The Ant and the Grasshopper is one of my favorite fables, created to teach children the principles of hard work and planning. The fable is simple, a grasshopper spends the warm summer months singing and playing, while an industrious ant slaves away storing up food for the upcoming harsh winter. The harsh winter arrives and the grasshopper finds itself starving to death of hunger, while the ant enjoys the bounty of his hard work. The grasshopper begs for food, but the ant reminds the grasshopper that his situation is the result of idleness and improvidence.
America finds itself at the beginning of a long harsh winter, and unfortunately for us, we are led by a cadre of self-serving grasshoppers straight out of Aesop's Fable. Like the fable, our legislator grasshoppers are living a life of illusion and improvidence with our taxpayer dollars. Furthermore, they are selling a lie to the American people, that by simply raising taxes on the rich, the majority of our structural and financial problems will be solved.
Raising taxes on the wealthy will not significantly reduce the deficit. According to Veronique De Rugy, "there simply aren't enough rich people." The Congressional Budget Office estimates that simply letting wealthy Americans go "over the cliff" would generate less than $950 billion over 10 years, while our cumulative deficit is projected to be more than $6 trillion over the same period. If a deal included raising taxes on the wealthy, only approximately $47 billion in revenue would be raised over 10 years. The result is our cumulative deficit hole getting deeper and deeper.
De Rugy correctly points out that the federal government has "never" consistently raised more than 19 percent of GDP in tax revenue. Why? Because raising taxes on America's most wealthy will not reduce the deficit.
The reality of our situation is extremely simple, we spend way more than we take in. As Republican Sen. Rand Paul of Kentucky states in his Wall Street Journal opinion piece last week, "Taxing and borrowing from the private sector so the federal government can continue spending is no way to grow the economy."
The fiscal shortfall is principally due to the growth of Social Security, Medicare, Medicaid, and the president's healthcare law. When you hear that America's national debt is $16 trillion, remember the real underlying issue, as Armstrong Williams has written, is that "the U.S. government and state governments have additional off-balance sheets with unfunded obligations estimated to be as much as $100 trillion to $150 trillion."
President Obama's initial "fiscal cliff"offer was $1.6 trillion dollars in tax increases but contained little to no spending cuts. If there were to be any reductions, they were to occur in negotiations down the road. In fact, it appears there are zero actual net budget cuts in the proposal. Meaning, the cuts proposed, minimal as they are, are based off projected savings of spending that has already effectively ceased. For example, counting money saved from the end of a war that has already effectively concluded. See what Obama just did there? This is a hocus-pocus illusion, a bait-and-switch of epic proportions.
Again, everyone knows that our problems orbit around Social Security, Medicare, Medicaid, and the president's healthcare law. If we are to address the out-of-control growth of these programs, we actually have to take action with these programs. Even the New York Times has noticed the president's lack of interest, stating Obama "has barely discussed how he would pare back federal spending, focusing instead on the aspect of his plan that plays to his liberal base."
The government is able to keep our creditors at bay by gobbling up America's debt by printing more and more monopoly money. As Williams notes, when the economy starts to recover, if it actually recovers, "expect the chickens to come home to roost with inflation roaring back like the Falls of Niagara." When that occurs, our fiscal problems will become apparent, with inflation decimating not only the middle-class but also lower income families.
If we are to survive, we need to pay down our debts and embrace sound fiscal policy. We need to reform Social Security, Medicare, and Medicaid. We need tax reform that focuses on lowering the marginal tax rates for all American families.
Going back to the end of the Aesop's Fable, the government should remember that the ant eventually refuses to give the grasshopper food for his lack of foresight. The harsh winter conditions eventually result in the grasshopper's death. Gulp.