Too Easy in Poverty
Listening to the radio not long ago, the host was talking about how the food stamp program, technically known as The Supplemental Nutrition Assistance Program (SNAP), has increased dramatically since Obama took office in 2009. Much of this increase happened, according to a Heritage Foundation report, after Obama ended (unconstitutionally) the work requirement of the program. The report states that able-bodied adult participation doubled from 1.9 million to 3.9 million from 2008 to 2010.
As I listened about how the food stamp program and other welfare benefits have increased under Obama I started thinking about what this means for the future and what the end state really is for Obama’s administration. I remembered when Obama and Boehner were negotiating the budget and debt ceiling increase earlier in the year. Boehner said that, “the president said to me, ‘We don’t have a spending problem.’” Further, Obama is dead-set on increasing taxes on the wealthy infinitum. In addition to all of this, others make compelling arguments about Obama’s past relationships with Communists, and their influence on his worldview. Putting this all together, what follows is my extrapolation of future events.
The government is expanding fast, even after the small cuts to the increases under Sequestration. The government then has to have more money coming in and borrowing will not work forever; hence, tax increases. Therefore, we give more to the poor through welfare and more is taken from the rich. This is the standard model for a socialist redistribution scheme. However, as we know from economic theories, when we take more from the rich (legal theft), the rich will revolt. They value their time away from work more than their time at work since earning more money requires them to give more to confiscatory taxes and fees.
That means that over time there will be less money in the treasury. That comes in two ways: 1) lessened income to the wealthy and therefore less income tax revenue to the government, and 2) a loss of wealth in general to everyone. This means that the government then has to search for more income. What will they do next? Redefine what it means to be wealthy in order to capture more paying people. Because they cannot go up to find revenue anymore, they will go out. So now more and more people will be paying what it used to take a small group to cover. This process will continue until at some point we will all be paying a large share of the burden to cover all the welfare programs for the so-called poor.
Imagine a world where the highest paid individuals make $1,000 a year, and are taxed at 40%. This means that they take home $600 a year and give $400 every April 15 to Uncle Sam. Understand that this tribute to the government reduces discretionary income and decreases their ability to spend on lavishness like houses, fancy cars, extravagant vacations, luxury hotel rooms, fine dining, etc. Therefore, the trickle-down effect means fewer people are working in those industries, making less money (if any at all), increasing the cost of government largess in the form of more needed welfare, etc. The effect is that the government returns to the wealthy trough in order to steal more money to pay more beneficiaries. This means that the wealthiest are making $1,000 but are taxed at 50% to cover the government’s shortfall; their money is split evenly between themselves and the government.
This creates another feedback loop where the process broadens and more recipients need more benefits from government. In addition, we have now hit a point where the wealthy are no longer the majority recipients of the fruits of their labor, so they start cutting back. This has the effect of reducing their income from $1,000 a year to $900 a year. Because they have reduced their income to qualify for a lower tax bracket, so they can keep $540, and subside the government $360. The wealthy are working less, paying less to the government, and making more than when they were working more and paying 50%. So the government broadens the base again, and taxes the “new” wealthy more.
You can see where this all goes, and how eventually it will get to an equilibrium point whereby everyone is equally miserable, making a relatively equal income, and receiving an equal amount of benefit from an out of control government leviathan. The scenario above is not just created to fit my point of view, it is what has been witnessed by economists the world over as they study human behavioral reaction to fiscal and monetary policies of government – this one is of course simplified and abbreviated.
My arguments above are representative of what constitutes the delusions of the defective socialist mind. From John Maynard Keynes to Paul Krugman, and from Teddy and Franklin Roosevelt to Barack Obama, their delusional interpretations of basic economic theory, and lack of understanding of human economic behavior, will eventually end our way of life. We cannot sustain (I hate that term) a system by which we continually take from the makers and freely give to others. A system that gives handouts is doomed to fail, but a system that encourages the less fortunate to achieve is bound to succeed.
Benjamin Franklin put it best when he said, “I am for doing good to the poor, but… I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. I observed… that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.” Franklin’s statement embodies the true nature of the American Dream. It is a dream that has been lost in recent times and is nearing a point where we may never see it again.