21 February, 2011

You see, here’s the thing: A Reality Check for Supporters of our Huge Government Status Quo.


Regardless of the tax scheme, marginal rates, or any other trick you might try, effective tax revenues always max out at about 20% of GDP.  It’s a fact of economics.

Our problem therefore is not that we are not raising enough revenues, we clearly are maxing out the 20% ceiling, but that for 50 years or more we have tolerated our politicians – usually in an unholy alliance with unions, bureaucrats, corporations, and academics – to vastly exceed the 20% level in spending.  Take in 20%, spend 30%, and pretty soon the debt poop will hit the economic fan.  That is where we are today, and the longer we wait the worse it will get.

One can lament all they want about how we cannot cut this program or sacrifice that spending, but the fact is we must reduce government outlays a minimum of 33% if we are to survive as a going enterprise.   If you think things are tough now, you do not want to live in a nation where government can no longer borrow, where the dollar is devalued over the next ten years by the same 94% that it was over the past sixty years, and where there are no funds available for investment, growth, and job creation.

Suck it up now folks or be prepared for much worse very soon.

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