WEALTH INEQUALITY: THE HOBGOBLIN OF THE LIBERAL MIND

Wealth Inequality: The Hobgoblin Of The Liberal Mind

by Jim Greenfield

 “A foolish consistency is the hobgoblin of little minds.”  Ralph Waldo Emerson

 President Obama has sought to distract attention from the Obamacare train wreck, and the consequent election disaster looming for Democrats, by harking back to the favorite perennial shibboleth of governmentalists everywhere: wealth inequality.  (The term “governmentalist”  includes all statist ideologies: liberal, progressive, social democrat, socialist, or communist because frankly I can’t tell much difference between ‘em.)  The specter of “wealth inequality” is ever lurking in the background whenever governmentalists of every ilk discuss domestic policy.  Wealth inequality is what all liberal/progressive policies are about.  They always want to raise taxes on the rich, i.e. anybody who makes more money than whoever happens to be speaking, and always want to give more government handouts to the “needy.”  The wealth levelers’ solution to the inequality problem is always the same: expand the power of politicians and government bureaucrats by redistributing wealth. 

 The irony is that the most prominent governmentalist in the world, Barrack Obama, has done more to increase wealth inequality than anyone in history.  Under the policies of the Obama administration, median household income, i.e. the wages of middle and working class families, have significantly declined.  Median wages are down 4.4% or $2400 per year per family since Obama took office.  (see Robert Pear, New York Times online 8/21/13). 

 As working class wages have gone down, the stock market has soared.  The Dow closed on 2/28/14 at 16,321, two and a half times higher than its bottom of 6,547 in March of 2009, shortly after Obama took office.  During the same period, the S &P 500 has risen 2.75 fold.  In other words, the investor class has seen their portfolios go up by more than 250% during the same period that middle class working folks have seen a substantial decline in their wages.  Paradoxically, this huge increase in wealth inequality has taken place under a President who loudly proclaims that wealth inequality is the most important problem of our time.

Why has wealth become so unequal under Obama?  Because  the Obama Administration has an array of  anti-business policies including higher taxes, an exploding national debt, expanding government regulation, higher welfare state spending, and, of course Obamacare.  These anti-business policies have not hurt crony capitalists and the super-rich, but they’ve hit the middle class hard, damaged small main street businesses, discouraged hiring, and depressed wages.  At the same time the Federal Reserve has pumped literally trillions of dollars of digitally created currency (not to be confused with bitcoin) into large banks and wall street firms, driving up stock and bond prices.  The Fed stimulus of these asset classes have made the rich richer, insulating them from Obama’s depressive policies that have so afflicted middle class working folks.   

But my purpose isn’t to criticize Obama policies that exacerbate wealth inequality, or to highlight the ironic hypocrisy of Obama’s de facto war on the middle class.  Because the truth is that “frankly, my dear, I don’t give a damn” about wealth inequality.  See I don’t share the governmentalist view that wealth inequality is a huge problem.  For governmentalists wealth inequality is just another excuse to expand government power even further, in the name of leveling the playing field, fairness, equality, or some other lovely sounding egalitarian principle. 

 But the inconvenient truth is that egalitarian governmentalist policies don’t actually reduce inequality.  All they do, in the name of equality, is change the rules about who gets to decide who gets rich and who stays poor.  Those at the top of the most egalitarian systems, communist paradises like North Korea, Cuba, or the former Soviet Union, are fabulously wealthy compared to the rest of the population, just like the titans of industry in capitalist countries.  The difference is that in socialist and communist countries the super rich acquire their wealth through the exercise of political power, whereas in America guys like, say, George Soros, Warren Buffett, Al Gore, the Clintons, the Bushes, or the guys who started Solyndra, acquire great wealth without political influence.  Just kidding.

