Friday, March 26, 2010

Preaching False Ideas to Men Known to be Idiots

Re: Yes, Debt Matters

Over the last several weeks I've been contemplating how things have changed in my still relatively short lifetime... how the word "freedom" has somehow morphed to mean "I work so others get free stuff" or perhaps even better "I better stop working so I can get free stuff." Personal accountability has gone out the window, an increasing number of people pay no taxes - coming dangerously close to the 51% tipping point where tax policy will be set by those who don't pay anything, and somehow all kinds of new "rights" have magically appeared in the Constitution."

A huge amount of debt is bad, like the amount we have taken on. Those that have continued to elect politicians that pour on the debt the last 30 years should be ashamed of ourselves, but we do not seem to be. We shouldn't elect people that year after year pay out money they don't have with the (unspoken) promise of future taxes.

Saying people don't pay taxes when they often pay much higher proportional taxes than the rich is very misleading. Pretending that income taxes are the only taxes is just not true. When people try to say a small percentage of people pay taxes, usually they mean there is a significant portion that don't pay federal income taxes. Which is, of course, not the same thing as not paying taxes.

I'm not sure where your claim of 51% pay no taxes comes from but it sounds like the extremely misleading "data" presented by those that think the poor are somehow responsible or to blame and we should be doing more to support the lifestyles of the rich.

Buffett Slams Tax System Disparities


Interview with Warren Buffett:

Most of my income is taxed at 15 percent, and-- and doesn't pay a payroll. Mainly it's dividends and capital gains. And if you look at the For-- Forbes 400, a bunch of my fellow rich guys-- they will-- their tax rate overall to the federal government will be less than that of their receptionist.
I'll bet a million dollars against any member of the Forbes 400 who challenges-- me that the average for the Forbes 400 will be less than the average of their receptionists. So, I'll give 'em an 800 number. They can call me. And the million will go to whichever charity the winner-- designates.

Criticize the politicians that have for decades passed budgets that hike the taxes in the future to give their current voters a false sense of well being (because they know the voters won't think about the future costs the largess [big tax cuts now without spending cuts, for example, are not in fact tax cuts in any real sense, they are just shifting taxes to the future. But that is not what the marketers peddling those giveaways say, of course] today costs). Criticize the voters for mortgaging a significant amount of future economic wealth of their country to such charlatans. I concur with such criticisms.

But I get frustrated with attempts to distort people's perceptions with misleading data. The debt problems are not because the poor are paying too little in taxes.

We spent like crazy in the last 10 years. That is a huge part of the problem - almost no-one disagrees with this. We reduced taxes on the rich. That is another huge part of the problem - some disagree with this. I can understand people feeling differently, that is their choice. But I see any attempt to market giveaways to voters today, that sticks a huge bill to those in the future as poor policy. Cutting taxes is fine as long as you cut spending a the same time (and you don't rely on fake financial projections to justify your current largess, of course).

We blow hundreds of billions a year in a very poorly run health system (again a problem that has existed and grown for decades). One can argue the current attempts makes it worse. One can't argue we elected people that have done nothing significant about it for decades.

No one must buy our debt. I have, for more than a decade, thought the main reason Japan and China buy so much of our debt is not because it is wise investment but for other economic reasons (and some political reasons). They wish to keep the dollar value high and allow the USA to buy their goods. I think they would be wise to massively reduce those purchases. And I suspect they shall. But we shall see.

It isn't tricky. Those of us that have elected politicians that created huge debt loads (by increasing spending or reducing current taxes) created the need for huge taxes for the future to pay off that debt. We continue to elect them so it is just playing out the way we chose.

Unfortunately we suffer a great deal from

1) the inability to think beyond the current year with any degree of sense. We act like 8 year olds. That isn't a good thing for adults to do on matters such as long term saving and debt. We not only do it with those we elect but also in our own retirement accounts.

2) the intellectual discourse on the most important and complex decisions our country makes is about at the level of a Coke commercial. Again this is something we chose. If we didn't acknowledge/accept ill informed campaigns on matters of pubic policy then talking heads would actually be replaced with thoughtful people that detailed the cost and benefits of options and provided alternatives they support. Instead we want simple minded marketing minds to set the policy landscape so we get decisions based on fear, rhetoric, oversimplifications, marketing gimmicks, manipulation, demagoguery...

H. L. Mencken said it well, a demagogue as "one who will preach doctrines he knows to be untrue to men he knows to be idiots." I can't tell how many of our politicians are demagogues and how many are the idiots that demagogues play for fools. But an awful lot of them are in one or the other camp. I imagine many think they are demagogues, but I bet quite a few are really fools.

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