Free Markets, Free People


So what would happen if Dems got all they want?

California, of course:

“The California Republican Party is functionally dead. And how is California doing, now that liberals have successfully terminated the state’s remaining conservatives?” #1 in debt, #1 in welfare, #1 in taxing the rich. And hoping for a federal bailout, I suspect. As is Illinois, which is in similar straits for similar reasons. “One-third of all the nation’s welfare recipients live in the state, despite the fact that California has only one-eighth of the country’s population. That’s four times as many as the next-highest welfare population, which is New York. Meanwhile, California eighth-graders finished ahead of only Mississippi and District of Columbia students on reading and math test scores in 2011.”

You can warn people till you’re blue in the face (no pun intended) how the blue state model is going to end up, but sometimes it is instructive to just let it happen.  Of course that assumes that those observing the train wreck try to understand how it happened and work to avoid it elsewhere.  I’m not so sure that’s the case in this nation.  But fair warning, given the fiscal road we’re on California is as much in our future as Greece:

“For a century or so, guided by brilliant private sector leadership, California was a beacon to the world, a land of opportunity such as never had existed in human history. Unimaginable wealth was created. Yet it required only 40 years of liberal governance to bring the whole thing crashing down. Today, California is the most spectacular failure of our time. Its government is broke. Productive citizens have been fleeing for some years now, selling their homes at inflated prices (until recently) and moving to Colorado, Arizona, Texas and even Minnesota, like one of my neighbors. The results of California’s improvident liberalism have been tragically easy to predict: absurd public sector wage and benefit packages, a declining tax base, surging welfare enrollment, falling economic production, ever-increasing deficits. Soon, California politicians will be looking to less glamorous states for bailout money. Things have now devolved to the point where California leads the nation in poverty.”

California is a state which has modeled blue government for decades, despite warning of where it’s continuance would lead.

And, shockingly to the left, it has ended up right where it was predicted it would end up.  Yet, they blindly and willfully continue to march along as though the reality will change and economic laws will disprove themselves if they just persist in their actions.

California is our future.  Our near future.  See, it’s pretty much as simple as this:

If a country runs a deficit (as a percentage of GDP) that is equal to its growth rate, the debt level will remain constant. This year U.S. GDP will be a little less than $16 trillion, and its historical growth rate is 3.25%. That works out to what we might call a “safe” deficit of $520 billion, or even $600 billion if you allow for a little inflation. Last year, however, the U.S. deficit was $1.1 trillion — or roughly $500 billion too much.

That gap could be closed by ending all tax cuts, tax breaks and stimulus payments for everyone, according to the Tax Policy Center. But two-thirds of the burden would fall on the middle class — something both political parties want to avoid. All the proposed tax increases on the wealthy, however, even combined with the end of the payroll-tax cut, would raise only $295 billion. So unless there were spending cuts twice as big as the ones currently scheduled, the deficit would still be too large.

Those sorts of cuts aren’t even being discussed.  Imagine, if you would, radical cuts in the size and scope of our current federal government.  Imagine subsidies of all sorts being eliminated.  Imagine backing government out of many of the areas it has no business.  Imagine simplifying the tax code and giving business a warm fuzzy feeling about the business atmosphere by freezing regulation and in some instances rolling them back.  Imagine all of that, because none of it is going to be done.

Instead, the solution is to “tax the rich”.

So let ‘em have it (only if they repeal the Hollywood tax cut).  Tax the rich.  And when it doesn’t work, and it won’t (in fact, I’m not sure what “work” means in this particular case since the amount to be collected is a mere drop in a 1.6 trillion dollar ocean of debt that’s planned each year for the foreseeable future), they’re left with a lot fewer excuses, huh?

Not that they won’t try to point fingers when their grand plan crashes.

Yup, in the end it all looks like we’re headed to California.  Apparently we’re going to have to recreate that debacle on a national level before the blinders come off of the public and the realization that you can’t spend more than you have forever finally sinks in.

Whether or not it will too late to salvage the country at that point, remains to be seen.

~McQ

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27 Responses to So what would happen if Dems got all they want?

  • How True, How Sad.  For us all.

