My April 15th Rant

I’m not against paying taxes. Sales taxes, property taxes, income taxes, etc…. They pay for schools, roads, police protection, national defense, etc… Government is necessary and taxes fund government.

My rant is this: The problem with our (assuming you live in the United States) government is its inability to put long-term objectives over short-term needs.
Exhibit A is the federal deficit / federal debt.

The current federal debt is approaching 100% of the Gross Domestic Product. Only one other time in the history of the country, World War 2, has the federal debt been this high. The debt to GDP ratio represents the ability of the people to pay back the government’s debt. The current national debt is around $15 trillion. As of today each American owes about $50,000. Considering about half of all Americans pay federal income taxes, each tax payer owes about $100,000. The government has been living beyond its means for years and our children and their children will have to pay for it. The economic and political issue has now become an ethical issue. The short-term benefit has been given preference over the long-term good.


With deficits hitting an all-time high ($1.42 trillion for 2009), a higher and higher percentage of government spending will be required to service the national debt. This does not even consider consumer debt which is also at historically high levels. Decades from now we will be paying for today’s consumption. Future generations deserve much better. (By the way, I want to comment on the $1.42 trillion deficit. That number is mind boggling. Each tax payer assumed an additional ten grand of debt last year.)

Consider health care. Any college freshman who has taken Economics 101 (or Economics 102 depending on whether they teach micro or macro economics first) knows that supply and demand determines cost. Assuming the supply of health care remains the same and the demand increases (baby boomers are getting older and Americans are becoming less healthy) then prices will increase. Thus, health care inflation will outpace normal inflation. In 1960 healthcare expenses were 5.1% of the GDP. In 1985 the number was 10.1%. In 2003 the number was 15.3%. The projected number in 2013 is 18.5%. Despite thousands of pages, passionate debates, and relentless media coverage—until the laws of economics change—health care will not be reformed until the supply and demand changes.

And then there is social security. The check I sent off today was to mostly pay social security. Both Amber and I are self-employed, so we get to pay the full fifteen point whatever percent. The Social Security system lost 28 billion dollars last year which means it paid more in benefits than it collected in taxes. The deficit wasn’t supposed to happen until 2018 when deficits will become the norm and one of three things will have to happen: benefits will be reduced, Social Security taxes will have to increase, or general taxes will increase and the deficit will have to be paid out of the federal budget. Read: deficits in the Social Security are not sustainable.

Practices and principles of the government must change and must change quickly in order to give our kids the same opportunities that our parents had. A balanced budget is absolutely essential for the long-term economic and political health of our country. It won’t be easy. But ethically and economically—it is the right solution.

A few hundred years ago, Patrick Henry said: “I know not what course others may take but as for me; give me liberty or give me death!” Tightening up our belts and living with fiscal responsibility doesn’t seem like much of a sacrifice compared to those who have gone before us. It is also essential for true liberty in the future.