Over at Marketwatch, Rex Nutting lists “The 10 best things government has done for us“:
- Protecting our freedoms
- Giving away the land
- Educating everybody
- Helping us retire with dignity
- Improving public health
- Building our transportation networks
- Investing in communications
- Building our energy supply
- Inventing the future
- Defeating totalitarianism
Yet, Nutting writes that “everyone knows that the government can do a lot to create the right conditions for prosperity” and “Our democratic government — along with you, me and our ancestors — created the conditions that have allowed private citizens and companies to build a great nation.” But many of these are simply government handouts–redistribution of wealth–not the creation of conditions.
Did we really want the government to give away land? (I write about this very issue in Angry Mobs and Founding Fathers.) Funny, now the government takes land away from private individuals instead of giving it to them.
And why should the government invest in the future, building our energy supply, invest in communications, build our transportation networks (I also write about this in Angry Mobs and Founding Fathers), etc.? Aren’t those the domain of private enterprise?
But why shouldn’t the government provide these free goods and services to us? Yes, I said FREE! Because the author, Rex Nutting, not once mentions taxes. He fails to mention that the resources used by the government to do these things took resources away from the private economy, which would have made use of them to provide the same or different goods and services to us.
Thus, Mr. Nutting provides us with just half the picture, and a distorted half at that.
We often complain about the excessive spending of our federal government, and for good reason. We even argue for “states’ rights” as a way to restrain the federal government. But are the states any better than the federal government?
This first chart clearly show that the federal government spends, on average, as a percentage of GDP, more than our state and local government. But notice that state and local government spending caught up to the federal government back in 2001 (after the fiscal responsibility of the 1990s).
Obviously, the chart above has two large spikes representing World War I and World War II. What would it look like if we excluded volatile defense spending?
Doing this, it looks like the state and local government spend more money than the federal government. More important, states and local government has grown from about 15 percent of GDP in 1980 to 22 percent today. The federal government has “only” grown from 15 percent to 19 percent.
Looking at these chart, I have no confidence that the states will act with more restraint than the federal government. If our governments are incapable of fixing the problem, that only leaves you and me. We have to replace the people running and governments. We have to teach them and ourselves the value of small governments designed to protect our rights of life, liberty and pursuit of happiness. Everything else government does is an infringement of our rights and they should leave us alone.
Posted in big government
Tagged big government, charts, conservative, Federal government of the United States, Government, government spending, graphs, Local government, states rights, Tea Party, United States
The Washington Times reports:
The federal government posted its largest monthly deficit in history in February at $223 billion, according to preliminary numbers the Congressional Budget Office released Monday morning.
That figure tops last February’s record of $220.9 billion, and marks the 29th straight month the government has run in the red — a modern record. The last time the federal government posted even a monthly surplus was September 2008, just before the financial collapse.
Last month’s federal deficit is nearly four times as large as the spending cuts House Republicans have passed in their spending bill, and is more than 30 times the size of Senate Democrats’ opening bid of $6 billion.
Actually, those figures overstate the cuts because it is comparing a yearly cut to a monthly deficit. In reality, the annual deficit of about $1.6 trillion is 26 times as large as the Republican budget cuts and 267 times the size of the Democrats’ proposed cuts.
I’m glad to see Washington is taking this problem seriously…
The sovereign debt crisis is back! Actually, it never went away…
Portugal yields soar, underline euro worries
ECB comes off THE sidelines to buy Portuguese bonds
Proving that the euro zone’s sovereign-debt crisis is yet to be vanquished, yields on Portuguese government bonds continued to climb to levels viewed as unsustainable on Thursday, prompting the European Central Bank to intervene.
Yields on the 10-year bonds soared to a euro-era high of more than 7.6% at one point Thursday morning, according to strategists. The European Central Bank later intervened to buy Portuguese bonds, several analysts said, after staying out of the markets amid relative calm in recent weeks.
Read the rest of the article here…
Back in the 1700s, income taxes were rare, yet more countries were adopting such revenue generating schemes. Adam Smith minced no words in attacking such “absurd and destructive” taxes. In a section of The Wealth of Nations titled “Taxes upon the Wages of Labour,” Adam Smith wonders why countries institute such income taxes:
Absurd and destructive as such taxes are, however, they take place in many countries.
Just a decade later, the Founding Fathers recognized that limits needed to be placed on government. One such limit would be to make it more difficult for government to raise our taxes. In Federalist #21, Alexander Hamilton argued that a consumption tax would effectively limit the size of government:
It is a signal advantage of taxes on articles of consumption, that they contain in their own nature a security against excess. They prescribe their own limit; which cannot be exceeded without defeating the end proposed, that is, an extension of the revenue. When applied to this object, the saying is as just as it is witty, that, “in political arithmetic, two and two do not always make four.” If duties are too high, they lessen the consumption; the collection is eluded; and the product to the treasury is not so great as when they are confined within proper and moderate bounds. This forms a complete barrier against any material oppression of the citizens by taxes of this class, and is itself a natural limitation of the power of imposing them.
We have seen how the income tax has accomplished the growth of government that duties were unable to do previously. I return to this chart of the size of government excluding defense dating back to 1910. Remember, the income tax amendment to the Constitution was ratified in 1913.
Click on image to zoom in:
Seeing the growth of government since the income tax appeared a century ago, Smith and Hamilton were correct in their assessments. Based on the above quotes and their other writings, Adam Smith and Alexander Hamilton would support a switch to a consumption tax, more commonly called a sales tax today or the proposed Fair Tax.
Posted in Books, Economics, Government spending, History, Quotes, Taxes
Tagged adam smith, alexander hamilton, Consumption tax, Fair tax, federalist papers, Federalist Party, Government, income tax, Sales Tax, Tax, taxes, Wealth of Nations