Soak the rich? Or, How to Run the Country on $10 billion per day

I wrote this a while ago regarding Bernie Sanders, but it still applies to Crooked Hillary.
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Ok I’m seeing a lot of back and forth on this commentary, and I myself have been a bit reactionary with my comments as well.  Although I’m vehemently against Sen. Sanders’s economic policies, I can see why he has the appeal that he does.  I agree he’s a charismatic Washington outsider, he’s probably the most honest person in the race right now (though next to Clinton and Trump that’s not saying much).  I believe his heart is in the right place.  That said, it’s important to understand why his plans cannot possibly work.  The numbers just don’t add up.
Unfunded liabilities are the difference between the net present value of expected future government spending and the net present value of projected future tax revenue, particularly those associated with Social Security and Medicare.  At usdebtclock.org, federal unfunded liabilities are estimated at near $127 trillion, which is roughly $1.1 million per taxpayer and nearly double 2012’s total world output.  The United States Gross Domestic Product or GDP, is the measure of national income and output for a given country’s economy. In other words. The gross domestic product (GDP) is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time.  The US in 2016 has a GDP of about $16.77 trillion which according to the Congressional Budget Office will increase to about $28 trillion in this same 10 year period.  So the unfunded liabilities all by themselves are almost eight times the combined wealth for every person and business in the entire country.  To put another way, suppose your annual income is, say, $40,000 per year.  You have $320,000 of credit cards that are maxed out and you’re now out of work.  What do you think a bank will say when you go for another credit card or loan?  That is the exact situation we have.  You can talk about what’s “fair” or pull the heartstrings all you want, but the numbers don’t lie.  On top of all that, we have a $19 trillion dollar deficit to individuals and foreign nations, and Bernie Sanders is planning at least $18 trillion in new spending over a decade, according to a tally by The Wall Street Journal.  including $15 trillion for Health care, $1.2 trillion for Social Security, and $750 billion for “college affordability.” (Source: Gerald Friedman, UMass Amherst, Sanders Campaign, Social Security Administration):
The common refrain is “just make the rich pay their fair share.”  First, it’s morally not up to anyone to define what “rich” is, or dictate how much money people should be able to make or keep.  But even if we ignore that, it won’t work in the first place.  There are 3.8 million households in 2010 making $250,000 per year or more (roughly top 3-4%).  Suppose we were just to take every penny of their wealth above $250,000.  I don’t just mean a higher tax, I mean cap earnings at $250,000, everything else is forfeited to the government.  So what would happen if we tried to do that?  The mean salary of people in the top 3 percent is $402,476, so if we let them keep $250K, we’ll collect on average (402K-250K)=$152,000.  Multiply by 3.8 million households and we get $578 Billion.  Sounds impressive, but our budget in 2011 was $3.561 TRILLION!  So soaking everyone in the top 3% would generate about SIXTEEN PERCENT of ONE year’s budget, and that’s not even touching the federal deficit or the unfunded liabilities.
An Internet blogger named “Iowahawk” ran the numbers, and though this data is about five years old, the problem has if anything gotten worse.  If we took every cent of profit from each of the Fortune 500 companies, every cent of ad money spent on all 45 Super Bowls, the combined salaries of all players in the NFL, MLB, NBA, NHL, 100% of every penny earned over $250,000, end the wars in Iraq and Afghanistan, kill off all billionaires and near billionaires and take all their money, and end all foreign aid, it would net us (in 2010) $3.561 Trillion.  Sounds impressive, but the 2011 Federal budget was $3.603 trillion, and even the total tax revenue was “only” $2.303 trillion.  That’s barely one quarter of our national debt.  Of course once we’ve done this, we’ve killed nearly every cent of capital in the U.S., destroyed all jobs and since people can’t keep anything above $250,000, nobody has any incentive anymore to star businesses, invent, or innovate.
I’ll make this real simple:  How do you expect any of this to actually work?
  1. Raise taxes on the rich.
  2. ???????
  3. We create more jobs and growth.
Anyone feel like filling in #2?  Seriously, the blindly devoted Bernie supporters out there talking about how Sanders is “obviously” the best person for the job.  Maybe in many ways he’s better than Clinton or Trump, but it’s easy to talk about new spending and social programs and spreading the wealth, if it’s someone else’s wealth you’re spreading around.
And on top of that, Sanders wants to add MORE social programs. EVEN IF YOU WERE TO LIQUIDATE OUR ENTIRE ECONOMY AND THE GOVERNMENT WERE TO SEIZE EVERY CENT FROM EVERYONE, that would not even pay for what we have now! What part of that do people not understand? You can talk about “fair” and “inequality” all you want, but fairness doesn’t put money in our banks, only private industry does that.

