Government Is An Obstacle to Growth

As of Saturday, October 22, 2011

The Obama/Pelosi/Reid triumvirate accelerated government spending from an average 20 percent of GDP to 25 percent, with 43 percent financed by borrowing.

Even though spending jumped $750 billion per year or $7.5 trillion over 10 years, Obama refused any meaningful cuts to his new spending. Predictably, the political class passed the impasse to the Super Committee, with ultimate results still unknown.

Obama’s wrong track polling above 75 percent since mid-July presages a one-term presidency. But he cynically launched a populist class warfare campaign in a desperate attempt to save a second term. He proposes yet another Keynesian stimulus bill, rebranded as a jobs bill, to restart the economy. And Reid obliged him by proposing a 5.4 percent surtax on millionaires as being a “fair” solution. But no one explains how to define “fair.” The only consensus seems to be “more.” But is “more” really fair? Not really.

According to the IRS, the top 1 percent earned 20 percent of all income and paid 38 percent of income taxes. The top 10 percent earned 45 percent of income and paid 70 percent of income taxes, but the bottom 50 percent earned 13 percent of income and paid less than 3 percent of income taxes.

Regarding Keynesian stimulus, this year’s Nobel Laureate,Thomas Sargent, states that the temporary, targeted Keynesian agenda to restore growth is a failure. Also, Christina Romer, former key economic advisor to Obama, says that tax cuts have greater stimulative effect than government spending.

T.J. Rodgers, CEO of Cyprus Semiconductor, used his creativity and technical expertise to create 4,500 high-paying jobs. Transferring his money, via taxes, to technocrats who don’t understand the private sector risks funding another Solyndra rather than a viable, hi-tech company. The path to growth is to get government out of the way.

Wes May

Pinehurst

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JER 1 year, 7 months ago

I don't live in Pinehurst, so I'm probably not qualified to comment but I am of the opinion that in order to pay income taxes, you have to have an income (or at least a taxable income after deductions allowed in our current system). In order to earn an income, I would think you would need a job (unless, of course, your source of income is generated by playing the Wall Street game). To have a paying job requires someone who is willing to give you money for a product or service. According to my reasoning, that transfer of money is called spending.

The path to growth, Mr. May tells us, is to get government out of the way. By this, he means that if the government would just not put rules and regulations and taxes in their way, business could really take off, creating all the jobs anyone could ever want. Business would no longer be sending jobs off shore because they could be getting those low wage workers right here at home. They would not be hindered by environmental protection laws, so they could make their goods a lot cheaper, meaning much bigger profits and larger returns for those playing the Wall Street game. What I don't see in all this is how his proposed system will change that ratio of the top 10% paying almost 50% of the taxes.