 Actually, the unfortunate truth that political influence is a path to great wealth even in a capitalist country like America is an outgrowth of two factors.  First, America isn’t really a capitalist country.  Not any more.  Forty percent of our gdp is now appropriated by the public sector and is therefore essentially socialistic.  And the other sixty percent is heavily regulated and otherwise intertwined with government.   What we have isn’t capitalism; it’s a mixture of socialism and crony capitalism, with a few vestiges of real capitalism.  Crony capitalism is easily confused with true capitalism, thereby giving capitalism a bad name.  Second, the truism that political influence begets wealth is just the way it is, and always has been.  This kind of corruption can’t be entirely eliminated but the best way to keep it in check is to limit the power of government and the politicians who control it.  Unfortunately the concept of limited Constitutional government is now regarded by the ruling classes as an antiquated and out of vogue notion, which also happens to be an assault on their power.  Those of us who advocate Constitutional limits on government power are called extremists and told we lack “compassion.” 

 The argument against wealth inequality, and by implication in favor of using government power to redistribute wealth, exploits intrinsic human sensibilities about fairness.  Most of us intuitively feel that it’s unfair for Bill Gates to have $69 billion, while children starve in the streets.   Liberal radio talk host Mark Levine recently confronted me with a stark example.  Is it fair, he asked, that the old miser Scrooge from Dickens’ “Christmas Carol,” should have millions, while the poor crippled boy, Tiny Tim, can’t afford surgery to correct his congenital condition?  As the “right wing” guest on Mark’s show, it was my unpleasant job to take Scrooge’s side of the argument.   

 It’s hard to make Scrooge’s unsympathetic case in a 30 second soundbyte.   I concede that it isn’t “fair” that Scrooge hoards his fortune while poor Tiny Tim is left to die.  But here’s the problem.  Who decides what is fair?  Is it fair to have the government take Scrooge’s money and use it to create Medicaid, or, for that matter Obamacare?  Before you answer keep in mind that if the government takes Scrooge’s money, it won’t be long before they’re taking your money also.  And they won’t just give it to Tiny Tim; they’ll give it to all kinds of unsavory people for all kinds of unsavory reasons.   

 If you compare the fairness of laissez faire capitalism, where the Scrooges, Rockefellers, and Gates’s accumulate vast fortunes, while the Tiny Tims die from lack of care, with some Platonically ideal and idyllic world where everyone cares for his brother, and all men are really equal, capitalism comes up morally short.  But in the real world those aren’t the real choices.  In a free market system wealth is allocated according to a combination of the vicissitudes of market place skills and good luck.  You may well feel that such an economic system is unfair, but what do you replace it with?   In the real world the only alternative to free markets is a political economic system where government bureaucracy re-distributes wealth in accord with the dictates of self-interested politicians.  Do you think the results are any fairer? 

 In the real world government is the worst possible institution to place in charge of administering charity to Tiny Tim and other misfortunates.  I’d rather work on old Scrooge and persuade him to part with some of his money voluntarily, which, by the way, is exactly how the “Christmas Carol” story turns out.  And in the real world, the fabulously wealthy from Andrew Carnegie, Henry Ford, and Rockefeller to Bill Gates and Warren Bufftett have been generous philanthropists.  So my question for redistributionists and wealth levelers is this: Do you think the government does a better job of administering charity than philanthropists, private churches, and charities?

 The welfare state began in America in the 1930’s and has been steadily expanding ever since.  We have 80 years of data, and the results are in.  Massive government hand-outs of benefits and cash has been an unmitigated disaster.  What governmentalist ideologues and welfare state advocates fail to take into account is that the politicians who take upon themselves the unbounded field of power to decide who gets what and who has to pay what, have motives that aren’t entirely altruistic.  Doesn’t this minor detail occur to those who advocate the massive government hand-outs of the welfare state?  Do you think the men to whom you grant this awesome power are angels with pure motives?  Is it not more likely that they will use this expansive power over the allocation of money to reward their friends, punish their enemies, hand out cash to those who give some of it back to them, and buy the votes of the masses with benefits and promises of benefits?  If power corrupts why are we surprised that a government that has accumulated so much power has also become so corrupt?  After decades of observing the failures of the welfare state, how can anyone still believe that such a corrosive system can produce positive social benefits?

 To illustrate the problem consider an example.  Imagine you’re part of a group of 100 people who move to a desert island.  Your group decides to democratically elect a government of three people to be in charge of everything, including the power to decide taxes and who will pay them, and to whom wealth will be allocated.  How do you think those three officials will fare?  Everyone will treat them with great deference, and ply them with gifts and favors.  Their decisions about who pays what and who gets what will be largely determined by what is in the self-interest of the three politicians who have been granted all this power.  The public good will be subordinated to naked self interest.  And the level of corruption will grow steadily worse over time.  The model I am describing is exactly what’s gone wrong with the political system in the United States today. 