Issue #4: Stop spending so much


ISSUE 4#: GET SPENDING UNDER CONTROL

If you listen to the Democrats, our financial problems are the fault of Republicans, Fox News, the Koch Brothers, George W. Bush and the Tea Party.  They make the argument that health care and education and health care is a right, hat the taxpayers have to pay for it, and all this can be solved if the rich “just pay a little more.”  For some reason, they feel that simply because some people have more money and wealth than others, that the have-nots have some right or entitlement to the money of the “super rich” simply because they have it. 

I. Morally: It’s wrong to assume that we’re simply entitled to other people’s money. Except for a rare exception of a large inheritance or powerball win, the millionaires and billionaires have earned that money because they have an in-demand or highly valued skill.  Who do Democrats think they think they are to decide who is allowed to keep their hard earned money and who isn’t?  Further, why do they think that they can simply dictate what “fair” is?  By global standards, most Americans are in the “global 1 percent.”  Do you have a TV with cable?  Do you have high speed Internet?  A computer?  A phone or two?  Suppose some government official came into your house one day, declared you “rich” and said that you had to give up your possessions for people in third world countries because “you don’t need those things.”  “Oh but that’s different, the super-rich don’t need all that money.”  $400,000 is roughly the 1% threshold and if you’re living in certain areas of the country, have 3 kids, 2 in college, and student loans, those expenses pile up pretty quick.  In addition, the rich don’t just “sit on” their money.  They put it to work, investing and creating more wealth (yes some of it for themselves, that’s not a crime), creating jobs, putting money in circulation.  Even if a person buys 2 more houses and a yacht, someone has to build these things, maintain them, repair them, clean them, if they buy a new limo someone has to maintain and drive it.  This is called job creation

II. Logistically: The notion that soaking the one percent will pay for our programs is a myth.  The far left apparently thinks that the wealthiest Americans have some money hoard somewhere and are just “greedy.” They use the “pity” card, making arguments based on pure emotion and completely devoid of logic.  You can’t just “attack the 1%” without having a snowball effect.  If you tax the corporations the more, regulate them more, jack up the minimum wage, they have less money to spend on expanding the business and hiring workers. 


 
BUDGET

This next section is boring but very important!   It’s easy to talk about spreading the wealth when it’s someone else’s wealth.  It’s easy to throw around terms like “rich” “fair share” and “one percent” but I want you to really have an understanding about how our budget really works, and why even if it was morally right to soak the rich, it just isn’t feasible or effective. 
Let’s start with a look at our annual budget: 2015 actual and estimates from 2016, 2017:

FY2017                                   FY15 act    FY16 est    FY17 est
TOTAL SPENDING             $3688        $3951        $4147
TOTAL REVENUE              $3249        $3335        $3643
Fed Deficit                              $-439        $-616         $-503

As we can see the Federal government over the past few years has spent roughly just under $4 trillion per year.  So we are overspending by roughly a half trillion per year.  Of course this dds up over time…  In FY2015 the United States had an accumulated debt of $18.1 trillion: $18,100,000,000,000.  Let that sink in for a moment.  That comes to $60,000 per citizen and $162,000 each for every single taxpayer.  Due to reckless government spending that number is estimated to be $19.4 trillion at the end of 2016.  Don’t take my word for it, you can find all this data at www.usdebtclock.org.

