Several days ago, poor Mitt Romney committed the unforgivable. He said something so obvious, so accurate, and so to the point that people, especially Obama and the leftists, are jumping all over him. Now… as must be clear to most of my readers, I’m generally appalled at the Republican positions on many issues, but what I find ironic is when someone whose positions I dislike says something that is absolutely obvious… and gets roundly criticized. I fully admit that I supported Gerald Ford over Jimmy Carter, but I applauded when Carter made the obvious statement that, “Life is not fair,” for which the media and everyone condemned him.
What was it that Mitt said? In effect, he was saying that he was never going to reach 47% of the population because they were getting benefits from the government for which they weren’t paying. And he’s absolutely right. When only 53% of Americans pay federal income taxes, then the 47% who don’t are getting all the federal programs paid for by those taxes for nothing. Should they get such benefits? Of course, some certainly should – such as the truly deserving poor, hungry children, and others that have a true need.
Some of the liberals have made the point that many of the “47%” do pay taxes, such as Social Security and Medicare payroll taxes, sales taxes, and property taxes, and they’re right. Many do pay those taxes. But what the left wing ignores is that those taxes do not fund most government programs, and for all the hullabaloo about deficits, Medicare and Social Security are not yet contributing to those deficits. The deficits are caused by outlays in programs funded by federal income taxes.
But the larger questions raised by Mitt’s offhand, if honest, comment, go beyond that. As some courageous Republicans and many Democrats have noted, Americans now pay the lowest percentage of their income in federal taxes in more than 70 years… and yet the Republicans, the Tea Party, and the Libertarians are all demanding that taxes be lowered more. Given the current deficit, this isn’t possible without literally eliminating not only a wide range of existing federal programs, but also ALL tax deductions, and that includes the cherished mortgage interest tax deduction, the earned income tax credit, credit for college and education expenses, and certainly various subsidies and business tax deductions.
All that isn’t going to happen, not in the current political climate of “I deserve it and someone else should pay for it.” Why not? Because it would destroy too many people. For example, although “only” about a quarter of U.S. homeowner mortgages are technically underwater [owing more than the house is worth], close to 50% are realistically underwater and unsalable in the current market because of the other additional costs required in selling a house and moving. If Congress were to remove the mortgage interest tax break, that would make the situation even worse, because the vast majority of homeowners would have even less income to make mortgage payments. Similar problems would arise with the elimination of the earned income credit, and others… and what politician is really going to have the nerve to eliminate deductions that will make things worse for their constituents… and the immediate economy, regardless of the possible long-term impact?
How did it come to this? That’s a chicken and egg question, but one thing is very clear. Americans, both rich and poor, have a lot more “things” than they did sixty years ago. The average new house being built is almost three times the size of those built in 1950, even while family size has declined since the 1960s. In 1950, the average family had one car; by 1995, the average family had more than two cars… again with a smaller number of people in the family. Almost every statistic – except for food consumed at home – dealing with personal consumption shows a significant real increase over the last 60 years – at all levels of income. Likewise, government programs have grown enormously since 1950. The one thing that hasn’t kept pace on a per capita or per family basis is the amount of federal tax revenue, and, as I’ve pointed out time and time again, while the taxes of the wealthiest individuals – and to a lesser degree those of the working poor – have decreased proportionately far more than those of other groups, even massive increases in taxes on the wealthy won’t close that revenue gap. And, remember, that “wealth” isn’t the same as income, so that under our current income tax system, income taxes can’t reach the huge amount of assets already held by the extraordinarily wealthy.
In essence, Americans as a whole have come to expect a combination of personal and government benefits greater that we are willing to pay for, and many of those increased personal benefits have come through deficit spending at the cost of more money in our pockets and less going to government. Even though most people will protest violently that this isn’t so… it is, and simple arithmetic proves it time after time.
So… whether I like Mitt Romney and his proposed policies or not, he was right about who’s paying for what [even if I disagree, which I do, with how much who should pay]… and especially who’s not.
But then, regardless of political party, no one likes embarrassing accurate facts.