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Economics For Demmies

Commentary by Greg Lewis / NewMediaJournal.US
February 9, 2007

To say that liberal Democrats don't understand the market economy is like saying Hitler didn't understand the Jews. Indeed, Democrats never met a free market they didn't want to eradicate from the face of the earth.

Their Marxist-based political ideology provides a totalitarian economic foundation not dissimilar from that of the ethnic purity agenda on which the German dictator based his attempted elimination of the Jews. Indeed, if left to their own devices, Dems will steer us toward an economic holocaust worthy of the Nazis, and, in the long run, arguably as damaging to humanity.

There are a number of considerations to take into account when examining the Democrat economic agenda. Among them, there's the issue of federal budget deficits and tax receipts. In the simplest terms (to be sung to the tune of "New York, New York"), 'receipts are up, and the deficit's down.' As significant income tax cuts have done over and over in the past, the President's 2002 tax-cut legislation has spurred economic development, lessened the tax burden on individuals across the board (but particularly for lower and middle income folks), and boosted federal tax revenues significantly. It's something no Democrat since John F. Kennedy seems to be able to grasp: lower taxes mean increased tax revenues.

But it seems to me that it's not that Democrats have never heard of Arthur Laffer and the famous Laffer curve that describes what happens when tax rates are lowered; rather it's that they're ideologically blind to the real workings of the capitalist market economy. Since, for Demmies, economics is a Marxist zero-sum game (that is, since as Dems see it there's only a finite amount of capital that we have to work with and so it must be "redistributed equally" among all people), they're simply unable to grasp the notion that capital can be created, that we're not limited by the amount of capital available to be spread around at any given moment.

Being ideologically unable to understand how a free market economy works is a tough handicap to be working under, and for Democrats it means that they'll over and over again apply the blunt instrument of raising taxes to "solve" apparent fiscal problems rather that step back and take a balanced look at how the economy really works and develop real-world solutions.

And in case you've only managed to avail yourself of the economic "news" put out by leftist media, the economy's working just fine, thank you. The projected federal deficit for 2007 is a paltry 1.5% of our enormous and growing $13 trillion annual Gross Domestic Product (GDP). Budgets deficits are shrinking, and American asset values have increased by a whopping $30 trillion since Bush lowered capital gains tax rates in 2002, according to the Federal Office of Management and Budget (OMB).

In his testimony before Congress on January 18 of this year, Federal Reserve Chairman Ben Bernanke noted that the federal deficit decline from $319 billion in 2005 to $248 billion (which represented 1.9 percent of GDP) in 2006 "was primarily the result of solid growth in tax receipts, especially in collections of personal and corporate income taxes." Bernanke also testified about the so-called national debt: "The federal government debt held by the public . . . amounted to about 37 percent of one year GDP." That's down about ten percent from its average during Clinton's White House tenure during the 1990s, by the way.

There is, of course, the issue of those pesky off-budget expenditures, including Social Security, Medicare, and Medicaid. Bernanke warned that these are rising at an alarming rate, saying that, where in 2006 they accounted for about 40% of federal spending (or 8.5% of GDP), they're projected to reach 10.5% of GDP by the year 2015 and 15% of GDP by 2030.

It's clear to pretty much everyone but Democrats that we can't continue funding Social Security by means of a proportionally decreasing base of workers paying into the fund to support a proportionally increasing base of recipients. No matter who does the math, we're fairly rapidly outgrowing the ability of those paying into the system to continue to keep it solvent, at least at present levels of taxation.

Again, Bush's proposal last year to gradually privatize social security met with fierce resistance from Democrats, who, unable to understand the positive implications of this market-based strategy, hid their heads in the sand while haranguing against the Bush plan.

One has only to look at how several U.S. automobile manufacturers and airline companies are struggling under the weight of their financial commitments to retirees to understand just how difficult it is to maintain solvency in the face of this type of fiscal pressure. Just as the very idea of Social Security reflects its socialist underpinnings, many labor contracts were negotiated with major employers during an era when labor unions were avowedly Marxist in their orientation, and many labor leaders were admitted communists, or at the very least promulgated a strong socialist economic agenda.

The consequences of the retirement agreements negotiated from the middle of last century have come home to roost and now saddle many U.S. companies with financial obligations that make it difficult, if not nearly impossible, to compete with global rivals not so encumbered.

The solution to this problem that most industries have adopted is one that centers on privatization. Private retirement plans, to which employers as well as employees contribute, have almost wholly replaced company-funded pension plans for the current generation of employees. Of course, for the government to adopt this way of funding future Social Security obligations would mean that Democrats would not only have to admit that private, market-based solutions might possibly work, it would also mean that Dems would lose an important weapon in their ongoing attempt to subvert and ultimately overthrow capitalism.

In the light of Democrats' likely insistence on increasing taxes to fund entitlements, it's more important than ever that Republicans and conservatives band together to derail their plans now so as to avoid the far worse train wreck that looms ahead.

 

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