Of course it gets worse: We have estimated unfunded liabilities, in other words bills for social programs like Medicare and Social Security that we have absolutely no plan on how to pay back.  It’s like getting bills in the mail and not even bothering to set aside money to pay them.  FY2015 estimate is about $104 Trillion: $104,000,000,000,000.  To pay this off, every taxpayer would have to pony up $861,579, almost a million dollars… EACH! By 2027, when your grandchildren and great-grandchildren are born, this number could balloon to $127 TRILLION! (https://goo.gl/ZndTqF) 

I know that national debt and deficit and budget are considered boring terms and these are numbers we can’t conceive of, so let’s break down the 2015 budget numbers and express them pro-rated per U.S. Citizen (based on 2015 data):

Annual spending (i.e. household budget)         $-11,525
Annual revenue (i.e. annual income)                $10,153
Annual deficit  (i.e. over budget)                     $-1,372
Cumulative debt (e.g. credit card balance)       $-56,553
Unfunded liabilities (e.g. unpaid bills)             $-325,000

Can you imagine having an income of $10,153 per year, spending $1372 per year beyond your means and still have debt of almost $400,000?  Do you think any banker in their right mind would loan you more?  Yet Hillary Clinton wants to take out MORE loans and rack up MORE debt while continuing to spend like there’s no tomorrow.  I don’t care how worthy the cause – nothing is free.  Nothing.  Everything has a price. 


 SOAK THE RICH?

The Democrats would have you believe that the wealthy are not paying their “fair share” (whatever the heck “fair” means).  In actuality, the 1% as a group pay a bigger share of income taxes than their share of adjusted gross income (http://money.cnn.com/2014/04/04/pf/taxes/top-1-taxes/) As a group, the top 1% earned nearly 19% of all adjusted gross income reported in 2011 and paid 35% of all federal income taxes. Below is IRS data from 2013.  It shows the taxable income vs. tax paid for all income brackets.
https://www.irs.gov/pub/irs-soi/13in12ms.xls

 Income bracket
Taxable income
Tax
paid
Effective
Rate
All returns, total
$1,562,956,295
$279,024,625
18%
$100,000 under $200,000
$243,010,087
$50,518,267
21%
$200,000 under $500,000
$118,451,146
$30,764,293
26%
$500,000 under $1,000,000
$44,422,264
$13,226,602
30%
$1,000,000 under $1,500,000
$19,389,608
$6,171,341
32%
$1,500,000 under $2,000,000
$11,240,669
$3,689,407
33%
$2,000,000 under $5,000,000
$28,645,134
$9,523,249
33%
$5,000,000 under $10,000,000
$16,606,647
$5,459,253
33%
$10,000,000 or more
$38,489,302
$12,080,894
31%



Income ($M)
% of income
% of tax
Under $100K
$1,042
67%
53%
$100K-$500K
$361
23%
29%
$500K-$1M
$44
3%
5%
$1M-$10M
$76
5%
9%
$10M+
$39
2%
4%
TOTAL
$1,562



So surely you can see that in the higher tax brackets the effective rate goes up.  We can also see that households above $100K earn 33% of the income yet pay 47% of the tax! 

