 for every man, woman, and child in the US.  A typical household paid more in taxes that they did for food, clothing, and shelter combined.

Two-thirds of all taxes go to pay for spending by the national government.  Payroll taxes for Social Security and Medicare contributed 34.4% to Uncle Sam’s total tax haul.

Individual income taxes brought in 49%, and the remaining 16.6% came from corporate income tax, estate and gift tax, customs duties, and excise tax —–.  Taxes paid to Uncle make up the biggest budget item in most households.

The Economist 4/2016: “Open warfare breaks out between the white house and America’s tax-shy multinationals.”  This says a bunch about the Obama administration’s corporate tax policy.

“On April 4^th Jack Lew, the treasury secretary announced a renewed crackdown on ‘inversions,’ takeovers that allow American firms to switch their nationality to that of the firm they are buying, in order to escape America’s tax net.”  We heard about tens of thousands turning in their passports and citizenship.  Now it is companies that don’t like how Obama is running the show.

“Two days later Pfizer, a pharmaceutical firm, cancelled its $160 billion purchase of Allergan.  It would have been the third biggest takeover in history and was premised on shifting Pfizer’s tax domicile to Dublin.  Howls of outrage were heard from America’s boardrooms and from Allergan investors, who lost $13 billion in 48 hours as its shares sank.

“The spat makes everyone look bad.  It reveals an administration that is capricious and a republican party establishment so out of touch that it thinks it should be the mouthpiece for firms that renounce their citizenship. 

“It shows great companies, such as Pfizer, reduced to shifty deal-junkies that are obsessed with financial fixes.   It exposes a tax system that is 30 years out of date and obsolete in an age of globalization.  And it highlights a hyper-partisan political system that is incapable of reform — even tho, in this case, almost everyone privately agrees what must be done.”  The American news media somehow managed to miss this monster.  See PG5 where we indulge the reader with a tawdry media history.

Adams once again: “—– average American can’t help but see him or herself as the victim, and not the beneficiary, of government spending.  ——-.  All they ask is to be left alone to work, raise their children, and be provided with a safe world in which to live.  They don’t want handouts, ——–.”  But the Nanny State refuses to leave its “children” alone.

The Economist 9/2017 titled this piece “Fly Me (private) to the Moon.  “Tom Price, —- health secretary, hit on a novel solution: get the taxpayer to foot the bill.”  This is hardly novel. 

”According to Politico, ——– chartered at least 24 private planes that have cost American taxpayers over $300,000.  Mr. Price’s predecessors had no problem flying commercial.

“On one occasion he used a private plane to get to a conference in San Diego, where he railed against wasteful spending.  That cost taxpayers $50,420.”  WoW!  Brass ones.

The Economist 10/2015 provides another revelation that we will never see in the American news media.  Another example: private initiative and innovation are always a step or two ahead of government bureaucrats.

“There are many such gaps, and the reason is that the patchwork of national rules and bilateral treaties governing how much tax companies owe, and to whom, is horribly dated.  It was designed for the manufacturing age.

“The share of American firms’ profits that they book in low-tax havens has more than doubled since the 1980s; this has helped reduce the actual tax rates they pay, relative to their countries’ headline rate ——-.  America’s 500 largest firms hold more than $2 trillion in profits offshore.  Its tax laws encourage this, because profits its companies make abroad are taxable in America only when repatriated. 

“The resulting ‘Base Erosion and Profit Shifting (BEPS) proposals were released this week.  They are the biggest shake-up of multinational taxation since the basics of the current framework were put in place in the 1920s.”

We would be derelict if we omitted BIG OIL News & Observer 8/2018: “For decades if not generations BIG OIL has taken lobbyist and taxpayer money (the latter thru legislation and regulation that favors it).  Now it wants more from the taxpayer.

“As the nation plans new defenses against the more powerful storms and high tides —— climate change, one project stands out: ——- build a nearly 60-mile ‘spine’ of concrete seawalls, ——– Texas gulf coast.

“—— to shield some of the crown jewels of the petroleum industry, which is blamed for contributing to global warming and now wants the federal government (read “taxpayer”) to build safeguards against the consequences of it.”  Irony, anyone?

Friends, we gotta face it. Part of this is on us.  And on our parents and grandparents who allowed BIG GOVERNMENT to operate like a whale on growth hormones (PG15).