 Wealth inequality is a bogus issue, a red herring that takes the public policy discourse out of focus.    If you think inequality is a problem let me ask a question that brings the issue into focus.  Suppose we adopted a pro-growth pro-business public policy that over a period of time, say ten years, grew the economic pie including a doubling of the income of people in the bottom 10 percent.  At the same time, however, the income of people in the top 10 percent quadrupled.   In other words, the policy makes everyone wealthier, but overall inequality  increases because the poorest 10 percent have only doubled their income, while the richest 10 percent have quadrupled theirs.  Would you support such a policy? 

 If you answer yes, you are recognizing that wealth inequality in and of itself is not really the problem.  You would like to see the poor become better off, even if the rich become better off at a faster rate.  If you answer no, it means you are truly obsessed with inequality and would favor a society where everyone is equally poor because you believe that inequality is a worse problem than poverty.  If that’s what you believe, you are a communist.  (Not that there’s anything wrong with that.)

 If  you’re now persuaded that wealth inequality is not a problem that government should try to correct, but you are still concerned about poverty, I have a solution.  It’s called free enterprise.  Over the past two hundred years the free enterprise system has liberated billions of people around the world from the grinding poverty bare subsistence struggle for survival that characterized the lives of most people since men first emerged from the trees.  Free enterprise doesn’t create equality; far from it.  But it does create vast amounts of wealth.  And that wealth is distributed  unevenly.  But even those in the bottom tier, and even more so the vast majority of people in the middle class in capitalist societies, have a material standard of living today higher than the kings and emperors of the ancient world.  The vast amount of wealth and material comfort, from indoor plumbing to electric appliances that we all take for granted today, were created by free market capitalism.  Let’s not kill the capitalist goose that laid the golden egg in the futile pursuit of an unattainable goal like equality.

Amazon Review of THE TAXMAN COMETH

 Brotherly Commentary –  Amazon Review of THE TAXMAN COMETH   (This review originally was posted on Amazon.  Author’s replies are in bold type.)

 By bill greenfield

 Format:Paperback|Amazon Verified Purchase

 

I read Jim Greenfield’s “The Taxman Cometh” along with two other books that provided a most useful contrast. One was Eileen Rockefeller’s “Being a Rockefeller Becoming Myself”, and the other was Chris Matthew’s “Tip and the Gipper”.

 In the interest of disclosure and to explain the contrast: Jim Greenfield is my younger brother. We have politically diverse views and goals, but nothing would please me more than to see my brother succeed both in selling this book, and in having the greater political impact he covets. .. I only hope I can correct him in the error of his thinking in the process.

THE TAXMAN COMETH is really two books. The story itself is well-written, funny, and emotionally complicated. It tells of a used car salesman, Samson (who bears an unmistakable personality similarity to my brother). Samson takes on the IRS bureaucracy and his nemesis, Elliott Mess . The two engage in struggle to the death reminiscent of a Roadrunner cartoon. Having seen earlier versions of this story, and having had countless discussions with my brother about issues of character, human motivation, and the benefits and dangers of government activity, I can say that Jimmy has finally gotten it right. His Samson is politically at odds to my own world view but nevertheless a sympathetic character. Samson provides a perfect foil for Mess and the government mindlessness he represents. If I only read the story, I would probably start thinking I should become a Republican.

Unfortunately, Jim also provides a second book, with appears as “dubious philosophical musings” that are sprinkled among the chapters of the story. Jim’s musings are neither as evolved nor as nuanced as his Samson. Jim creates straw men that he can handily demolish in the style of the Fox News commentators. He equates government trying to improve opportunity to the poor in the form of such things as health care and education, with redistribution of wealth. Frankly, I have not understood why requiring that Bill Gates and Warren Buffett pay taxes at the same rate as Jim I do in order to provide a child in North Philadelphia with a decent school will make the child into a millionaire and Gates and Buffett into paupers. Nor do I understand why it sticks in Jim’s craw.

