As we race towards the "Financial Cliff," there is a lot of tough talk, and while the word "compromise" is thrown around a lot, there is little compromise in the talk. While "negotiation" is used, those discussing how to do it seem inept at the principals of negotiation.
Compromise does not mean that you get everything you want, or that you give the other side everything they want. It means that the result is equally uncomfortable and equally agreeable to both sides in the end. It means you have to give up something you want to get some you want.
Negotiations do not begin by giving away your cards before you start in hopes that the other side will give them back to you when you have nothing they value, later. If the House of Representatives gives up their negotiating points in December in hopes they'll be approved in July, they'll get nothing in July, in 2013, or in 2014.
If the POTUS were as strong in negotiations with foreign enemies, if he were as demanding in "diplomacy" with non-allies, as he is with the Representatives the American People elected to Congress, and the allies who have stood by us throughout the centuries, the Administration would not be calling this "the end of the American Century." Instead, his political appointees in the Defense Department are noticing that China will outspend us militarily in a few years, as the Administration continues to call for spending cuts on Defense. It notes that China, India, and others will become greater economic powers than the US, and rather than doing something to stop this, accepts it.
"Elections have consequences," is a true statement, but it isn't so easy to say why people pulled the lever for one or another person or party. The people re-elected pretty much everyone, including the House of Representatives, which Constitutionally controls the purse-strings, i.e. Budgets, Taxes, and Spending, as well as the "debt limit." There are many people who voted for the POTUS because his challenger was considered boring, just as there were people who voted for Boehner because he has demonstrated his "sensitive side."
But, back to the precipice of the "Financial Cliff." The Administration has complained that it needs to spend more to get the economy rejuvenated. It complains that factories and office jobs are being outsourced overseas, while it encourages the companies (GE) that are doing it, and selling American corporations (Chrysler) it took over to Foreign companies (Italy's Fiat).
Nancy Pelosi has gone out front for the Administration to say that cutting (certain) spending does not "add revenue," while calling for adding taxes which she calls "revenue." This is the same politician that earmarked $7 Million dollars for 7 monkeys to live in a pagoda in California and whose personal wealth has grown exponentially since elected to tens of millions of dollars in single years.
If the government were a business, it would have filed for bankruptcy decades ago. It is NOT a business. It does not have customers. Its services are not superior to those businesses provide. It should not be discussing "revenue increases."
The government collects taxes, which are an additional cost to businesses and a diminishment of the wages that workers earn. It decreases what they can use to buy the things they need and want. Every dollar the government collects means that a dollar less that businesses have to expand their operations, to build new factories, and to hire new workers. Every dollar it collects means that workers have a dollar less to buy the products that those factories make, and to spend on the services they provide.
While those consumers may not be making the decisions in the way I prefer, or the way the Administration wants, it is the money the taxpayer earned, and his to spend. It is the money that drives the US Economy, and excessive taxation is sucking it dry. And in the end, the dollar the consumer spends does a lot more to rejuvenate the economy than does the dollar the politicians tax away. And the combined tax collections of State and Federal government exceed 75% per worker of per capita Gross Domestic Product.
While the Chinese annual tax burden per individual is $1,225.40, the Federal tax burden alone on Americans is $10,524.22, in addition to state taxes (average tax burden per individual including State and Federal is $15,851.19 per person or $35,407.71 per worker) which are equal or greater to that in states like New York and California. While GDP growth was 1.8% in 2011, 157th in the world, inflation was 3.1%, in large part due to "Quantitative Easing," or the magical means by which Bernanke has proclaimed more American Dollars to exist, diminishing the value of each dollar that did exist. Economists believe that only Quantitative Easing "One" has hit the inflation rate, while Bernanke is already considering QE4.
Currently, 15.5% of all US Gross Domestic Product is sucked out of the US economy in Federal taxes alone. Including Social Security and Medicare taxes, brings this brings Federal taxation to 22%. In 2011, 8.7% of Gross Domestic Product was borrowed by the Federal government annually in new Federal borrowing, decreasing the amount of money available for consumers and companies to borrow. As of 2011, the government owes 67.8% (up by 5% from the year before) of annual US production in debt. Including government debt "to itself" brings this to 100% of GDP. If Americans and Corporations donated all of their labor and profits, keeping NOTHING for themselves, not even a morsel of bread, it would take a full year to pay off the Federal debt. Of course, the American people would die without food and water nearly 12 months before that.
Only 37 countries (only 13 when we include intra-government debt) owe a greater percentage of their GDP in debt, including Libya, Egypt, Sierra Leone, Spain, Italy and Greece, but State government debt is not included in the US percentage. Source: CIA World Fact Book. China owes only 43.3% of its growing GDP and Russia owes only 8.3% of its own.
Government is a monopoly and exhibits all of the largesse and irresponsibility that monopolies do. Whereas a person normally has at least the ability to decide against buying from a monopolistic business, or to limit what it buys from a monopoly, taxpayers have no option to stop buying from the government. Employers are required to collect taxes on the wages workers earn, whether he likes it or not. Stores are required to collect sales tax on the goods consumers buy, whether the taxpayer likes it or not. Companies are required to charge more for the goods they produce, whether the individual sees it or not.
