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Tuesday, November 06, 2012

Step Back & Ponder

Question: Why do we pay federal taxes?

Silly question, right?

The government can't operate without revenue.

Right?

Or is it right?

No.  It's not right.

In truth, nearly forty percent of the money Washington is spending today it never received.

The rest?

Nothing but paper.

Oh.  And that "good faith and credit" stuff.

And a promise to someday make it good.

So, here's my question: If the federal government can spend 40% more than it takes in - and the government doesn't collapse - why not 100%?

Why do we have to pay taxes at all?

40%?  100%?

Why doesn't the federal government simply back up all its expenditures with that oh-so-confident assurance of its resolve - and a big smile - and not bother collecting anything from us?

What brought this up is an article in the Wall Street Journal this morning written by Bret Stephens, entitled "Liberal Exceptionalism."  In it he lays out the bottom line for fiscal discipline:

"Great nations may have greater grace periods, but they don't get blank checks. Bills come due."

The reality of it is, though, the bill isn't coming due.

It's never going to come due.

We just keep adding to the federal debt.  And play this game in which we all talk about how that debt is going to have to be paid ... someday.

But someday never comes.

And we keep spending money we don't have.

And keep wringing our hands over it.

And we keep talking about paying that debt ... paying that debt.

And spending ... spending.

Neat trick, huh?

The stuff that would make Bernie Madoff proud.

So where is this going to end?

Well, it's not.  But ...

Expect the government of the United States of America - in the not too distant future - to simply write down that debt.  And give the Chinese a big kiss when it happens.

We are the USA, after all.  We can do that kind of stuff.  We're fiscally responsible.  And all that.

Then expect the government to start the game all over again.

We'll wring our hands in woe as we spend massive amounts of money we don't have.

Like drunken sailors with someone else's credit card.

Sweet.   Count me in.

So tell me again: Why do the American people have to pay federal taxes?