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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