WASHINGTON, October 9, 2013 – With debt and political leadership spiraling out of control, Americans need to be concerned about the State of our Union. Our forefathers could not have possibly foreseen that our government leaders would dissolve into such disrespect for the American people or the American Dream.
About 237 years ago, the leaders of our country gathered to form a new government. This land would be governed by individuals who were freely elected by the majority of the people. This land would encourage freedom, democracy and fulfillment, by proclaiming that all people had the right to life, liberty and the pursuit of happiness. This would be the land of opportunity.
In this land of opportunity, every individual would be encouraged to contribute to the economic system and would be rewarded according to that contribution. This land would have low rates of taxation and a limited role for government. That would ensure freedom and just rewards for all contributions. This would be the land of opportunity.
In this land each person was expected to not only reap the vast rewards of a free society, but also to assume the responsibilities of freedom. These responsibilities included providing for those who were, for whatever legitimate reason, unable to provide for themselves. Because in a free society people tend to be very compassionate, this responsibility was accepted. Yes, this was the land of opportunity.
After about 150 or so years of this system, we became the most successful nation on earth. We were the greatest producers, we had the strongest economy and we strived to be the best at virtually everything. Our success was stunning.
Then things changed.
Government began to grow very large. The original intention for the role of government was to provide a minimum of public goods and also to insure that all people were provided for. Paying for government services was supposed to account for the vast majority of government spending with the “providing for” function using the rest.
But the federal government decided to begin to provide more for those who were in need. To do this, they levied a tax on our income which eventually included separate additional taxes on our wages. Over time the 2% federal income tax grew tremendously and became very progressive. The taxes on wages also grew. Then they taxed the things we purchased, the house where we lived and placed special taxes on certain goods like gasoline. This seemed counter to the original idea of low taxation and limited government. This changed the land of opportunity.
As tax revenue increased, government spending increased further, especially on “income transfer” programs, so that today the majority of government spending is on these programs. As government grew, they began to regulate more, limiting growth and freedom. This is not the land of opportunity.
Then it was decided that those who were being provided for should be provided for with even more. It was also decided that the individuals who made the largest contributions to our economy, and thus received the largest incomes, should carry the entire burden of these new “provisions”. This seemed counter to the original principles and, more importantly, was counter-productive to the economy as a whole. This is not the land of opportunity.
In the 1980’s it appeared that this trend was reversing. The government reduced tax rates, made them less progressive, removed burdensome regulations and began to decrease income transfer programs. The result was a 26 year expansion, with the exception of small hiccups in 1991 and 2001.
For the past six years, this has definitely not been the land of opportunity. Growth in the economy has barely exceeded population growth. High achievers, who provide the investment capital the economy needs to grow, see very little opportunity and coupled with the increased tax burden, are reluctant to invest. Over regulated markets add to their reluctance. Workers see little opportunity since the high achievers are not investing to grow businesses. Workers, even highly skilled and highly educated, are forced to take lesser jobs at lower pay. Unemployment remains high, economic growth stagnant and no new opportunities are being created. This is not the land of opportunity.
Most of the problems we have today can be resolved if we returned to the land of opportunity, so we had individuals finding opportunity and contributing to the system, rather than being provided for. We need businesses to grow and new businesses to be created so that there is a demand for workers who have invested in themselves and are now highly skilled and highly educated. We need a tax environment that generates sufficient revenue, while encouraging all people to follow the opportunities they see. We need a government that is able to efficiently offer the public services required while providing for those who are truly needy. We need a government that encourages the economy to grow so that we all benefit.
We need to return to the land of opportunity.
Michael Busler, Ph.D. is a public policy analyst and an Associate Professor at Richard Stockton College.
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