The total net worth of all billionaires in 2015 was $2.2 trillion.* Even if you took every cent of all billionaires in excess of $250,000, it would (A) not cover the $3.9 trillion U.S. budget for one year, but (B) once you’ve done that, you’ve now sucked a substantial amount of capital from the entire U.S. economy, meaning there’s no one left to run the corporations, invest in American jobs, or pay those taxes you love to stiff them on.  According to money.cnn.com, the 1% as a group pay a bigger share of income taxes than their share of adjusted gross income. As a group, the top 1% earned nearly 19% of all adjusted gross income reported in 2011 and paid 35% of all federal income taxes.**  SOURCE


So let’s just completely liquidate all the evil Fortune 500 companies that the Occupy movement likes to pick on.  The total 2015 profits from the top 100 Fortune 500 companies is $682 Billion and the total adjusted gross income of every single taxpayer in excess of $250,000 is a “paltry” $1.464 Trillion. https://www.irs.gov/pub/irs-soi/13in11si.xls

So even if you bankrupted all the billionaires and corporations you would end up with $2.146 Trillion, or about 55% of one year’s budget.  Of course now you’ve just put millions out of work, emptied the banks, and obliterated the tax base.  And that doesn’t even touch the unfunded liabilities mentioned earlier.  Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period.  For the United States in 2016, the GDP is estimated to be about $16.8 trillion.  So we have more accumulated debt than the entire economic output of our entire country in 2016! 

The Committee for a Responsible Budget, using Congressional Budget Office (CBO) data, put together a price tag for Clinton’s campaign promises.  $1.6-$1.8 trillion more over the next 10 years (and have you ever known a government project to come in under budget?), so there’s still a shortfall, and even that is covered by… of course, more taxes.  The CRB also states on their web page, that Clinton’s plan “would  keep debt at post-war record-high and rapidly growing levels. Under Secretary Clinton’s proposals, debt held by the public would climb from 74 percent of Gross Domestic Product (GDP) at the end of last year to 86 percent of GDP by 2026.”  SOURCE: http://www.crfb.org/papers/adding-secretary-clintons-campaign-proposals-so-far

CONSEQUENCES

Democrat politicians throw billions around like we throw dollar bills, they are mortgaging our future and sending our country into unpayable debt, to add bloated social programs that they have no business providing in the first place.  And yet they want to expand Social Security, expand Medicare, expand Obamacare, give more students “free” college, as if the bills will never come due.  It will someday and when that happens there’s not enough money in the entire world to pay it off.  Think about that please next time you shrug your shoulders at a new social program and say, “Sure, why not.”

Former British Prime Minister Margaret Thatcher was known for saying, “The problem with socialism is that you eventually run out of other people’s money.”  Democratic Socialism has been tried most recently in Venezuela.  Oil prices are plummeting, the currency is practically worthless, store shelves are empty, there are long lines for food, the government is imposing rolling blackouts and forcing citizens to work rural farms just so that the country has enough to eat.  Then the ultimate embarrassment:  They can’t print any more money because they can’t afford the paper and ink to do so!  As Joshua Yasmeh points out in “The Daily Wire” 6/29/16*: “Oil exports were the only thing keeping the country’s economy afloat as the government shut down all traces of successful private enterprise… Income inequality, the singular obsession of every socialist and democratic-socialist the world over, has become profoundly exacerbated as an unintended consequence of government economic engineering. The class hierarchy in Venezuela now mirrors that of a medieval feudal society.
Why did this happen?  Because of a government takeover of the economy: raising taxes, nationalizing industries (much like Obamacare is trying to do).  Most stores in the U.S. run an inventory system, keeping track of products, knowing how much is sold and when, and they use this information to know how much of a product to order and when.  When the government starts taking control of the economy, there is no way that one group can possibly determine what interest rate to charge, how much of a product should be available where, which industries to prop up and which to tamper down.  As a result, you have out of control inflation and people standing in long lines for basic goods. 
*SOURCE: http://www.dailywire.com/news/7066/socialist-paradise-venezuela-attacks-supermarkets-joshua-yasmeh

“Oh but that’s a third world country, it can never happen here!”  I’ll bet a lot of people were saying that on October 28, 1929 as well.  We are so sheltered having spent our entire lives in a first-world country.  Our nation is not somehow privileged.  Those are famous last words.  What they’re doing in Venezuela is exactly what the Socialist left is trying to do here.

An analogy for “just tax the rich”

Here’s an analogy that should make sense to the “Feel the Bern” Millennials.