 

Jim’s Reply:  The above comment from my smarter older brother mis-states my view.  I never said I oppose using tax money for education.  As to the assertion that I equate “government trying to improve opportunity to the poor…with redistribution of wealth,” I never equate anything with redistribution of wealth except redistribution of wealth.  When the state uses its taxing power to take money from someone and give it to someone else that is the definition of redistributing wealth.  Whether the money is taken from the rich and given to the poor, or taken from the middle class and given to both the rich and the poor as is more common, either way it’s redistributing wealth.  Actually it’s more complicated than that.  They also take money from some in the middle class and give it to others in the middle class.  Along the way, the people who are doing all the redistributing manage to slip out some of the money and put it in their own pockets.  You can favor redistributing wealth, or oppose it, Bill, but don’t pretend it doesn’t happen.  It constitutes two thirds of the federal budget.  And by the way, my brother, you and I, like most Americans, are both payers and payees in this convoluted system.  We’re both receiving social security and medicare benefits, paid for by taxing younger working people who are less well-off than we are, who are struggling to support their children with what’s left after they pay taxes to pay our retirement benefits.  Is that your idea of “fairness?”  

……………………….

My simultaneous reading of the Rockefeller and Matthews books with my brother’s book was fortuitous in setting a context for my discomfort with Jim’s philosophical leanings. Tip O’Neill and Ronald Reagan may have had ostensible philosophical differences, based, in part, on O’Neill’s misreading of Reagan. Even though both descended from Irish immigrants, O’Neill, according to Matthews, saw Reagan as a kind of golden boy, not recognizing that the character he saw was what Reagan constructed out of a background more emotionally and financially impoverished than his own. (This political misreading does not come close to the Bobby Kennedy misreading of Lyndon Johnson, as per Caro, that Johnson “did not understand poverty”!!!). My point is that, political ideology aside; these two could work together because they came from a similar place where people understood what it was to compromise in order to get things done, and to make a deal and stick with it.

Eileen Rockefeller’s title is also the outline of her entire story. She was born into a world of privilege at a level that could be considered royalty. It is not just that her family does not want for anything; it is that they live on a different scale than regular people. Instead of buying a second or third home, they buy second and third islands, and then bring in workers to create entire economies that did not exist before. How does a child find meaning and individual purpose in such an environment? First of all, the family understands the importance of cutting through and moving beyond the issue of status and money. There is no tone of entitlement in her or her parent’s behavior, and frequently there are references to relationships that clearly bypass social status. Secondly, once you get past noticing that an experience occurred on uncle Laurence’s 55 foot yacht, or that the home in Maine had 50 rooms, the stories themselves are no different than one would read about any child growing up in a successful family. A child of a successful family may seem to “have it made”, but in fact, the wish to be recognized for one’s own merit and accomplishment is magnified by the accomplishments of parents and grandparents, not made easier. The child of a wealthy and well-known family must fear that she will not only be liked and manipulated in order to gain favor, but that she will not be seen as having any value of her own.

Which brings me to Jimmy and his musings. Jimmy and I may not have been born Rockefellers, but sure were not Reagans or O’Neills either. Our father was a graduate of Harvard Law School and both of his brothers were lawyers as well. His uncle Albert entertained three US presidents and many world class leaders other celebrities on his compound in Philadelphia. Relatives who were reasonably intelligent and had some ambition, such as my brother and I, would attend Ivy League colleges, get professional degrees, graduate without debt, and contribute to the family wealth during our lifetimes. Relatives with even limited intelligence or ambition would never be without cars or health insurance. They would get what education they could without incurring debt, and most likely, would own their own homes. In this context theoretical constructs about capitalism and other esoteric economic models are a quaint luxury that may serve as a kind of cover for some inconvenient truths. Like, for example Uncle Albert championed civil rights and introduced Martin Luther King to a Philadelphia crowd in 1961, and Jim’s and my parents were always great supporters of civil rights, But the Brooklyn Dodgers were denied service at the Ben Franklin Hotel, when Jackie Robinson became a member of the team. Uncle Albert owned the Ben Franklin Hotel.

