The latest numbers I've seen regarding the projected budget surpluses here in the United States of America indicate that over the next decade the government will take in roughly twenty-five trillion dollars more than it presently plans to spend. Let's get clear on that number; i.e., that's a "25" followed by twelve zeroes. For those with little imagination, that's 25,000,000,000,000. My, that's a very big number, isn't it?
What amazes me about the discussion of what ought to be done with this money is that people don't seem to have any clue that this is their money. In my estimation, there is no room for any such discussion: it should be returned to the people. It's their money. Period. In this essay, I am going to explain (1) why government has no legitimate claim to these funds and (2) why the money should simply go back to the people, no questions asked.
The government of this nation is not a business. That is, it does not create any useful product or provide any useful service for profit. In fact, it arguably stands opposed to the creation or accomplishing of anything useful. The government is most fundamentally a parasitic (though necessary) evil, drawing its sustenance from the labors of those it is intended to serve. The purpose of tariffs, taxes, and so forth is not to build up a huge pile of money for our government officials to sit upon (or more likely spend). Rather, the purpose is to fund those programs taken to fall within the legitimate domain of governmental interest as defined by the elected representatives of the voting populace.
When a business earns more than it spends, it makes a profit. This money may then be spent as those in control of said business consider best—well, insofar as they get to keep any of it from the government. This is precisely how things should work in a capitalist economy. A business that creates products or provides services that have value to consumers is rewarded for its efforts with said consumers' hard-earned money. Any excess beyond that necessary to maintain the business is pure profit, which is available for a multitude of uses. The business has a moral claim to the surplus because of its efforts and initiative expended toward fulfilling a need/desire. Capitalism is inherently meritocratic in this sense.
So let me be crystal clear: this is not the proper way to look at government. Government surpluses do not come about because the government has sold some product or service for more than it cost to provide it. Government surpluses come about because more money has been taken from the taxpayers than was supposed to be taken. In effect, surpluses come about only because of simple, human ignorance; i.e., the persons that comprise our government calculated incorrectly what tax rates would be necessary to fund the programs that the people (or more likely their representatives) want funded. Government acquires money only by taking it at gunpoint from various persons. If this description seems too harsh, then I suggest you stop paying taxes, tariffs, etc. and watch what happens. The only claim government has to this money is that the people have given it over with the intent that it be used to fund various public endeavors.
If it happens, then, that there is a surplus for whatever reason, the government has no claim to this money whatsoever. Rather, only the people have any legitimate claim to this money, for said surplus has come about only because of their productivity, not because of some government productivity or efficiency. This really isn't hard to grasp, so let's try an analogy. If a consumer retains a lawyer to tend to some matter, and said lawyer overcharges the customer, is he entitled to keep the extra? Of course not! There is no question to be debated; the extra money must be refunded to the paying customer. And in fact, we have laws to enforce this sort of thing. Government, folks, is no different except insofar as they aren't held accountable unlike lawyer; i.e., government takes your money under threat of force and may not be held liable for any failure to provide the services for which it was taken.
Were it not for my familiarity with the utterly dismal process of lobotomization that is our system of public education, I would be incapable of believing the discussion I see of this issue in the popular press. Take, for instance, the recent tax-cut package passed into law thanks to the initiative of George W. Bush and the near-Herculean efforts of many others. All I hear from the liberal Democratic leadership is that this tax-cut package is too expensive; we simply cannot afford it. And this is parroted largely without question, it seems, by virtually every major media outlet from CNN to my local news. I take this as no big surprise given that 80% of those in the popular press vote Democratic—yeah, they're unbiased, really. Trust them, they'll tell you so.
But what is there to afford? First of all, a tax cut is unlike a welfare program, a fighter plane or other such things. A tax cut is not something that costs money. It is not something that is bought or paid for. The people should reject this very use of language because it helps obfuscate the truth. The government doesn't buy us poor working stiffs a tax cut in its great munificence; rather, a tax cut means that less of your own hard-earned money is gobbled up by government.
Second, even if we overlook this dishonest abuse of language, the claim at stake is simply false. For I ask you, dear reader, if a surplus of twenty-five trillion dollars is expected over the next ten years, then how is it even remotely reasonable to claim that the nation cannot afford to return 1.35 trillion of this (a mere 5.4% of the total) to the working taxpayers who earned it in the first place? It is simply dishonest to claim that returning the money to the people is something we cannot afford. The very notion of a surplus implies that it is extra, additional, beyond what is needed, etc. By its very definition, all twenty-five trillion dollars of the surplus is not needed for spending. As such, it should be returned to the people that earned it.