  • When “tax the rich” fails they (Progressives) will have three excuses they will use:
    1) We did not tax “the rich” enough! Krugman is right, we need to go back to the 90% tax rates of the 50s!
    2) We did not tax “the rich” soon enough.
    3) “The rich” are really people who earn more than _______! (Fill in the blank: Something considerably less than 250,000)

  • While I agree with the premise, McQ, I suggest California is not the best example.  California has too many aberrational aspects that make it unique and not representative of the rest of the US.
    I suggest Illinois is the better example.  Or in greater microcosm, Detroit.  As we corkscrew into greater and greater Federal corruption, I think Illinois looks more and more apt as THE model for where we are headed.

    • I agree,  this administration has made Chicago politics the national standard.  Rather quickly, which tells me, it was there all along with better camouflaged.    But in Chicago, they don’t care if you know who they are, what are you going to do about it?

  • Q:What would happen if the Dems got all they wanted?
    A: They’d blame the Republicans when it all failed. Which it is destined to do. I’m reading those reports out of CA with ever more amusement. Let it fail. Let it burn. I see no other realistic way at this point. At least the ladies will have free birth control while the burning happens though.



     

  • In the 50′s—the Conservative dream world—the marginal tax rate was 91%—I wonder why?

    • I’m betting you’ll be crying uncle long before we will Taddy boy.

    • Back in the 1950s there were very few people in that 91% tax bracket and even fewer who actually paid that rate due to deductions.
      Before anyone says, “well, tax rates used to be that high”, consider the details. Marginal tax rates were 80%+ in the 1950’s, but applied to the mega-wealthy (income of $3 million+ in today’s dollars), rather than the $388,350 that marks today’s top bracket. In other words, people had to be 10x wealthier in the 1950’s to be subject to ultrahigh marginal rates. There were also more deductions then. For example, in 1979, while the top statutory income tax rate was 70%, the effective tax rate for the top 1% was less than 25%.
      http://www.zerohedge.com/news/why-tax-rich-doesnt-solve-anything-its-math-stupid
      The so called fair share for the wealthy will turn out to be a 85% tax rate for everyone except the poor. 

    • So, what you’re contending is that the “conservative dream world” which laid the foundation for our wealth today, was able to do so despite government’s attempts to stifle it with high marginal tax rates?

      Because it certainly wasn’t government that gave us the economic boom of that era.

      Of course you might have noticed we’re in a different era and situation now, and the economy isn’t in the shape it was then thanks to that “conservative dream world”. We’ve fought a “war on poverty” and just about everything else since then, started Medicare and Medicaid and we’re drained dry.

      Tell me again, even if stipulated to be true, how your “parallel” has any legitimacy whatsoever when compared to today’s situation?

      • “Because it certainly wasn’t government that gave us the economic boom of that era.”
        Try running that past the “you didn’t build that” crowd.

    • Like Gore with his profligate carbon footprint, I’d give Krugman a little more credibility IF he lived in a modest home in the suburbs and donated 91% of his plush earnings to the Federal government…or even came close to Romney paying taxes and giving charitably.  Which he DOES NOT.

    • Tad, you ignorant slut. The 50′s were not a “conservative dream, world”.

      Hell, even Paul Krugmann looks back to the 50s as a better time. The 50s do have many social con values (although less so then you might expect), but for small government conservatives who favor the Constitution and economic liberty, the 50s were an era of being lost in the wilderness.

      The 50s came after FDR’s New Deal era, and represented an era of political convergence where conservatives gave up on their free market values while Democrats agreed that communism and racism were bad.

      The 50s were able to get by with higher taxes for several reasons, including the total economic dominance by the US post WW2 and less accumilated regulation. Social Security began in ’38 but wasn’t going to explode on us until the Baby Boomers began to retire, and Medicare didn’t exist yet.

    • The funny thing is, tadcf, that in the 1950s, the amount of revenue was about the same percentage of the GDP as it was in the 2000s.  So, tax rates have nothing to do with tax revenue.
      Do you understand why?

    • “In the 50′s—the Conservative dream world—”

      The past is a dream world for fools of all political persuasions.  Liberals seem to be partial to the ’60s.

