Paul Krugman, opinion economics blogger for the New York Times, today wrote a very revealing article entitled, Now That’s Rich.
Revealing? What does this article reveal? I believe Krugman’s article reveals the attitude of the ruthless statist—in opposition to that of the free man. Here’s an excerpt from the article:
But these same politicians are eager to cut checks averaging $3 million each to the richest 120,000 people in the country.
What — you haven’t heard about this proposal? Actually, you have: I’m talking about demands that we make all of the Bush tax cuts, not just those for the middle class, permanent.
So, what’s the big deal? If you notice in that first statement we see Krugman—a devout statist of the Keynesian economic school of thought—believes that ownership of what citizens earn, build, and create belongs first to the government. After all, it’s out of the benevolence of our government that we’re allowed to keep any of the fruits of our labor at all, since it’s the government who’s ultimately sanctioning any prosperity whatsoever. It’s the government who will “cut checks averaging $3 million each to the richest 120,000 people in the country”. He’s equating reduction of taxes to the government payment of citizens!
This stands in stark contrast to the spirit of one of our founding documents—one in which I’m quite proud—the U.S. Declaration of Independence. In the second paragraph, we see the following:
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. — Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government.
Judging from this paragraph alone, who is the master and who is the servant? Do the citizens serve the state, or does the state serve the citizens? If the former, how would the citizens be free to pursue their own happiness (as is mentioned twice in this paragraph—something I’m guessing is important to the authors and signers of this document)? Wouldn’t it be odd to suppose that the citizens exist to support the state? I would certainly say so, particularly when discussing the United States of America. Nothing in our founding documents would indicate such a misguided understanding of our very founding principles.
But this is what dogmatic statists tend to believe—it is not the individual citizen who plays the most important role in our nation, but the state itself, wherein we can hope that mankind can be perfected in a sort of Utopia. Therefore it is only right that each citizen duly bow to the whims of the state, in acquiescence to this most admirable goal. (It’s a pity the statist point to nowhere in human history where this goal has ever been reached! We might as well go hunting for unicorns!)
Meanwhile, back to Krugman—perhaps he misspoke before, or perhaps I’m unfairly misunderstanding what he meant to say:
What’s at stake here? According to the nonpartisan Tax Policy Center, making all of the Bush tax cuts permanent, as opposed to following the Obama proposal, would cost the federal government $680 billion in revenue over the next 10 years. For the sake of comparison, it took months of hard negotiations to get Congressional approval for a mere $26 billion in desperately needed aid to state and local governments.
First, Krugman labels the Tax Policy Center as non-partisan. Perhaps that’s a tad misleading, since, posted on the home page of their site is an article that attempts to dispel Five Myths about the Bush Tax Cut, wherein we find this troubling statement:
The cuts lowered tax rates across the board on income, dividends and capital gains; eventually eliminated the estate tax; further lowered burdens on married couples, parents and the working poor; and increased tax credits for education and retirement savings. Obama’s proposal would extend most of these reductions, allowing only those for individuals making more than $200,000 and families making more than $250,000 to expire.
Let’s be clear about this—Obama believes the government spends other people’s money better than they do. So we need not discuss tax cuts while Obama is at the helm—he simply has no intention of cutting taxes. The claim that most of the Bush tax cuts will remain in place if Obama has his way is quite misleading. In the excerpt above, the statement appears to tell the reader that Obama is actively killing is the so-called “death tax” (called the estate tax above) wherein a tax rate of 45% – 55% of any estate at the time of the owner’s passing is levied against those inheriting such an estate. No, instead, Obama is actively reviving the death tax, as this Wall Street Journal article reveals. How is such a thing collected when the inheritance involves something like a farm (not much money, but lots of capital and land involved)? Fire sale. You cannot pass a family farm to your children or grandchildren with such a tax in place, since there is no means to pay the tax other than selling everything and paying Uncle Sam from the proceeds. If you wonder what has happened to all the small family farms in the last fifty years, you can look directly to this insidious tax as a primary reason for its demise.
Krugman claims that keeping the Bush tax cuts in place will “cost the government” $680 billion over the next ten years. Obviously, to Krugman, that’s a bad thing. In fact, it’s worse than nixing the tax cuts and instead costing the citizens $680 billion over the next ten years! Remember, statists ultimately believe the citizens exist to serve the state—and not the other way around. More from Krugman’s article:
How can this kind of giveaway be justified at a time when politicians claim to care about budget deficits? Well, history is repeating itself. The original campaign for the Bush tax cuts relied on deception and dishonesty. In fact, my first suspicions that we were being misled into invading Iraq were based on the resemblance between the campaign for war and the campaign for tax cuts the previous year. And sure enough, that same trademark deception and dishonesty is being deployed on behalf of tax cuts for the wealthiest Americans.
No, this has nothing to do with sound economic policy. Instead, as I said, it’s about a dysfunctional and corrupt political culture, in which Congress won’t take action to revive the economy, pleads poverty when it comes to protecting the jobs of schoolteachers and firefighters, but declares cost no object when it comes to sparing the already wealthy even the slightest financial inconvenience.
So far, the Obama administration is standing firm against this outrage. Let’s hope that it prevails in its fight. Otherwise, it will be hard not to lose all faith in America’s future.
Giveaway? Oh, that’s right—your earnings belong to the government until they benevolently decide to let you keep some of it. That’s part of the whole “pursuit of happiness” thing Jefferson seemed so hung up about. I guess we’ll have to concede that the citizens should keep some of what they earn. Never mind that one of the specific grievances leveled at King George in our Declaration of Independence was, “For imposing Taxes on us without our Consent”.
Who will “revive the economy”? Our collective hero, the state, of course! By taking money from the citizens, the state doles it out as it deems fit—and it employs millions of people along with way to manage such redistribution! Those are real jobs there!
Ironically, while raising taxes is one way to reduce the record-breaking annual deficit and perhaps reduce our national debt, Krugman deftly ignores the other side of this equation—that of reducing spending. But that’s normally the behavior of the government-can-do-no-wrong attitude of the statist. Since the state is our de facto hero, we must give the state as much power as possible to achieve their goals. Never mind the individuals supporting the whole enterprise.
Citizens, you are the ones who earn, innovate, build, and create—but that’s a trifling detail. That the government forcibly steals from the productive citizenry is another.
This whole thing reminds me of the “bar stool economics” illustration that’s frequently been attributed (and falsely so) to high-profile economists. As best I can tell, the authorship of this illustration remains safely anonymous, and I’ll post it below in case you haven’t seen it before from the many versions floating around the Internet and email. Mr. Krugman, if you’re reading this, please continue to the end.
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
- The first four men (the poorest) would pay nothing.
- The fifth would pay $1.
- The sixth would pay $3.
- The seventh would pay $7.
- The eighth would pay $12.
- The ninth would pay $18.
- The tenth man (the richest) would pay $59.
So, that’s what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20.”
Drinks for the ten now cost just $80!
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men–the paying customers? How could they divide the $20 windfall so that everyone would get his ‘fair share?’
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay! And so…
- The fifth man, like the first four, now paid nothing (100% savings).
- The sixth now paid $2 instead of $3 (33%savings).
- The seventh now paid $5 instead of $7 (28%savings).
- The eighth now paid $9 instead of $12 (25% savings).
- The ninth now paid $14 instead of $18 (22% savings).
- The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
“I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth man, “but he got $10!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than I!”
“That’s true!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!” The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.