04 November 2010

Voters Pound Democrats: The Wages of Irresponsibility

Stephen Kershnar
Why the Democrats Got Pounded
Dunkirk-Fredonia Observer
November 1, 2010

Assuming the projections hold up, yesterday voters pounded the Democrats. The polls show that the voters called them onto the carpet for three reasons: the economy is a mess, government spending is out of control, and political corruption is getting out of hand. The Democrats had it coming.

The first reason Democrats got pounded is that the economy is weak. When the childlike Democrats gained control of both sides of Congress in January 2007, unemployment was at 4.6% and the stock market (Dow Jones Industrial Average) was at roughly 12,600. Almost four years later, the former is at 9.6% and the latter at roughly 11,100. When inflation is taken into account, the stock market has dropped by roughly 15%. A fun thought experiment is to figure out how many years of retirement this cost you. To be fair, the Democrats had a lot of help from the Bush administration.

If anyone doubts the Bush administration loved big government, recall its signature accomplishments. Among them were more medical welfare (Medicare drug coverage), greater restrictions on free speech (McCain-Feingold campaign-finance bill), more federal involvement in education (No Child Left Behind), pricey overseas wars (Iraq and Afghanistan wars), expanded government search powers (Patriot Act and related bills), and milquetoast tax cuts. Not exactly a Reagan-like legacy.

The second reason Democrats got pounded is that government involvement in our lives is expanding at breakneck speed. Consider spending. According to www.usgovernmentspending.com, the government in 2010 at all three levels now spends 44% of what is produced in this country (that is, 44% of the GDP). That means that for every $1.00 earned in this country, the government spends 44 cents of it. It now spends $41,219 per household (Heritage Foundation, 2008). Government at all three levels has been growing, but it has exploded (26% growth) over the last three years. This underestimates the role of government because the government controls the economy in part through vast tentacles of regulation. If the combined role of Obama Care and regulation exceeds 6% of the economy, and they likely will, then over half of the economy will be controlled by the government. This makes the economy as much socialist as market-based, despite the protests of effete news commentators.

Consider taxes. The upper middle class (top 25% or roughly $67,000, 2008 figure) pay a marginal rate that is over 40%. Consider a New York resident in this bracket. His marginal tax rate includes a federal income tax of 25-28%, an entitlement tax of 15.3% (Social Security tax 12.4% and Medicare tax 2.9%), and a state income tax rate is 6.85%. This marginal rate does not take into account deductions and credits, but it also doesn’t take into account property, sales, corporate, and sin taxes.

The U.S. has the second highest corporate tax rate in the world. Only Japan beats us and their economy has been in the doldrums for two decades. When state taxes are added, 24 states have rates higher than Japan. Corporations are just collections of taxpayers, so when corporations are taxed this simply means that taxpayers are further bled.

Even on the conservative estimate of the Tax Foundation, taxpayers work for the government from January 1 to April 9 (May 17 if you count deficit spending and you should). This underestimates the taxes on the middle class because the poor and working class (bottom 50% of taxpayers) don’t pay their fair share of the income tax (3% of income-tax revenue), let alone other major taxes. You worked all winter for Barack Obama, Nancy Pelosi, and Harry Reid. At least by the summer, if not the spring, you were working for yourself.

Democrats are irresponsible. In 2010, the government debt is approaching 100% of the economy. Note that 44% of the debt is foreign owned, so reneging on it will likely result in our credit being reduced if not cut off. Because the interest rate on it is roughly 8% (2008 figure), the problem is snowballing. The government ran roughly a 10% deficit in 2009 and will likely run another massive deficit in 2010. It plans on continuing to do so for the few years. The current Congress and President are like a lawyer with a coke problem. This lawyer makes $100,000 a year, owes $100,000 in credit-card debt, and is spending 10% more than he makes with no end in sight. We know how this story is going to end. The same is true if Barney Frank, Charley Rangel, and Brian Higgins were to stay in the majority.

The third reason Democrats got pounded is corruption. It played a smaller role than the above factors, but still mattered. Some voters remembered the illegal activities of scoundrels like Charles Rangel (D-NY) and Maxine Waters (D-CA). The former allegedly failed to pay taxes, committed rent-control crimes, and failed to report income. The latter used her influence to help bail out a bank in which her husband held a sizable stake. Other voters revisited the tawdry kickbacks demanded by Senators Ben Nelson (D-NE) and Mary Landrieu (D-LA) in return for voting for Obama Care. Some voters likely considered the various sleazy benefits given to former Senators Chris Dodd (D-CT) and Ted Stevens (R-AK). Both got favorable treatment or other benefits from people who worked for businesses they regulated. Deserving attention, but not getting it, are the special-interest payoffs that have characterized the careers of government profiteers Joe Biden, Harry Reid, and Michelle Obama. The Republicans were not much better when they were in power, but the Democrats pledged to clean up the sleaziness and then kicked it up a notch.

What is happening in this year’s election is voters have simply had enough. This election is in effect a referendum on Obama and the Democrats and the majority of voters are disgusted. Upon taking power the Republicans should do a few things. First, they should repeal Obama Care. Further socializing medicine (government accounted for about 50% of medical expenditures before the bill) is bad for health care and the economy and politically unpopular.

Second, they should cut Washington spending and stop propping up irresponsible states like New York and California. An across-the-board cut, perhaps 10% initially, would limit the ability of special interests to carve out various protections and reduce the caterwauling about any group receiving unfair treatment. This cut should include sharply reduced defense spending and spending on foreign affairs. The American military presence in Iraq and Afghanistan should be ended and the large number of American troops overseas (for example, those in Germany, Japan, and South Korea) should be yanked back.

Third, the Bush tax cuts, all of them, should be retained and further cuts put in place. Making an American’s work more than a third of the year for others is not just inefficient, it’s immoral.

Fourth, investigate the various criminals in Congress. This might step on some toes. For example, in early 2010, all eight of the open House investigations involved members of the Congressional black caucus. If this caucus, or any other, is loaded up with criminals, they should be exposed. If Obama wants to veto some or all of the policy changes, let him do so. In 2012, voters will be more than glad to open up another can of whoop-ass.

1 comment:

The Objectivist said...

Californians didn't legalize recreational marijuana. Shame on them. They spat on liberty and will confine thousands in jail over nothing.

I wonder who funded the opposition to it or what the voter demographics were? So far I can't find the data.

The Obama administration opposed legalization. Heaping yet more disgrace on Obama.