Washington stands helpless before the monster.  But we are many and we earn the money that feeds it.

With a gofer in every pocket and purse we are organized and not helpless.  Stay tuned.

WHAT WE TAXPAYERS WOULD PREFER

There may be good news; we have detected the whiff of a trend (Pirie in The Economist yearbook 2000).  “Despite the different names, the principle has remained constant: those who do not produce take resources from those who do, and spend it on altogether different things.

“The tide is turning because of the convergence of several factors.  ———–.  Taxes are thus being squeezed from three directions: the increased mobility brought by globalization, electoral resistance to taxation, and a movement away from tax-funded schemes (pensions).  ——-.

“A more permanent solution will be for finance ministers to recognize their limitations and for governments to live within their means.”  Oh, let’s hear it for this idea!  (The Swiss do it.)

Friends, events may just be moving our way.  The Internet has no physical borders, which means that a lot of business is being done that the taxman cannot trace.

The OECD (the 30 largest countries in terms of size of economy) thinks the Internet might “—– lead to governments being unable to meet the legitimate demands of their citizens for public services.”  This could slash BIG GOVERNMENT right to the bone.

Quite possibly a better policy all around would be an end to taxation of companies.  Then they would be free to operate at maximum efficiency (and thus offer products and services to customers at the lowest prices), instead of wasting resources on both sides of the fence when they play games with the taxman.  Such firms would be more internationally competitive, thus forcing prices and other expenses downward so that consumers could buy more.

Thinking about this one nearly blows our mind; witness: Thousands of businesses have no borders now, and hundreds of thousands of people will also, and soon.  These will be mostly middle class folks, who resent being socked for big ones. 

This trend forecasts the ultimate end of the nation-state as a working political concept.  Paternalism, socialism, totalitarianism, and most of the other –isms could not exist.

Very few people, in government and out, realize this today.  Surely included in this category are the officials in Washington, as they continue to cause BIG GOVERNMENT to grow still bigger and to figure new ways to fool the public into paying still higher taxes every year.

The trend will bring on a huge change in the way people live and are governed.  It would be much easier on everyone if this change were anticipated and planned for.

Studies show that 72 percent of us want a Constitutional amendment that would require a referendum vote among all of us for every proposed increase in central government taxes.  This is okay in theory, but we must remind ourselves that congressmen are masters at hiding increases in our taxes.

The congress rejected the Balanced Budget Amendment because such a monster “might raid the Social Security Trust Funds.”  Friends, this is pure baloney.

Writing in 1775, economist Adam Smith gave four signs of a bad tax system (reported by Adams).  “First a tax is bad if it requires a large and expensive bureau to administer it.  ———.  Second, —– bad that discourages enterprise, hard work, and investment —–.

“Third, —– bad that encourages evasion, and puts an end to the benefits which the community might have received from the employment of their capitals.  Fourth, —– puts people through odious examinations of the tax-gatherer, and exposes them to much unnecessary trouble, vexation, and oppression.”

The Economist (4/2005): “The more complicated a country’s tax system becomes, the easier it is for governments to make it more complicated still, in an accelerating process of proliferating insanity —–.”

The Economist10/2015: “—— budgets agreed for 2016 and 2017 are closer to Obama’s proposal than that of congress.  Spending will be $50 billion higher in 2016, and $30 billion higher in 2017, than the sequester allowed.  That relief is spread equally between defense and non-defense spending, with defense getting a further boost from an off-budget war fund.” 

Not only this heresy, the writer does not give a figure for “war fund,” probably because, as in tradition, there is no limit to defense spending.  “Republicans, by contrast, wanted to keep the sequester in place for 2016 and then cut non-defense spending dramatically.  Democrats will also rejoice at a rescue of the Social Security disability fund, and the avoidance of steep premium increases for some recipients of Medicare ——-.

“The deal’s revenue-raising parts are mostly unconvincing.  Deeper cuts are promised in future (another of those political promises) by extending the life of parts of the sequester by one more year, to 2025.”  Friends, this is hawgwash.  Career politicians think only of the next election, so what we are getting here is window dressing.

Here is more, if we can swallow it  The Economist 12/2015: “—— population is ageing.  This is squeezing the federal budget by  increasing the cost of social security —— and Medicare, ———-.  By 2025 these programs will have roughly 70m beneficiaries, up from 44m in 2007. 