Monopolies are bullies, and the government monopoly is the biggest bully of all. Even the taxpayer that decides not to file a tax return pays taxes. Not even an illegal alien working off the books can get away from paying taxes, even as he escapes many such as income taxes and FICA.
Hence, the Founding Fathers created the smallest possible government that it could. They got it wrong the first time, and made it too small, so they went back to the drafting table and created the US Constitution. The beauty of the new form of government was that it created competitive government: sovereign State governments allied in foreign affairs, that competed on a level field for workers, employers, and votes. They re-created the concept of Citizenship, removing the then norm of subjects of monarchs, which had not been a reality since the early days of the Roman Empire, and the Greek city-states from which it had derived.
Today, the US Federal government is the biggest government, in the world, and growing faster than the economy it sucks off of can endure.
The Founding Fathers prominently stated that government derived its authority from the Citizens that created it, that while government would assuredly attempt to overstretch that power, the Citizenry had a God-given right to dismantle that government. They noted that while Citizens would endure the small abuses of government and politicians, the People had a responsibility to overcome that government that took the abuses beyond what they could endure. Excessive taxation was among the enumerated abuses that caused the Founding Fathers to risk their lives and fortunes to throw off the chains of an abusive monarch.
Countries having more than $1 Trillion in taxes and/or spending include (as of 2011, CIA World Fact Book):
China: Revenue $1.646 Trillion, Expenditures: $1.729 Trillion
France: Taxes $1.415 Trillion, Spending: $1.559 Trillion
Germany: Taxes $1.598 Trillion, Spending: $1.633 Trillion
Italy: Taxes $1.025 Trillion, Spending: $1.111 Trillion
Japan: Taxes $1.956 Trillion, Spendig: $2.514 Trillion
United Kingdom: $984.8 Billion, Spending: $1.183 Trillion
United States: $2.303 Trillion, Spending: $3.599 Trillion, plus $1 Trillion in taxes and $2.3 Trillion in "social benefits" spending, plus State & Municipality taxes & spending.
While some imply that US taxation has decreased, the fact is that it has increased, substantially. In 1996 $1.45 Trillion was collected, growing to $1.82 Trillion in 1999, and $2.67 Billion in 2008. These tax collections increased, despite the dot.com bubble, despite the recession of 2000, despite the 9/11 attacks, and despite other downturns, during tax rate cuts. The problem is that spending by the Federal government has outpaced increased tax collection.
Worldwide, governments collect $20.37 Trillion dollars in taxes, and spend $23.25 Trillion annually, as of 2011. The United States Federal government collects 11.3% of ALL taxes worldwide and spends 15.4% of all government money WORLDWIDE. This, despite the fact that we have only 4.5% of the world's population (2012). And when we include Medicare & Social Security taxes and expenditures, the US Federal government collects 16.2% of all taxes worldwide and spends 25.3% of worldwide government money every year. It adds 10% of all national debt to the accumulated worldwide government debt every year.
The combined State Governments collected an additional $1.67 Trillion in taxes, according to the US Census Bureau, which exceeds the tax collections of all other nations in the world, except Japan, in addition to Federal tax collections, and means that the United States collects more than twice the taxes of any other Nation in the world. States, had a combined debt of $1.13 Trillion, made up significantly by the top 5 debtor States: California ($149.7 Billion), New York ($134.9 Billion), Massachusetts ($74.3 Billion), Illinois ($64.8 Billion), and New Jersey ($64 Billion). These are also members of the highest taxed states.
This brings a combined Federal and State tax collection total to $4.97 Trillion dollars (after $593.7 Billion in "intergovernment revenue" was subtracted), or an average (before municipality taxes) to $15,851.19 per person and $35,407.71 per employed person (Sep 2011, Bureau of Labor Statistics). It means that there is very little left for the worker, after the taxes are collected, already. Not all of these taxes are readily visible. These include corporate taxes, FCC taxes, oil taxes, property taxes, license fees, as well as sales tax, employment tax, and gasoline tax.
The federal government paid $432 Billion in interest on that debt in 2012 versus $454 Billion in 2008, despite having 50% more debt in 2012 versus 2008. This is due to artificially low interest rates. And when interest rates return to "normal," the interest rates alone will soak up nearly all of the taxes the government collects on worker production.
The US Federal debt has reached critical mass and must be dealt with. Taxes are not the problem. Americans already pay more than 24.4% of all taxes collected world wide, with only 4.47% of its population. There is a reason why the US Economy is stalling, why the Administration has prounounced the death of the American Century. There is a reason why China, India, and others will overtake the US as the world's leading economy, but it is not because we aren't taxed enough, or that the government doesn't spend enough. As tax collections, government spending, and government debt have increased, the US Economy has slowed.
Sources of figures in this article include: The US Bureau of Labor Statistics, the US Census Bureau, the CIA World Factbook, and the left wing "non-profit" Center on Budget and Policy Priorities.