  • To the previous comment edit as “…the ‘highest’ marginal tax rate….”

    • And NOBODY paid it, Taddie.  It was the era of LOOPHOLES.
      There are economic laws that rational people have developed by observing how people behave.  One is The Law Of Substitution; when a thing becomes too dear, we find acceptable substitutes at lower costs.  Hence, high-earners substituted simple tax compliance for lobbying and tax avoidance.  They did it very well, as you would expect of intelligent, motivated people.
      And only you and another MORON like Krugman fantasizes that the ’50s was a “Conservative dream world”.  Although it was populated generally by people who loved their country, contra your Dear Leader.

    • And from from the 1940′s on, REVENUE was 18-19% of GDP. REGARDLESS OF TOP MARGINAL RATES.
      Thing is, and what retards like Tad and his “progressive” school “indoctrination into mental mush” always miss in the adult dynamic world of mathematics instead of the static/elementary school arithmetic, is that GDP delta was 3.5% during two decades when the US was alone in the undamaged world.
      That takes a bit of brainpower and experience to grasp. Tad and his aren’t even close. That likely explains why he comes in and throws crap on the wall and then runs away like like little fairy he is.

  •   Great debate going guys. Unfortunately, we are all missing half (and to my thinking, the more important half) of the point. We aren’t in this fiscal mess because we don’t tax enough. We are in this mess because the knuckleheads we let reside in DC are SPENDING too much. In other words, we don’t have a deficit because revenues are too low (although that is going to change quickly with obamacare), we are in a deficit because we are spending WAY more than we are taking in.
      That said, there are three obvious paths:
      1.  Increase taxes – we all know where that leads
      2.  Decrease spending – seems to me there are some hard choices to be made here, and they will have to be made eventually, so better that we make them now, while there are still some options out there. The options become more liimited the closer we get to the meltdown.
      3.  A combination of both. Unfortunately, that would require the one thing the libs are incapable of – compromise.
      With all that siad, I agree with McQ – give them all they ask for, make it clear that this is what they want, and it is against our better judgement, but that for the sake of compromise, we are willing to go along with it. Understand though, the consequences of THEIR actions. Then spell out for the ignorant masses exactly what is going to happen. Then let them burn down the house.
      In my past life, I had the honor and duty of training junior Naval Officers to be leaders. Most of the time, when I offered them advice, they took it, and things wet well. Sometimes though, they were determined to do things their way, and after a point, I let them. Usually afterward, I would ask them if they learned anything from the inevitable disaster. Usually they did, and then we would discuss why my original advice was a better idea, and that following it in the future would keep them from getting poked in the eye. Usually. In some cases, it wss a painful, but necessary process to aid in their development.
      This is one of those times when we have to let America get poked in the eye. Oh, and after they start feeling the pain, it is really going to stink to be the group of clowns who’s ideas got us to that point.

  • The left keeps coming back with 91% taxes and good times.

    1) Those taxes didn’t exactly exist

    2) The mix up the direction of causality: often the good times lead to high tax rates and high tax revenues not the other way around

    3) The seen/unseen. They look at Sweden and say that they are doing okay. But Sweden doesn’t have very dynamic markets. The big companies do okay, the small ones may never even start up. You don’t see the companies that never start up. And IKEA pioneered tax avoidance.

    • Re: The seen/unseen.
      I absolutely concur. One thing the left is always happy to do is point at other countries that seem to be doing what they would like to do here, but completely ignore the fact that over there and over here are two incomparable things.
      They do this all the time with gun control. “Japan doesn’t allow their citizens to have guns, and look at thier crime rate.” They also have vending machines on the street in Japan that dispense beer and liquor. (Kids there don’t touch them, by the way…) Would you like to see that tried in this country? It wouldn’t work here, because in this country, the culutre is different. Not allowing people the means to defend themselves is a little easier when the culture discourages the crimes that require protecting yourself from. Why don’t the libs try reforming the culture instead of mandating behavior by laws that don’t do anything? Oh, right, I forgot who we were talking about…. Reforming the culture is what WE do, and it requires WORK, which automatically disqualifies libs from even attempting it.