“Today they consume about 10% of GDP.. That will rise —– 14% of GDP by 2040, according to the CBO.  At the same time, rising interest rates will increase the cost of servicing the national debt.  Only 8 of the 34 members of the OECD, —– have failed to reform their public pensions in the past two years — America is one of them.  To keep the debt in 2040 beneath today’s 74% of GDP, taxes need to rise, or spending needs to fall, by about 6%.

“In 2010 the president established a commission—– tackle the problem.  It contained a sensible mix of higher taxes and reduced spending, and was pronounced dead on arrival.

We conclude that proliferating insanity pays the fatsos handsomely.  The kicker comes when we realize that with that mountain of income kept clear of taxes we peasants must pay more to make up the slack.

OTHER THOUGHTS: How about a flat tax, where every income above a specified minimum amount is taxed at the same rate, and there are no tax breaks, loopholes, deductions or credits?  History amply shows that attempts to rig tax codes in the interest of desired social objectives leads to corruption.  Furthermore, we showed that a high tax bracket for the rich is meaningless.

The kicker here is that a flat tax is still a tax on income.  As we indicated, grim history has proved that any tax on income is subject to abuse by government.

The tradition of taxation is based on land, going back to the agrarian society.  But today people, money, and companies are far more mobile.  They can and do cross national boundaries easily.

The implication is that governments will have increasing difficulty in collecting huge taxes and spending huge amounts like they are used to doing today.  This in turn suggests that central governments may have to severely downsize.  See PG15.

We have thought about what life would be like with no personal or corporate income tax.  Rather, we might tax consumption in some way, like a sales tax or a V.A.T. (value-added tax), which is popular in European countries.

No corporate income taxes?  Don’t huge companies dominate us consumers enough already?

The kicker here is that large and small companies must be profitable to survive, and so they must pass tax expenses along to customers in the form of higher prices.  So, we pay them along with what BIG GOVERNMENT pries loose from us directly.

Big companies play a high-stakes game with the IRS as they attempt to minimize their tax loads.  This game is not only very expensive for them (lots of lawyers and accountants); it also means we pay higher taxes to the IRS as its people struggle to pry more money loose from companies.  Furthermore, markets get distorted and investors get misled about where best to put their money.

Low inflation discourages borrowing as people stop thinking they can pay back debts with cheaper dollars.  When consumption is taxed folks tend to save more to avoid taxes.

The Economist 5/2015 gives America and its citizens and companies a huge lesson.  This may be the best explanation of the cause of the crisis of 2008.

“Subsidies that make borrowing irresistible need to be phased out.  Half the rich world’s governments allow their citizens to deduct the interest payments on mortgages from their taxable income; almost all countries allow firms to write off payments on their borrowing against taxable earnings.  It sounds prosaic, but the cost — and the harm — is immense.

“In 2007, before the financial crisis led to the slashing of interest rates, the annual value of the forgone tax revenues in Europe was around 3% of GDP — or $520 billion — and in America almost 5% of GDP — or $725 billion ——.

“This hardly begins to capture the full damage, —- behavior the tax breaks encourage.  People borrow more to buy property than they otherwise would, raising house prices and encouraging over-investment in real estate instead of in assets that create wealth.  The tax benefits are largely reaped by the rich, worsening inequality.  Corporate financial decisions are motivated by maximizing the tax relief on debt instead of the needs of the underlying business.

“—- have created a financial system that is prone to crises and biased against productive investment; ————— debt imposes a rigid obligation to repay on vulnerable borrowers, whereas equity is expressly designed to spread losses onto investors.  Firms without significant equity buffers are more likely to go broke, banks more likely to topple —–.

“Without a tax break ————-.  Investment in new ideas and businesses that enhance productivity would become relatively more attractive, in turn boosting economic growth.”

Both of these would combine to increase saving and thus make more money available for investment and retirement.  This would in turn lower interest rates and cause more rapid and steady economic growth.

Critics complain that a national sales tax would hit the poor hardest.  It does seem that the poor get stuck every way they turn.  Charities could help these folks with financial assistance thru vouchers (so they can’t spend the money on drugs and booze).  They could also help them get back on their feet.  See PG2.