My debate with my brother over many years has nothing to do with capitalism, which is the system to which we both owe our financial well-being. My issue is with fairness. I don’t understand why a child born to parents without means should have less access to the basic needs of life than we did. This has nothing to do with making all things equal, or with reducing the luxury of the wealthy. It has to do with believing there is a minimal level of support to which we think our fellow humans are entitled. It is hard for me to understand why my brother, and many other people who are equally or even more comfortably situated, seem so focused on getting more for themselves.

 

Jim’s Reply:  I don’t make the argument that capitalism is fair.  It isn’t.  But the only alternative to capitalism is socialism, and socialism isn’t fair either.  My brother has discovered that life is unfair and, being a high-minded guy, he’s troubled by that.  Fine, if you think it’s unfair  join together with other high-minded people who think it’s unfair, and do what you can to help the poor.  Use your own money to do it or raise money from other people who are willing to donate voluntarily to the cause.  But don’t imagine you can solve the “fairness” problem by building huge government bureaucracies, funded by taxes, and run by power-hungry politicians and petty tyrant bureaucrats.  We’ve tried that approach for 80 years, and all it’s done is create a dangerously corrupt concentration of power in Washington.  Life is even more unfair when Washington power-brokers decide who gets what than when wealth is distributed according to the admittedly Darwinian vicissitudes of the market. 

                            ………………………………

 

Capitalists are as divided on this issue as any other group. It is interesting to me, however, that the capitalists who stand with me on the issue seem to be pretty much out front on the matter. Warren Buffett, Bill Gates and Ted Turner are capitalist titans and public icons as well. On the other side, I cannot think of a single capitalist who actually speaks out himself, with the possible exception of Mitt Romney. They would prefer to quietly spend millions suppressing the vote and getting other people to speak falsehoods, truisms and half-truths. I keep thinking that if Samson, I mean … Jimmy, could understand this, we might get an even funnier sequel that really could be the Uncle Tom’s Cabin of our time.

Bill Greenfield

 

THE TAXMAN COMETH – an enjoyable, funny read

Actual Review on Amazon:

 
5.0 out of 5 stars An Enjoyable, Funny Read, January 14, 2014

By 

Steve Buckstein (Portland, Oregon)

Amazon Verified Purchase

This review is from: The Taxman Cometh: Notes from the Underground Economy (Paperback)

Who would have thought that the IRS could be this funny? “The Taxman Cometh” is in the best tradition of irreverent American satire from Mark Twain to “Saturday Night Live.” It makes fun of everything that deserves to be made fun of.

The plot is full of unexpected twists and surprises. It strikes the right balance between realistic and bizarre. The characters are great. The dialogue is clever. The story cruises along at high speed and entertains, even as it makes the point about intrusion into every aspect of our lives by an ever-expanding government bureaucracy.

Integrating troublesome real world events into the story makes it difficult to discern the line between fiction and an increasingly oppressive reality.

Whatever your political persuasion, after reading this novel you may just think twice before tossing out the old cliché that “America is a free country.”

Without giving much away, I will say that the story ends on a relatively high note. I just hope that America’s real story will start doing the same.

 

FEAR AND LOATHING IN AMERICA

FEAR AND LOATHING IN AMERICA

The Bogus Shutdown/Debt Crisis

by Jim Greenfield 10/24/13

The crisis isn’t failing to raise the debt ceiling; the crisis is the debt.”   Peter Schiff

The majority is almost always wrong.”    Henrik Ibsen

I’ve been studying public policy and politics for 50 years. Never have I seen such an onslaught of misinformation, disinformation, confusion, and sheer ignorance as the coverage of the recent government shutdown/debt ceiling debacle. If the public is confused, which, according to opinion polls, the public surely is, it is because a cabal of journalists, pundits, and politicians have done everything possible to make them confused. I’m not shocked by demagoguery by politicians, nor by bias in the media. What was unusual was the extraordinary amplification by the media of manipulative messages of particular politicians to create public hysteria, that was so beneficial to one political faction while so damaging to the other.

It’s human nature to panic over imaginary threats, while remaining oblivious to real threats. Remember the existential danger believed to be posed to civilization in 1999 by Y2K? Remember Y2K? Imaginary threat. Or, on the other hand, the real threat posed by Hitler in the 1930’s as he was building the greatest war machine in history and, other than Winston Churchill, nobody noticed.

