Fu­ture Gen­er­a­tions

The Covington News - - THE SECOND OPINION - WAL­TER WIL­LIAMS COLUM­NIST Wal­ter E. Wil­liams is a pro­fes­sor of eco­nom­ics at Ge­orge Ma­son Univer­sity. To find out more about Wal­ter E. Wil­liams, visit cre­ators.com.

Is there any rea­son for to­day’s Amer­i­cans to care about what hap­pens to to­mor­row’s Amer­i­cans? Af­ter all, what have to­mor­row’s Amer­i­cans done for to­day’s Amer­i­cans? More­over, since to­mor­row’s Amer­i­cans don’t vote, we can dump on them with im­punity. That’s a vi­sion that de­scribes the ac­tual be­hav­ior of to­day’s Amer­i­cans. It would be seen as self­ish, cal­lous and ruth­less only if it were ac­tu­ally ar­tic­u­lated. Let’s look at it.

Busi­nesses, as well as most non­profit en­ter­prises, by law are re­quired to pro­duce fi­nan­cial state­ments that in­clude all of their present and ex­pected fu­ture li­a­bil­i­ties. On top of that, they are re­quired to hold re­serves against fu­ture li­a­bil­i­ties such as em­ployee re­tire­ment.

By con­trast, the fed­eral government gets by with­out hav­ing to pro­vide trans­par­ent and hon­est fi­nan­cial state­ments. The U.S. Trea­sury’s “bal­ance sheet” does list li­a­bil­i­ties such as pub­lic debt, but it does not in­clude the mas­sive un­funded li­a­bil­i­ties of So­cial Se­cu­rity, Medi­care and other fed­eral fu­ture obli­ga­tions. A con­ser­va­tive es­ti­mate of Washington’s un­funded li­a­bil­i­ties for the year end­ing in 2011 is $87 tril­lion. That’s more than 500 per­cent of our

2011 GDP of $15 tril­lion.

Former Con­gress­men Chris Cox and Bill Archer have writ­ten an ar­ti­cle — “Why $16 Tril­lion Only Hints at the True U.S. Debt,” The Wall Street Jour­nal (Nov. 26.) — point­ing out our dire eco­nomic

straits. They said, “When the ac­crued ex­penses of the government’s en­ti­tle­ment pro­grams are counted, it be­comes clear that to col­lect enough tax rev­enue just to avoid go­ing deeper into debt would re­quire over $8 tril­lion in tax col­lec­tions an­nu­ally. That is the to­tal of the av­er­age an­nual ac­crued li­a­bil­i­ties of just the two largest en­ti­tle­ment pro­grams, plus the an­nual cash Let’s an­a­lyze that. Washington would have to col­lect $8 tril­lion in tax rev­enue, not to pay off our na­tional debt and have re­serves against un­funded li­a­bil­i­ties, but just to avoid ac­cu­mu­lat­ing more debt. Re­cent IRS data show that in­di­vid­u­als earn­ing $66,000 and more a year have a to­tal ad­justed gross in­come of $5.1 tril­lion. In 2011, cor­po­rate profit came to $1.6 tril­lion. That means if Congress sim­ply con­fis­cated the en­tire earn­ings of tax­pay­ers earn­ing more than $66,000 and all cor­po­rate prof­its, it wouldn’t be enough to cover the $8 tril­lion per year growth of U.S. li­a­bil­i­ties.

Given this im­pos­si­ble pic­ture, the mes­sage coming out of Washington, es­pe­cially from our left­ist politi­cians and the news me­dia, is that we solve our bud­get prob­lems by rais­ing taxes on the rich. If Amer­i­cans were more in­formed, such a mes­sage would be in­sult­ing to our in­tel­li­gence. There are not enough rich peo­ple to sat­isfy Congress’ ap­petite.

In 2011, Congress spent $3.7 tril­lion. That turns out to be about $10 bil­lion per day. Ac­cord­ing to IRS statis­tics, roughly 2 per­cent of U.S. house­holds have an in­come of $250,000 and above. By the way, $250,000 per year hardly qual­i­fies as be­ing rich. It can’t even buy a Lear­jet.

House­holds earn­ing $250,000 and above ac­count for 25 per­cent, or $1.97 tril­lion, of the nearly $8 tril­lion of to­tal house­hold in­come. If Congress im­posed a 100 per­cent tax, tak­ing all earn­ings above $250,000 per year, it would bring in about $1.9 tril­lion. That would keep Washington run­ning for 190 days, but there’s a prob­lem be­cause there are 175 more days left in the year.

The prof­its of the For­tune 500 rich­est com­pa­nies come to $400 bil­lion. That would keep the government run­ning for an­other 40 days, to mid-July.

Amer­ica has 400 bil­lion­aires with a com­bined net worth of $1.3 tril­lion. If Congress fleeced them of their as­sets, stocks, bonds, yachts, air­planes, man­sions and jew­elry, it would get us to at least late fall.

The fact of the mat­ter is there are not enough rich peo­ple to come any­where close to sat­is­fy­ing Congress’ vo­ra­cious spend­ing ap­petite. The true tragedy for our fu­ture is that there are mil­lions of un­in­formed Amer­i­cans who will buy the po­lit­i­cal dem­a­goguery and treach­ery that our prob­lems can be solved by tax­ing the rich.

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