This week I want to delve a bit more into the national debate around deficits. Long gone are the days of Dick Cheney who infamously uttered: “Deficits don’t matter!”
It is now established that deficits do matter and we as a nation have to do something about it. The logical place to start the reform is at the feet of those who caused the problem — Washington, D.C., and our Congressmen, who through the various outlandish and wasteful programs have gotten us into this mess.
It is also clear that most politicians will provide lip service to wanting to reduce deficits while they do not really intend to make a change if it affects their constituency. President Barack Obama blames the previous presidency and the financial crisis for the increase in deficits and yet has not made any serious reductions to the deficits five years into his presidency. In fact, the deficits have grown more in the past few years than ever before.
Back in 1960s, only 15 percent of federal income tax returns had a zero tax liability. Now we have nearly 50 percent of the federal income tax filers indicating no tax liability. As new tax laws and loopholes are drafted by the Congressmen attempting to satiate their constituents, we will see the number of filers having zero tax liability grow even more. And these tax filers are the ones who are electing the representatives to govern the country.
As the United States turns more and more into a socialist nation, we will soon face the stark truth of socialism. As famously quoted by former Prime Minister of England Margaret Thatcher: “The problem with socialism is that you eventually run out of other people’s money to spend.” And Milton Friedman once said, “Nobody spends someone else’s money as carefully as they spend their own.”
The challenge with the system is that we have a mass of voters who have elected Congressmen to represent their rights in Congress. Everyone wants to tax the rich and complains about how the system is gamed to benefit the rich. Media stories are littered with how the rich and large corporations are getting away by paying no taxes. It is quite fashionable to join the bandwagon of blaming the rich and large corporations for not paying their fair share.
But let’s look at some of the recent numbers.
The top 10 percent of taxpayers paid over 70 percent of federal income taxes in 2010. That is up from 55 percent in 1986. The remaining 90 percent paid under 30 percent, while 47 percent of the total population paid nothing. Yet most of the people who paid nothing voted in the last election and most voted for the Democrats.
You do not have to be a genius to figure out why.
The people have become addicted to free stuff and do not want to change the system. They want to continue to depend on the government, and in turn, the government wants to continue to exert higher influence on the lives of the people so that they can get larger and become “too big to fail.”
Democrats have fallen into this trap and cannot resist expanding their influence on the lives of the masses. They want the people to be dependent on them and that makes them irreplaceable.
In an environment like this, I am very concerned about the long-term health of the country, as we are raising a growing number of government-dependent addicts rather than a group of entrepreneurs who take the bull by the horns and make it not just for themselves but also spread employment and prosperity as they grow.
The U.S. dollar is currently on a tear and is strengthening. While those who have diversified out of the dollar should hold steady and batten down the hatches for this storm to pass, for the new comers, this is the opportunity to start buying currencies such as Canadian dollars, Norwegian Krone, Australian dollars and Singapore dollars preparing for the next wave of decline of the U.S. dollar.
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