Myth #1. Who was to “blame” for the government “shutdown?”

Throughout the shutdown fiasco, the media obsessed on the question who was to “blame,” and conveniently provided a simple answer: the Republicans. But the question contains two false premises. First, the assumption that shutting the government is a negative for which someone ought to be blamed. Second, the factually incorrect premise that the government was shut down. The government was not shut down; it continued to function throughout this manufactured crisis. Soldiers continued fighting. The IRS continued collecting taxes. The NSA continued spying and gathering data on us all. The government continued giving out money with abandon to everyone to whom the government routinely gives out money with abandon.

A few functions of government were shut down, functions handpicked by the Obama administration to inflict the maximum pain on the maximum number of people, a slight perversion of the old utilitarian maxim about pursuing the greatest good for the greatest number. Obama’s shut-down targets were optically selected to get the most bang for the shut-down buck – the Washington Monument, Yellowstone National Park, and the Grand Canyon, to name a few. Shutting down the Grand Canyon required a really big canopy.

“Essential” government personnel continued to work. “Non-essential” personnel were given paid holidays. Astonishingly, some furloughed government workers managed to “double-dip” by wangling unemployment benefits on top of the pay they received retroactively for not working. Not a bad deal.

The Obama administration coldly decided that the people in charge of keeping parks and monuments open were non-essential, but the people in charge of closing them were essential. Threatening the citizenry with arrest to keep the parks closed is rotten work, but somebody has to do it. This strategy was manifestly chosen in order, with the complicity of the mainstream media, to convey the compelling message that Republicans are dirty, rotten, scoundrels. Never mind that the House Republicans had passed several bills to fund not only the parks and monuments, but all other government functions except Obamacare. It was the Senate Democrats, led by Majority Leader Harry Reid, who blocked this legislation. These inconvenient facts were not permitted to interfere with the Democratic party/media narrative that it was right wing Republican extremists (i.e those who, like the majority of Americans, oppose Obamacare) who had shut down the government.

This false reporting exacerbated ambivalence and confusion in public attitudes toward government. According to a recent Gallup Poll, 64% of Americans say big government is the biggest threat to the country. If the public is worried about big government, why were they also worried by a reduction in peripheral government functions? These conflicting attitudes are self-contradictory. If the public doesn’t like big government, why wasn’t the debate about who gets the credit for shutting down the government instead of who gets the blame? Why did the public see the modest shutdown in non-essential functions as a crisis? Answer: because the media told them it was a crisis. And if it was the Democrats who refused to vote on measures to keep the government open, why did the public think it was Republicans? Answer: because the media told them it was Republicans.

Myth #2. The government shutdown harmed Americans and caused severe damage to the economy.

President Obama said that the shutdown and threat of national default had inflicted “completely unnecessary damage on our economy.” It’s an article of faith among liberal governmentalists that reducing government spending damages the economy. In one sense, they are correct, but only because of the peculiar way gross domestic product (gdp) is measured. In accord with the dictates of Keynesian ideology, the official definition is: GDP = private consumption + gross investment + government spending + (exports −imports). In other words, the definition of gdp includes government spending. Hence, any reduction in government spending, by definition, reduces gdp. This is putting the rabbit in the hat. Any government can create the illusion of economic growth by simply printing money and spending it, and many, including Barack Obama, have done just that. In the short run, such “stimulative” policies appear to increase gdp. In the long run they are disastrous because they conflate growing government bureaucracy with real economic expansion. Real wealth is created by the private sector making stuff, not by government bureaucrats handing out cash to favored constituents. The historical record shows that reduced government activity is a long term economic boon.

Remember also that just last year the Obamanistas made the same scare-tactic argument that the sequester budget cuts would cause untold damage to the economy. But the horrors Obama and his supporters gloomily prophesied would result from the sequester never materialized. The same arguments and scare-tactic forecasts were also made when the government was shut down in 1995, during a similar confrontation between the Republican-controlled House, and the Clinton Administration. In fact, the 1995 shutdown, and budget trimming measures that followed, produced four straight years of balanced budgets and an economic boom that lasted five years.

Myth #3. By refusing to raise the debt ceiling the Republicans would cause the U.S. government to default on its debt and create a world-wide financial crisis.

