Reaching for Your Wallet

Although I've made reference to David M. Walker, former comptroller general of the United States and head of the Government Accountability Office and now president and CEO of the Peter G. Peterson Foundation, on several occasions -- see "When It Rains, It Pours," "A Fiscal Train Wreck," "Ron Paul Speaks," and "Demographic Tsunami" -- it's been awhile.

So when I saw that he had just written an Op-ed column for CNN, entitled "Commentary: Why Your Taxes Could Double," I couldn't resist sharing Mr. Walker's straight-shooting insights on the subject of taxes. As it happens, I have long argued that tax rates were headed higher -- regardless of who "won" last year's election, by the way -- but that, eventually, there would be serious resistance -- and even a full-scale revolt.

Even under the best of economic circumstances, tax season is a tense time for American households. The number of hours we collectively spend working on our returns is probably a lot more than government agencies claim.

The burden in financial terms is even greater: A recent independent survey found that the average American's total federal, state and local tax bill roughly equals his or her entire earnings from January 1 up until right before tax day.

Now imagine that tax bill doubling over time.

In recent years, the federal government has spent more money than it takes in at an increasing rate. Total federal debt almost doubled during President George W. Bush's administration and, as much as we needed some stimulus spending to boost the economy, the nonpartisan Congressional Budget Office now estimates total debt levels could almost double again over the next eight years based on the budget recently outlined by President Obama.

Regardless of what politicians tell you, any additional accumulations of debt are, absent dramatic reductions in the size and role of government, basically deferred tax increases. Remember the old saw? "You can pay me now or you can pay me later, with interest."

To help put things in perspective, the Peterson Foundation calculated the federal government accumulated $56.4 trillion in total liabilities and unfunded promises for Medicare and Social Security as of September 30, 2008. The numbers used to calculate this figure come directly from the audited financial statements of the U.S. government.

If $56.4 trillion in financial commitments is too big a number to digest, think of it as $483,000 per American household, or $184,000 for every man, woman and child in the country.

Even broken down, the numbers can be tough to swallow. Yes, you've paid your taxes, but you still bear a significant share of the government's own financial burden.

To help this news go down with a smile, the Peterson Foundation is supporting a campaign designed to help Americans understand what Washington is doing to us, rather than for us.

Meet Owen & Payne (www.owenandpayne.com), partners in a fictional accounting firm that specializes in helping Americans fill out the "new" Form 483000, which spells out how our elected officials are putting our nation into more and more debt and how that bill eventually will have to be paid: By doubling your taxes. The campaign is all in fun, but the intent is very serious.

Unless we begin to get our fiscal house in order, there's simply no other way to handle our ever-mounting debt burdens except by doubling taxes over time. Otherwise, our growing commitments for Medicare and Social Security benefits will gradually squeeze out spending on other vital programs such as education, research and development, and infrastructure.

Personal savings, while experiencing an uptick lately because of the recession, have been too low for too long. As a result, when our government has to borrow money, it must increasingly turn to lenders overseas.

Effectively addressing these issues will require tough choices and comprehensive reforms, including budget controls, changes to our entitlement programs, reductions in health care costs, other spending cuts, and yes, tax increases. But as the old saw goes, paying now, or paying soon, won't be as painful as paying later.

So as you file your tax returns this year, bear in mind that no matter how much you're paying now, you'll pay much more in the future because of Washington's failure to get its finances in order. If you don't like the idea, then get informed and get involved. And by listening rather than punishing, help encourage our elected officials to speak the truth about our financial condition, even if it means reforming entitlements, cutting spending, and yes, raising taxes.

Comments

[roger]

What is money? a piece of paper/ a contract/ a I O U, lets abolish this monster
there can be other ways of exchanging the products of our labor.

[Jay Greathouse]

It would be nice to think the system could be reformed. Unfortunately, there is too much profit being made by those who run it for any evidence or argument to change their minds.

Perhaps there is no alternative to watching it all go down in flames and then doing our best to duck and cover. Seems every individual needs to pick their own best path through the carnage and become involved in building something more accountable on its ashes.

Sadly, it appears likely that whatever comes next, if we even get another chance once non-renewable resource exhaustion, climate change and population overshoot get done with our species, we will be doing well if it can approach the Declaration of Independence and the Constitution complete with the Bill of Rights.

Money should properly be managed as a public utility and not allowed to fall under private control. Unfortunately, those who can afford to influence elections constantly seek to elect ever more "hand out" inclined Presidents and Representatives.

[biologist]

I would not mind a 90% tax rate on Wall Street bonuses or on income greater 10 million per year. The 50ies and 60ies, when they still had that kind of tax rate, were a good time economically.

