Arman's stuff
Of Budgets and Debts

(Mon Apr 25 00:43:19 2011)

"Tax the rich" only sounds good if you can't do math

I don't get it; I really don't. I know why I don't get it, though. I'm an engineer. You see, if I was having a budget crisis - just a home/family size budget crisis, mind you - I would do two things.
First, I would go to work, lay out the details to my boss, and ask for a raise.
Second, I would go home, and say, "This is how much money I make NOW. This is how much money we need. We are overspending by 20%, therefore, we need to cut the budget by 20%." And then I would do so.

It's not actually possible to do that with the government. Why is it not possible? Simple: politicians.

Let's address that first idea. I go to my boss, and I say, "Hey, I need a raise." Here are three ways he could respond:
1) "Well, you've been doing really well, so I'll give you that raise. Here you go!"
2) "Well, you've been doing really well, but the company can't afford to give you a raise. Sorry."
3) "Well, you've been doing really badly, so there is no way you'll get that raise."

Sounds about right, yeah? Ok, so here is what the government goes through. First, they realize they are low on funds. Then, they present their case before the public. The public responds:
1) "You know, you're actually doing really well. We wouldn't mind paying a little more in taxes."
2) "You know, you're actually doing really well, but we can't afford to pay more taxes. Sorry."
3) "You already throw money away, why would I give you a single red cent more?"

This is where the divide begins. In my own case, were I to ask the boss for a raise and be refused, I'd be out of luck. In the case of the government, they don't respond in the same way... here are their responses:
1) "More money? Yay!"

...response. Sorry. Just the one. That's the first, and biggest problem - just like all those bankers and eeeeevil CEOs that got to set their own budget, the government gets to choose its own raises. Oh, they don't make it sound that way, but in the end, that's what it is. The public get no say in the matter; there is no way to vote for a "don't tax me any more" bill, because it'll never come up.

The second bit is also a problem. If I'm short on money, I cut back on things - whittle down the food budget, drive less to save on wear-and-tear (and gas), eat out less, and so on. I could save money by shutting down my computers at night, turning off the little air conditioner in my room (and raising the maximum temperature in the rest of the house), etc. I could raise some extra cash by selling some of my stuff, too - toys the kinds don't play with, old computer bits I don't really need, even some of my more useful stuff like tools could be quick cash items at a garage sale.
But the government doesn't work that way. In the big pie chart of the government's budget, various pieces match my own budget. Transportation? That's my car. Can't cut much from that, but you can cut a bit. Education? That's school supplies (books and things) in my budget, and that, too, can be cut a bit. But those are only tiny pieces. What is the biggest chunk spent on? For me, it's housing - where I live. Here are the top chunks in the 2010 budget:
19.63% - social security
18.74% - Department of Defense
16.13% - Welfare, unemployment, and other such
12.79% - Medicare
8.19% - Medicaid
4.63% - interest on the national debt
Everything else - everything that isn't military, interest, or entitlement programs - only comes to 19.89% of the budget. Less than 20%. Even counting the interest make it less than 1/4 of the budget.

In 2010, the government spent $3.55 trillion. They overspent by about $1.3 trillion. That means that we are over budget by just about 47%! Yeah, ok, so you see why there's a problem here... but how do we fix it?

Well, if we lump all of the entitlement stuff together, we've got 56.74% of the budget - that's just over $2 trillion. Huh. We overspent by $1.3 trillion; we've got $2 trillion of 'entitlement' money. Sure, sure, we need some of it; we ripped off millions of elderly by forcing them to invest in "social security", remember? But we can't keep the whole budget.

If I were overspending by almost 50%, I'd have run up my maximum on every credit card I could lay my hands on. Which, by the way, the US government has done.

Oh, and about the summary, there - say we do raise taxes on the rich - say, the top 10% highest incomes. You know, the people that already pay 71% of the taxes. You could do the math yourself from this Wikipedia page, but to save you that, I'll just say it... if you tax the "rich" at 100% of their income, you still won't cover the budget. You'd need to tax every single income in the US around 60% to make budget.

Something needs to change. At this point, I can't even tell you what needs to change, but I can tell you this: it's not going to happen. Not this year, anyway. Maybe some day, but I somehow doubt it. Everyone figured out they can vote for bread and circuses; if a third of the US population is receiving handouts from the government, that's a lot of votes for food and fun.

Am I really in that much of a minority by living within my means?

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This blag is tagged: Budget, Government, Taxes, All