Let me break this down. The word “default” has been even more misused and abused than the word “literally,” which, in recent years, “educated” people in the media have been using to mean the exact opposite of what the word actually means. Recent example from Fox Business channel: “These policies will cause the economy to literally flush down the toilet!” For those who don’t know what the word “literally” means, let me put your mind at ease. It’s not possible for the economy to literally flush down the toilet because the toilet isn’t big enough for that to happen.

Innumerable Democratic party politicians, reporters, and media commentators repeated over and over and over again that if the Republicans didn’t vote to increase the debt ceiling, the United States government, for the first time in history, would “default” on its debt. This assertion is a prevarication and a lie! It’s the biggest and most frequently repeated lie since many of the same people were telling us in the last decade that George Bush’s tax cuts were only for the rich. Like the lie about the Bush tax cuts, the “default” lie was repeated so often that most Americans came to believe it.

This “crisis” was manufactured to create fear and dread in the populace for the purpose of driving a particular agenda. Even the President of the United States himself did his best to talk down the economy and spook financial markets. I’ve never before seen a President engage in such tactics, laying the foundation to blame Republicans for the ongoing failure of his economic policies.

So what are the facts that refute the “default” lie? The Democrats and the media conflated not raising the debt ceiling with defaulting on the debt. These are two completely different things. If Republicans had followed through on the threat to not raise the debt ceiling, would that have meant that the government would default, i.e. not pay interest on its debt? No. All it would have meant is that the government could not go even deeper into debt.

By way of analogy, suppose you are $200,000 in debt, and you want to get a loan to go even deeper into debt. The bank says your wife has to co-sign, but your wife, wisely, refuses to “raise your debt limit.” Does that mean you default on your existing debt? No. You can continue to make payments on your existing debt out of your income. In fact, by refusing to co-sign, your wife actually reduces the risk that you’ll default by restraining you from going deeper into debt.

Similarly, if the Republicans in Congress had stuck to their guns and refused to raise the debt ceiling, it would not have caused a default on U.S. government debt. To the contrary, it would have produced an instant balanced budget that would have prevented the President from leading the United States even deeper into debt.

But Democratic politicians, including the President, and many in the media, either through ignorance or malfeasance, told the public that if the Republicans didn’t vote to raise the debt ceiling the U.S. government would default on its debt. As shown by opinion polls, the public believed this patent nonsense. Those who made this argument are ignorant of the simple arithmetic. Here are the numbers. The United States government takes in approximately $3 trillion a year in tax revenues. It spends approximately $235 billion a year on interest on the national debt. In other words, only 1/12th of government revenue is spent paying interest on the debt. So even without raising the debt ceiling, there is virtually zero chance that the government would default on its debt.

Now it’s true that the government would have had to cut spending if the Republicans had refused to raise the debt ceiling. They would have had to cut about $700 billion from the $3.7 trillion budget, i.e. a reduction of about 19 percent.

Who would have decided which spending to cut? President Obama. Would President Obama have chosen to cut spending by defaulting on the debt of the United States? Unlikely. If he had made such a choice, it truly would have created a world-wide economic crisis. But not even Barack Obama would have done anything so reckless and destructive. And if he had, Alexander Hamilton would surely have risen from his grave, and demanded that the President pay the debts of the United States.

To extend the above analogy, suppose, after your wife refuses to increase your debt limit, you have to choose how to spend your limited income. If you choose going to fancy restaurants over paying your mortgage, you’ll default. If you choose to pay the mortgage, you have less money for restaurants, but this isn’t a default. Similarly, if Congress refuses to raise the debt ceiling, the president has to choose what expenditures to cut. Only if he’s a total douche bag would he choose to default on the nation’s debt.

The real risk that the government might have defaulted can be handicapped by looking at prices on short term government bonds during the crisis. According to a report on NPR, the price of $1,000 treasury bonds that came due just after October 17, the deadline for raising the debt ceiling was discounted by only a few cents. This tiny discount demonstrates that bond investors, the most savvy financial experts, were not spooked by the political turmoil; they knew the government would never default on its debt.

