Guest Saturday with The Free Market Project

The following article was originally published by Pat Slattery of The Free Markey Project on July 14,2011.

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The Progressive Trap Revealed

Everyone must read this column by John Hayward: Empire of Debt. Here’s just one section I loved:

Debt is not universally interpreted as a sign of failure on the part of government planners. On the contrary, it becomes a weapon used to demand more taxes. The same politicians who spent $1.7 trillion more than they collected, in just this year alone, say the problem is that private citizens are not paying enough. Democrats will not even begin to discuss minimal fiscal restraint unless they get a tax hike… and they claim the urgency of this tax increase is irresistible because of the huge national debt they have created.

Combining federal, state, and local taxes, the government already takes or controls over half of what the private sector produces. Now they want more. That is the demand of an imperial conqueror, not a humble public servant.

Here’s the crux of John’s piece… the reveal of the trap the progressives have laid:

If we refuse to let the Empire of Debt grow larger, it will have to immediately slash government spending by 44%. This, we are told, will result in a massive surge of unemployment, as thousands of federal employees lose their jobs. In other words, the Empire has been using those gigantic annual deficits to hire a huge number of people… and if you insist on spending cuts, you will be held accountable for putting them on the unemployment lines… where, of course, more federal spending will be needed, to pay their unemployment benefits.

High corporate and individual tax rates lead to high unemployment rates. If you suggest reducing those tax rates to spur private-sector growth and lower unemployment, you will be accused of making the debt situation worse. That wouldn’t be very intimidating if the national debt was low. Why not lower those taxes and see if the resulting growth generated more net revenue at the lower rates?

But because the political class has made the national debt so high, it is able to insist that taking a chance on the power of liberty is an irresponsible gamble. Because the government lives so far beyond its means, it would be irresponsible to provide it with reduced means.

This is how we have reached the madness of a moment when the national debt is used as an argument against spending reductions, or growth-oriented tax and regulatory policies. The insane problem becomes a weapon against rational solutions.

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16 thoughts on “Guest Saturday with The Free Market Project

  1. This is the response to Reagan trying to kill the beast by cutting off the money supply. Unfortunately, his tax cuts spurred economic growth and produced even more revenue.

    Killing off liberalism is like killing snakes. They slither and writhe and if you don’t get the knife all the way through, they zip off to fight another day.

    They have a knife to our throats now and it’s time to call the bluff. Yeah, cut that 40%, because we ain’t giving you any more money!

  2. What, exactly, do we get for all of this money that we can’t live without? There are answers, but most of them come down to the few core functions of government, such as a military for defense, and a judicial system to try crimes and enforce contracts.

    It drives me nuts that the argument against cutting typically comes down to losing policemen, firefighters, and teachers, or not being able to send out Social Security checks. Are they seriously telling me that there aren’t thousands of bureaucrats (being paid more than teachers, policemen, and firefighters) whose jobs are either redundant, or unnecessary? Guess what… Those people need to be put out of work. They need to see if they can find a way to make it in the private sector and contribute to net wealth increase rather than wealth confiscation. Yes, it will hurt for a while. But it won’t hurt them any more than government harming the economy hurts the private sector workers who can’t find work. Who does it hurt (other than the newly unemployed)? Democrat politicians who rely on their corrupt bargain with public sector workers to retain power and position.

    1. That is a great question. Who would get hurt? As I reported in my post Debt Ceiling __ The Focus Should Be On The Debt and Not The Deficits, Randell Hoven proved that for a whole year we could keep paying Social Security, Medicare, Military personnel, Judicial and Prison System all at the projected cost in Obama’s 2012 budget as projected by the CBO. All other agencies and departments would have to cut back in personnel and spending to same level as they had in fiscal 2005. Yes, a lot of bureaucrats would be laid off. But if, at the same time, we slashed corporate taxes to 15% and rolled all regulations back to what they were in 2005, I bet they wouldn’t be unemployed all that long.

  3. It is the Democrat loop-of-death. Hire Leftists – lots of them, and hear them roar when they are laid off. They think they have us by the tail, but I don’t think so. We must ignore it and do the right thing. I really do believe Americans are prepared to reward those with a spine. If not…we’ve done the right thing. This is our moment. Great article and discussion, CoF.

  4. It is a trap. The Democrats increased spending because they wanted to raise taxes. Now there is only one way out: We have to say “No”. No new spending. No new taxes. It will be very difficult to fix this mess, but it has to be done. Conservatives have to stop caving on this sort of thing.

    1. I’ve been a big fan of John Hayward (aka Dr. Zero) for a long. But, this time it was Pat Slattery at The Free Market Project that made the catch. Before going to work full time a Human Events, Hayward had his own very popular blog called Dr. Zero.

      1. I never miss anything John writes. He’s not only right on the money, but he’s insightful and a brilliant writer. I also never miss anything Thomas Sowell writes. Another new favorite is Dan Mitchell’s blog: International Liberty.

  5. Please go to http://www.freemktproject.com and read my two latest posts. One gives you statistical ammunition for people who talk about the rich not paying their fair share. The other is a take-down of Obama’s Saturday radio address… Good stuff for Conservatives on Fire readers.

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