The country is so wealthy today that there are very few truly poor folks.  With a sales or VAT tax they would tend to save some of what little they make, and this would help to lift them out of poverty.  Critics would not complain as much as they used to.

When we run the government instead of the reverse we may discover that income need not be taxed at all.  The 16th Amendment to the Constitution could be dumped along with the tax code.

Entitlement programs should be sharply reduced, as they maintain the false belief that BIG GOVERNMENT owes us a living.  Actually, there is no need for the central government to be involved at all in this business.

Defense can be cut to the bone.  With the cold war over society is moving toward an economic world where there will be no place for wars. See PG18 for elaboration.

Discretionary spending on projects such as housing, space, transportation, energy, and education can be eliminated.  All can be privatized, and should be.

If government has any role in these matters, it is logically placed in state and local agencies.  Just don’t let the central government get near them.

Change accounting practice to accrual.  We deserve to know the truth concerning what is being done with our tax money.

He who pays the piper should call the tune.  And none of this “off-budget” balderdash!

AND ONE MORE: Here is another thought that we could put in our pipe.  Today’s system has Washington taxing individuals and companies but not states.  This means that if we citizens would like to force a change in the system we must organize ourselves in our millions.  This is the business we are in right here and now, but we concede that it is a tough challenge.

If the principle of federalism (in the Constitution) were applied, state governments would be separate and independent from the federal government and could act accordingly.  If state governments and not individuals were taxed to support the government in Washington, officials there would be reduced to requesting operating funds from only 50 relatively well-organized treasuries instead of 200m individuals.

Well, how about this one?  Big government in Washington would in effect be reduced to begging states for money.  We could instruct our state governments to be as stingy as we like.

Unreal?  Not really (damn! Sorry).  The Tenth Amendment to the Constitution says that governments at local and state levels voluntarily give carefully measured and limited authority to the central government, not the reverse.  It has been the doings of that tawdry outfit behind our backs over mainly the past 60 years that caused this reversal of the principle of federalism (and democracy).

Just for fun, suppose that we authorize state government officials to vote for one of four annual national budget proposals.  The weighted result over the 50 states favors one of these: $X dollars.

This is then the target for the congress for the coming fiscal year.  Note that this policy separates the taxing from the spending function.  Spending plans are made; the year passes.

Suppose the congress ends up spending $X plus $5 billion over budget.  A citizen-defined percent of that amount is then deducted from the budgeted amount that we decide to allocate for operations for the next fiscal year.  (Our decision would occur before the end of the current year.)

Combine this with accrual accounting and absolutely nothing placed off-budget, and we might have something that is workable.  The important point here lies in taking away from the government unlimited authority to spend our money.

Here is a thought about the future of taxation.  Even today billions of dollars and dollar equivalents daily fly around the world at the click of a computer mouse button.  Other information is doing the same thing.

This is the modern version of the old floating craps game.  A scout would warn players when local cops were closing in and the game would move so as to stay one jump ahead of them.  Modern tax collectors would be frustrated.

For example, an accountant in Atlanta, GA, say, could bill customers in a tax-free country.  Customers would pay over a phone line in electronic money.  The accountant pays his/her bills in the same manner.  How does the taxman fit into this scheme?

Today we are seeing efforts by the central government to gain access to iPhones and Androids at home (with a court order) in order to disable code systems and, it says, to “identify terrorists and their plans.”  Citizens have developed codes because they want privacy in some of their dealings.  Therefore one of the snoops who can’t penetrate these codes is the government.

The reality of the matter is not hard to pin down.  The element of government driving this effort forward is the IRS.  Understandably, we have not seen this in print.  But the logic has not escaped us.

The government seems to have two choices. It can try to know and control everything as it did in Soviet Russia, or it can give up trying to tax incomes and promote honest and efficient government.

This would take us back to before 1913, when folks were generally happy with government’s activities on their behalf.  They allowed the 16th Amendment to be passed, which permitted taxes on income.  They ignored historical evidence and the government jumped on its opportunity.

In a democracy citizens choose how they wish to be taxed and how much.  As we think about it, the notion of Washington coming to state governments with hat in hand is intriguing.

CONCLUSION

The Council of Economic Advisers tackles controversial policy issues, analyzes them, and generates a proposal for action.  Then political reality intervenes, and the economists are ignored.  Such is life in a totally politicized government.