Despite the best efforts of Obama and his loyal followers in the press, bond and stock investors never panicked during this fabricated crisis. Now on to the next crisis. Let’s see how the Democrats and media figure out a way to blame the looming Obamacare catastrophe on the Republicans. As long as it’s called “Obamacare” this could prove difficult. Maybe they should rename it “Cruzcare.”

Critical Book Review

For the sake of dialogue, critique of THE TAXMAN COMETH from a different perspective:

“Only in the perfervid imagination of a tea-party anarchist like Jim Greenfield could the hero of a novel be the ‘twenty-seventh richest man in the world,’ a lemon-selling used-car salesman who deals solely in cash, specializes in fraud, doesn’t do refunds, and considers it his patriotic duty not to pay taxes for seventeen years. In this addled, sexist, politically incorrect book – as subtle as Ayn Rand, as nuanced as a sledgehammer, and as likely as Sharknado – the only interesting segments are the parts dubbed “Optional” when Greenfield actually expounds on the flawed philosophy behind his Randian views.

Although Greenfield is ridiculously paranoid about the Internal Revenue Service (and IRS Commissioner Darth Nader), some of his wild conspiracy theories do hit a bit too close to home. Warrantless government spying on American citizens in the era of the NSA, elected officials who do only what special-interest lobbyists legally pay them to do, and digital ballot-counting without a paper trail are just a few of the Orwellian realities that liberals and conservatives should join together to thwart. Without the ridiculous plot and gratuitous sex and violence, this could have been an interesting polemic and not a cartoon. But THE TAXMAN COMETH prefers snark over legitimate debate. It thus well represents the current intellectual state of the tea-party movement.”

– Mark Levine, liberal talk radio host and former Legislative Counsel to Congressman Barney Frank (D-MA)

Jim Greenfield’s  Reply to Mark Levine’s Humor-Challenged Critique:

“As likely as Sharknado?” “Wild conspiracy theories?”  “Prefers snark over legitimate debate?”  Hey, Mark, it’s not a debate.   It’s a novel! It’s fiction!  It’s satire!   It’s not supposed to be “likely.”   Get it?  You probably thought “Star Wars,” and “The Matrix,” and “Young Frankenstein” were “unlikely, wild conspiracy theories” too.  Or for that matter, how about “Hitchhiker’s Guide to the Galaxy?”  How likely was that?  Or “Hamlet,” an unlikely story about a guy sent on a mission to murder his uncle by a ghost claiming a “wild conspiracy” of assassination against the king?

Mark Levine claims he graduated summa cum laude from Harvard, and went to Yale Law School, so I guess he’s smart, but he clearly lacks the perspicacity to recognize great literature.  To put his sardonic commentary about this masterpiece, The Taxman Cometh, in context, bear in mind that Mark made similarly dismissive remarks about the complete works of Shakespeare.  Okay, not really; that’s satire also.  Maybe they don’t teach satire at Harvard.

Mark accuses me of being “ridiculously paranoid” about the IRS, as if that were possible.  Apparently he’s oblivious to what the IRS does to real people in the real world.  See, Mark, these people make a living seizing other people’s money and property; putting  people in jail, and scaring the shit out of the entire population.  Is it paranoid to point out that people who are out to get you are out to get you?  We’ll see if Mark feels the same way after his first IRS audit, which won’t happen to such a prominent liberal as long as his fellow Democrats are running the country.

And speaking of preferring “snark over legitimate debate,” what does calling me a “tea-party anarchist” sound like?  Does that fall under “snark,” or is it “legitimate debate?”  Apparently neither Harvard nor Yale taught Mark the meaning of “anarchist” either. People like Mark Levine, who think they are “liberals” but are actually totalitarians, are prone to conflate constitutionalism with anarchism.  By the way, Mark, I’m not involved in the tea party movement.  But I do believe in the same principles of limited constitutional government and individual liberty that the founders of our nation believed in.  So if I’m an anarchist, what about Washington, Jefferson, Franklin, Hamilton, and Madison?  Were they anarchists also, Mark?  Try reading “The Federalist Papers.” Anarchists don’t found nations.  Anarchists don’t write constitutions.  Anarchists don’t create governments and write laws.  It’s a glaring self-contradiction to accuse constitutionalists of anarchism, a frequently used, and desperate ploy by the extreme left, intended to obscure the fact that they no longer believe in the United States Constitution.