Suppose you were taking a class and worked very very hard, giving up weekends, parties, and earned a 95% average. But the class average is 70% because many of your classmates have been partying, missing class, and goofing off and are thus failing the class.

Suppose then the professor announces one day that it’s not fair that some are passing and others are failing and so out of “fairness” he just assigns everyone a 70%. Would that be fair to you, to work your butt off for a high grade just to have the professor “reallocate” 25 of your points to those who didn’t work for it?

In this analogy, the capitalist answer is, “Let’s try to help those with under 70 averages. Let’s hire tutors, work with them, help them pull themselves up so that everyone can get a 95.” Yes some people are born smarter than others, some have learning disabilities, but instead of inflating their grades we should help them, because even with these inequalities they CAN achieve anything that the top students achieve, even if they have to work a little harder for it.

The Socialist answer is, “We need to force equal outcomes to make things fair. Instead of having the “have-nots” raise themselves to equality, we’re going to force equal outcomes by REALLOCATING and REDISTRIBUTING the points so that everyone can feel good about themselves.” (except of course the ones who just had 25 points chopped off their grade).

I don’t want to live in a country where things that I work hard for aren’t valued, where the government can simply take my money for no other reason than some Washington bureaucrat has decreed from on high that I “make too much,” while the Hillary Clintons of this world walk around in $50,000 pantsuits and live in $10 million dollar homes claiming how much they “stand with the middle class.” Because if government has the money, then they have control. If the government pays for your college, your doctor, your insurance, then the next step is to tell you where to go to college, and what doctor to see. That is not an America I want to live in.