Third, such a view assumes a blatantly false zero-sum view of our economy. That is, it assumes that tax receipts must necessarily decrease if tax rates are lowered. This is a shibboleth that has been discredited time and time again. When John F. Kennedy cut taxes in the 1960's, the amount of revenue collected by government increased. Similarly, when Ronald Reagan cut taxes in the 1980's, the amount of revenue collected by government again increased—and substantially at that. Tax cuts mean less of a load on producers and consumers, which results in a higher volume of transactions, etc., all of which results in government collecting more money.
So what about those who claim that the money should not be returned to the people because it provides a unique opportunity to save social security, pay down the national debt, etc.? Is this a laudable use for the money that overrides the people's claim to it? I don't think so for two reasons. First, there is absolutely no reason whatsoever to believe that it is possible to save such programs. Consider a simple question: why is social security constantly failing in the first place? The answer can be reduced to two simple facts: (1) the structure of the program is such that no funds are actually safe, and (2) the structure of the program cannot help but fail because of population demographics.
Regarding (1), there is a good reason that no amount of money will ever save social security, namely, because social security funding is not safe. The money for social security comes out of the general fund, and if the money in the general fund is already spent, then social security is in trouble. This is precisely what has been happening for years thanks to spending-crazed politicians. Regarding (2), the bad idea that is social security was conceived in an era when there were far fewer elderly than there were taxpayers. Since that time, population demographics have changed such that those collecting will soon outnumber those paying for social security, and this is a trend that will only continue to develop given medical advances and so forth.
In short, to those who would use the surpluses to save social security, my response is twofold. No amount of money will ever save social security because it is doomed by its nature. Frankly, and more to the point, social security is not worth saving at all. It was a rotten idea to begin with. Seriously, if persons had the freedom to invest the roughly 15% of their income that is immediately stolen in the name of FICA, they would retire far richer than than they will ever be under an incompetent, government (nearly synonymous) program. Yes, I realize "only" 7.5% is taken from the individual, but an additional 7.5% burden is levied on employers. Effectively, were social security abolished tomorrow, everyone's pay would rise by 15% immediately without employers losing a single penny in the process.
Second, what about paying down the national debt? Isn't that a cause to which that money should be put? Well, no. The debts of a nation are not like the debts of an individual. And frankly, paying off the national debt would be very disruptive to world financial markets. Much of that debt comes from bonds and other such notes; what good does it do to pay it all off? It's not like the bond market is going to go away. Rather, people will simply put their money elsewhere or again take out bonds. The short response to those who wish to do this is that there is no compelling reason to do so. There is compelling reason to refinance the national debt so that much less of it is in short-term notes (another dishonest and self-centered move on the part of the Clinton administration in order to cook the books), but that's an entirely different issue and doesn't require spending the surpluses.
In short, leaving the money in the hands of our politicians will never accomplish the tasks to which it is set. Should you doubt this, simply look back at our history. We've now spent far more than Lyndon Johnson claimed would be necessary to end poverty altogether—to be precise, the federal government spent more than half that much in FY 2000 alone—yet we still have the poor, don't we? We've already spent money time and time again to "shore up" social security, yet it is still failing, isn't it? We've already raised taxes again and again to pay for more Medicaid, Medicare, welfare programs, etc., and yet all of these programs cry out for more, don't they?
Leaving twenty-five trillion extra dollars in the hands of politicians is much like giving a group of teenage boys a case of whisky, the keys to the car and directions to the local red-light district. Or if you prefer, it's like leaving a pack of spider monkeys in charge of an atomic bomb. No matter which analogy you prefer, it is a recipe for disaster. Entitlement programs are the largest portion of the federal budget, and they are growing seemingly out of control. No amount of money will ever save them. Period. To paraphrase a wise, Roman senator, our very form of civilization works only until the people realize they can simply vote themselves more bread and circuses. Given the current state of the national IQ, the future isn't bright.
The people of the United States of America have become so ignorant of the fundamentals of their own government—thanks, public education!—that few, it seems, are even interested in getting their own money back. Or perhaps it is simply that the standard of living in this nation is so high that the less than 50% of one's income one actually gets to keep after FICA, federal taxes, state taxes, property taxes, sales taxes, licensing fees, etc. is enough that fighting for tax relief is simply not worth the effort. What shouldn't be missed in the midst of the discussion about surpluses, however, is that it is the people's money, not the government's. And if prior history is any guide, individuals always do a far better job of spending their own money than does the government. For these reasons, all of the surpluses should be returned to the people.
06/11/2001