[dearieme]

" The 50ies and 60ies, when they still had that kind of tax rate, were a good time economically." But in the 50s and 60s you had no competition since the rest of the world was either ruined financially or bombed flat.

[DocG]

I completely agree with Roger. Let's simply cancel all the debts, abolish money, and start over with a better system, one based on the production and equable distribution of resources. For some ideas on how this could be done, see http://amoleintheground.blogspot.com/2009/02/shape-of-things-to-come-part-8.html

As far as taxes are concerned, I really don't see taxes as a central issue, despite all the hand wringing about how the "taxpayer" is footing all the bailout bills. That's actually not the case, taxes are not going up all that much, they are going up only for the wealthiest few, and realistically the bill is going to be far too high to ever be covered by taxes, in the near OR distant future. What's the point of raising taxes on the middle class if most of the middle class in this country are either taking a bath in the stock market, losing their jobs, or taking pay cuts? What's the point of raising taxes on the wealthy when most in that class will be in a position to take huge writeoffs on their spectacular stock and bond losses for the past year and beyond?

The danger is not that taxes will go up, but that government services, at all levels, will go down -- and in many cases drastically. The danger is not to that mythical beast "the taxpayer," but to the social safety net that keeps this country stable. What's needed at this point is less of an awareness of where the money is going to and coming from, and more sensitivity to the potentially devastating effects of decades of class warfare waged by the privileged against the middle and lower classes. For more on this, see http://amoleintheground.blogspot.com/2009/01/c-word.html

[Rocky]

We seem to be following in the footsteps of Weimar Germany: financing a war, not by direct taxation, but by loans and the the printing press. Instead of raising taxes during the Bush era, we lowered them. See pages 61 and 62 in "The Rise and Fall of the Third Reich" by William Shirer. Even if you don't like the Obama administration, you should hope that it succeeds in restoring economic stability to the country. The alternative may eventually be concentration camps filled with speculators, cosmopolitans and all the other usual suspects.

[roger]

of interest to the inquiring mind,
GEAB N°34 is available! Summer 2009: The international monetary ...
GEAB N°34 - Contents. - Published April 16, 2009 -. Summer 2009: The international monetary system’s breakdown is underway. The perspective of a US default ...
www.leap2020.eu/GEAB-N-34-is-available!-Summer-2009-The-international-monetary-system-s-breakdown-is-underway_a3... - 18 hours ago - Similar pages

[Sandra McDonald]

Regarding Walker's Op-Ed... exactly who's taxes are going to double? As someone who's never made 100k/yr, I've mostly paid the same rate since Gerald Ford was in office. The largest tax increase I had was Reagan adding 7.5% to "self employment income". Other than that... it's been fairly constant.

However at the top end - that group has seen DRAMATIC tax winfalls - from 92% in the 50's to a tiny fraction of that today. They also tend to pay zero (or very little) in for Medicare and Social Security taxes that all the bottom earners pay. Letting the Bush tax cuts expire will put them to ummm.... 10 percent LESS than they were paying under Reagan!

[farang]

Sandra hits the nail on the head: This Petersen Foundation, a far right-wing endeavor Walker has now prostituted himself to, has for years attempted to gut Social Security benefits.

Instead of causing collapse of the 90% of Americans, we simply tax BACK the funds the top ten percent have accumulated by paid-for whores in Congress and the White House funneling assets and wealth to "their base." I can count TRILLIONS given to banksters for the last year alone we can tax back. THAT ALONE secures S.S. benefits for 100 years.

Or we hang them and take it. They have brought it on themselves with their incessant greed. Acting like we don't know they own the media, the politicians. Talking down to us like we are second graders. I know which alternative I prefer......

But Sandra, when you say your rates haven't changed much except for Reagan's raising self-employment taxes, are you including his tripling FICA?

He raised it when he raised the benefits to pander to the elderly voters. And now we reap the whirlwind of IOU's in our "Trust Fund." In other words, Petersen and Walker seem to think we won't realize we would be TAXED TO REPAY YOURSELVES what the mega-wealthy have "borrowed" (stolen) with political and media assistance.

Yes, David Walker properly sounded the alarm years ago, good on him. Then got bought off by the billionaire Petersen.

But it ain't gonna be "business as usual" which he doesn't comprehend.

He didn't "choose wisely."

[michael]

See where we're going:
In Germany 2006 the total federal, state and local tax bill roughly equaled his or her entire earnings from January 1 up until July 4.

[El Scorcho]

"You cannot legislate the poor into freedom by legislating the rich out of freedom.

What one person receives without working for, another person must work for without receiving.

The government cannot give to anybody anything the government does not first take from somebody else.

When half of the people get the idea that they do not have to work because the other half is going to take care of them,

and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for,

that my dear friend is about the end of any nation. You cannot multiply the wealth by dividing it."

Dr. Adrian Rogers