Soaking the rich and making them pay their fair share

So our old friend Hillary Clinton wants to “make the rich pay their fair share.” As if if it was up to her to define what “rich” is and who gets to decide what’s “fair.” Notice the liberals talk about “investing” more in our community.  “Investing” is when you spend your own money with the expectation of getting more back.  Investing to the left is a euphemism for “we have these great new big government ideas and we’ll send the bill to John Q. Taxpayer.  By the way as an aside, who else feels it’s kind of weird for Hillary to speak out against income inequality while wearing a $25,000 suit and charging six-figures for speeches?
1. No one has the right to go dictate what the wealth distribution should be.
3. There’s no indication that raising taxes on the so-called “super rich” will do anything to increase jobs creation  It’s like that old South Park episode with the underwear gnomes.  1) Steal underwear.  2) ?????? 3) Profit.  In fact when you raise taxes and fees, the business expenses go up, they slow down hiring and expansion, and it costs jobs.
The leftist “economic justice” types assume that if someone is richer or more successful than someone else, they must have gotten there through some underhanded means or invisible “privilege.”  The other mistake we make is that yes while the income gap is growing, that doesn’t tell the whole story.  The economy is not a zero-sum game.  In other words, there isn’t a fixed amount of wealth to go around.  You don’t need to help the poor by taking directly from the rich. We don’t need to rob Peter to pay Paul.  We want a bigger piece of the pie, but as an economy grows the pie itself gets bigger.  Yes the rich are getting richer, but the poor are getting richer too.  Would they have us kill the golden goose and expunge our country of all wealth and investment.  A rising tide raises all ships and a falling one will destroy all of them.  If Warren Buffet makes $50 million a year and I make $40K, why do I care what Buffet makes?  If I double my salary to $80K that’s a good thing, regardless of how Warren Buffet does?  I don’t believe in stealing from the rich to pay the poor, I want everyone to have wealth and opportunity, so as long as you are doing well, why do you care what the “super-rich” make?  We can build ourselves up without tearing others down.
These ‘evil’ rich people and corporations are the people who CREATE jobs, and more government and more taxes reduces capital, forces companies to lay off workers and automate. When was the last time a poor person offered you a job? When was the last time a low income worker created wealth for the economy?  You can demean them all you want, but business and free enterprise creates wealth for EVERYONE, and creates jobs. Carrier Air Conditioners recently moved to Mexico because they couldn’t live with the strangling EPA regulations. Why do companies move offshore? Because of the endless string of new taxes, fees, regulations under the guise of “fairness.” So companies that want to improve their bottom line for themselves, their employees, and stockholders (of which I am one) need to make adjustments to achieve that goal because the US government won’t leave them alone.  Putting more taxes on businesses and forcing them not to move overseas will only force them to cut these jobs even more.  All this bleeding heartiness is only making things worse, but we’re so addicted to free stuff, and we’ve been sold the message that the super rich are these evil people who wake up in the morning saying “how many people can I put out of work today”, that we’ve been totally sucked into the lies.
Millionaires put money in the Cayman Islands because we have too many regulations and red tape and too many taxes in this country. Anyone who claims that they would “gladly pay higher taxes” is either kidding themselves, lying, or don’t pay taxes in the first place. Spreading the wealth is really easy to talk about when it’s someone else’s wealth. These tax dollars that Bernie Sanders wants to steal (unless he believes that the money for his fantasies grows on trees) came from FREE ENTERPRISE. FROM BUSINESS. If it weren’t for the rich and corporations, we wouldn’t have the tax money to pay for all these free goodies, and yet all you can do is demean them!
This next part is crucial.  I will make the point that even if you “soaked” the rich for all they have, that still would not fix our budget problem.  And of course the Democrats want to add to our expenses.
According to fellow blogger Iowahawk, If we took every cent of profit from each of the Fortune 500 companies, every cent of ad money spent on all 45 Super Bowls, the combined salaries of all players in the NFL, MLB, NBA, NHL, 100% of every penny earned over $250,000, end the wars in Iraq and Afghanistan, kill off all billionaires and near billionaires and take all their money, and end all foreign aid, it would net us (in 2010) $3.561 Trillion.  Sounds impressive, but the 2011 Federal budget was $3.603 trillion, and even the total tax revenue was “only” $2.303 trillion.  Of course once we’ve done this, we’ve killed nearly every cent of capital in the U.S., destroyed all jobs and since people can’t keep anything above $250,000, nobody has any incentive anymore to start businesses, invent, or innovate.  And Sanders (and now Hillary by extension) wants to add another $1.3 trillion to pay for all his “free” stuff. So please inform me how raising taxes on the “rich” will help!
So many leftists out there are completely unaware of what causes real growth. Ronald Reagan (yes I’m going to go there!) slashed taxes and regulations, and within a few years we had the best economy after World War II. He left office eight years later with a booming economy and an 80% approval rating. Where Obama’s insistence on spreading the wealth has only resulted in more stagnation. Yes some people suffered in the 80s, but they were people who feel that the government is the answer to their problems, those that lived off of government handouts. Those who WANT to work, and put in the blood, sweat and tears to succeed WILL make it if they work hard enough. I’m sorry, but the people who are rich EARNED it, and they don’t owe you a SINGLE CENT just because they have more. If you want to earn a lot of money and get a good job, then go out and make it happen, and stop blaming everyone else for your bad decisions.
I’m going to end this post with an analogy that any student or millennial in college (the ones complaining most about inequality) can probably understand…
Suppose you’re taking a class and have worked hard all semester for a 95 average.  The class average is only 70.  The professor walks in one day and decides that it’s not fair that some are failing and some aren’t, so he decides to make things “fair” he simply assigns everyone a 70.  How would you feel if you worked your butt off for a 95 only to have 25 points taken away so that those who unlike yourself, spent all their time skipping class and partying, could have an equal outcome to you?

In this analogy, the capitalist answer is, “Let’s try to help those with under 70 averages.  We should get tutors, work with them, help them pull themselves up so that everyone can get a 95.”  The Socialist answer is, “We need to force unequal outcomes to make things fair.  Reallocate and redistribute the points so that everyone can feel good about themselves (except of course the ones who just had 25 points chopped off their grade).