We surely don’t have a complete recommendation here.  It needs work.  However, we propose to finish this pocket gofer with an idea which is so far out it may just be in.

Dreamily, let’s say a federal government large enough only to execute the responsibilities assigned to it by the Constitution (that is, what we citizens permit) would cost, say, $100 billion a year (not $3 trillion) to run.  Let us also say that we eventually retire the national debt and accumulate a $1 trillion reserve on the plus side.

Wild, huh?  That money would be invested worldwide in mutual funds (where professional money managers take the money and invest it in companies which they think will do well in the future).  Citizens would make sure these managers operate completely independent of government officials.

We would pay congressmen partly in shares.  This would reduce their incentive to ruin the efficiency of the free market with their goofy vote-buying schemes.  (Er, do we need these clowns in our future government?)

We will be conservative and say these investments would earn an average annual return of six percent, or $60 billion.  This leaves $40 billion to be raised through taxation.

With about 100 million future taxpaying families and individuals this works out to an average annual federal payment per family (thru its state government) of about $450.  Today the bite per family is about $11,000 in income tax only, so our wild idea would cut its national tax burden by at about 95 percent.

Hey, this is ridiculous!  Maybe.  But our grandchildren and their children and grandchildren may have a different opinion.

The late Pete Peterson and Publius II are/were old folks who are embarrassed because we allowed a bunch of thieves to steal from our descendants.  In his book Running on Empty he wrote to the young:

“You have a right to be angry about the financial encumbrance your elders have collectively placed upon you.  ———-.  Your individual parents and grandparents did not intend to saddle you with this debt.  They didn’t vote to pick your pocket.

“Instead, they were misled by various experts and politicians ——– into supporting policies that turned out to be based on false premises.”  (A good education system would turn out people who are much less likely to be bamboozled.  See PG10.)

Before we lay this last bomb on ourselves we need to repeat our usual warning: we’re going to bring this whole pocket gofer caper off without violence.  We will do it the democratic way, even if “our” representatives have long since quit doing things in this manner.

We mentioned that for years the congress filched all the money from the Social Security trust funds and spent it.  This means they are not accumulating surpluses in anticipation of retirement of the baby boomer generation (when the funds will run huge deficits).

Therefore by the year 2030 the average family will need to cough up an extra $37,000 a year in taxes, on top of its existing load.

Today the typical family pays about 45 percent of its income in taxes at all levels.  Unless something is done, by 2030 the bite will be up above 80 percent!

We clearly have practically no representation of our interests in the congress.  In 1775 among the colonists an angry cry reverberated throughout the land: “TAXATION WITHOUT REPRESENTATION IS TYRANNY!”

IRS agents have pockets too.  How about a country without a congress?  See PG21.

—— PUBLIUS II

TITLES OF OTHER POCKET GOFERS WHICH WE CAN DIG INTO,

DISCUSS, CRITICIZE, AND ACT ON:

PG 1 – ON HEALTH AND FITNESS IN THE USA

PG 2 – ON VOLUNTEERISM

PG 3 – ON THE CAREER POLITICIAN IN A DEMOCRACY

PG 4 – ON THE BOTTOM-UP APPROACH TO GETTING THINGS DONE

PG 5 – ON THE COMING OPEN SOCIETY

PG 6 – ON MAKING A CONTRIBUTION

PG 7 – ON CORRUPTION AND ACCOUNTABILITY

PG 8 – ON GOVERNMENT REGULATION OF BUSINESS AND THE PHANTOM

PG 9 – IT’S ALL IN THE FAMILY

PG 10 – ON EDUCATION IN THE USA

PG 11 – ON THE US AS A WORLD CITIZEN

PG 12 – ON THE UN AND POTENTIAL CONFLICTS

PG 13 – ON PERSONAL POWER AND IDEAS

PG 15 – ON BIG, SMALL, AND GOOD GOVERNMENT

PG 16 – ON DEMOCRACY AND OUR CENTRAL GOVERNMENT

PG 17 – ON LEADERSHIP IN A DEMOCRACY

PG 18 – ON WAR, WEAPONS, AND PEACE

PG 19 – ON THE GRAND DECEPTION

PG 20 – ON LIFE IN A DEMOCRATIC COMMUNITY

PG 21 – PRELIMINARY DRAFT OF A CONSTITUTION