Does the practice of robbing Peter (taxing the top tier) to pay Paul (subsidizing the poor) have a theoretical limit? If so where is the tipping point? Like the luxury liner, Costa Concordia, are we already seeing the signs of capsize? Are our captain and crew already in the lifeboats, “coordinating” the rescue of the passengers?
I am starting to think that while the governmental practice of robbing Peter to pay Paul, has worked for quite a while, in the past few years we have reached some tipping point that has moved the paradigm into a new dynamic. While I accept that the motivations for the practice are grounded in human decency and the desire to provide for the helpless and the downtrodden, at some point it has become part of our collective existence and not a real safety-net for the helpless.
It seems to me that at a point, perhaps when the Pauls become more than one-half of the population that the efficacy and sustainability of the process fall apart. In fact, I would argue the tipping point is, at least mathematically, less than 50% because the system consumes resources to pay for the process itself. Even if it is highly efficient, the cost to pay for the bureaucracy to provide the robbing and paying is at least 5%. The basic grade-school math says that one-half (50%) minus the 5% cost would yield the ability to only pay for 45% of the Pauls. Today, the Peters are already paying a significant amount to about 48% of the Pauls. Roughly, 48% of the people in America are getting almost half of their income from some form of federal subsidy, directly or indirectly.
The second observation is that we are no longer subsidizing just the poor in America. In fact our continually expanding set of ideals is drastically changing. In the 1930s it became obvious to many that something needed to be done to help the poor in America and the government took action. In the 1950s the government took more actions, and in the 1960’s President Johnson declared the War on Poverty and took even more actions. We have been waging this War on Poverty for many years and have spent huge amounts of money–it seems that no effective gains on helping the poor have been realized. They are still poor and we are simply increasingly subsidizing the poverty.
The disturbing trend is that it was the rich and the middle-class Peters that felt it was their duty to help pay the poor Pauls. But now the dialog has shifted. The president wants to add the middle-class to the list of paid Pauls. In fact, the middle-class started to become Pauls when the government began providing program eligibility at the 200% 300% and 400% of poverty level.
It appears to me that at some point, robbing Peter to pay Paul becomes robbing Peter and Paul to pay Peter and Paul. I would submit we are either at this point or damn close to it already. Not only are we now shifting our classification of who needs help in America to include the middle-class, but we already have numerous programs that indirectly are subsidizing even the highest echelons of the Peters because we provide incentives (subsidies) for many industries and business segments where we are not competitive on the world stage and we are proposing to add more subsidies. So almost all Americans, if not all Americans, are getting some or much of their ‘revenue’ from the federal government. If you look at the unqualified increase in the amount of currency since 1974 it can be said that almost all of our money has come from nothing other that taking something from all of us in terms of devaluation of the currency and giving back a disproportionate share to selective groups–not all of them the poor.
Have we arrived at the point where we are just robbing ourselves to pay ourselves? If so when do we really address this problem? I think we clearly are at at least at the doorstep of this dilemma, and more likely our toes have already crossed the threshold.
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11 Responses
A good friend of mine, who leans more to the liberal side sent me a note saying that the use of the term robbing in connection with taxes causes him a problem. I have tried to point out the use of the term is not pejorative and it is not the robbing that is the point it is moving from one to another to both to both that is the point of the article. He then has said it is about leveling the playing field away from the 1%. I have responded that the playing field will never be level unless we decide as a nation no one can have more than another or it will not be level.
He will respond that it is about the unfair advantages that the 1% get because of tax reductions, and the benefit that money brings. It is the same song different lyrics, and I do not mean this as a criticism. The point is we have moved from helping the poor, to helping businesses, to helping this one and that one, and now helping the middle class. It is not about helping the rich either. It is about recognizing that in effect now we are moving to directly or indirectly subsidizing everyone in one form or another.
You know it is very hard for us to separate our ideologies from any discussion. My friend finds umbrage in the phrase robbing Peter to pay Paul because he says the poor don’t want charity they want jobs. But, I am sure we all except that. He cannot separate a turned phrase from an ideological innuendo because everything today is ideological innuendo is it not?
The point of this article is we have moved beyond helping the poor and have truly created a quagmire where everything is now linked to some subsidy or another. The middle class have been screwed because they have been lost in the subsidy train. The article is my question related to now as we move to cover the middle-class are we not stepping completely off into the abyss.
A good friend of mine, who leans more to the liberal side sent me a note saying that the use of the term robbing in connection with taxes causes him a problem. I have tried to point out the use of the term is not pejorative and it is not the robbing that is the point it is moving from one to another to both to both that is the point of the article. He then has said it is about leveling the playing field away from the 1%. I have responded that the playing field will never be level unless we decide as a nation no one can have more than another or it will not be level.
He will respond that it is about the unfair advantages that the 1% get because of tax reductions, and the benefit that money brings. It is the same song different lyrics, and I do not mean this as a criticism. The point is we have moved from helping the poor, to helping businesses, to helping this one and that one, and now helping the middle class. It is not about helping the rich either. It is about recognizing that in effect now we are moving to directly or indirectly subsidizing everyone in one form or another.
You know it is very hard for us to separate our ideologies from any discussion. My friend finds umbrage in the phrase robbing Peter to pay Paul because he says the poor don’t want charity they want jobs. But, I am sure we all except that. He cannot separate a turned phrase from an ideological innuendo because everything today is ideological innuendo is it not?
The point of this article is we have moved beyond helping the poor and have truly created a quagmire where everything is now linked to some subsidy or another. The middle class have been screwed because they have been lost in the subsidy train. The article is my question related to now as we move to cover the middle-class are we not stepping completely off into the abyss.
we are robbing peter (rich people) to pay for an unjustified war in iraq and to take an extra 8 year to kill bin laden. freedom is expensive. we are also robbing peter (taxing rich people) to pay peter (rich banks that we bailed out so they could give themselves big bonuses) the poor carry the rich on their backs, by being taxed more when they have so little in the first place.
we are robbing peter (rich people) to pay for an unjustified war in iraq and to take an extra 8 year to kill bin laden. freedom is expensive. we are also robbing peter (taxing rich people) to pay peter (rich banks that we bailed out so they could give themselves big bonuses) the poor carry the rich on their backs, by being taxed more when they have so little in the first place.
business in america creates the poor, that is why the term robbing seems so hateful. i get that it’s just an old way of saying things. but words have power and can be hurtful. it sent me right away from your message even though i knew you didn’t mean it in that way.
business in america creates the poor, that is why the term robbing seems so hateful. i get that it’s just an old way of saying things. but words have power and can be hurtful. it sent me right away from your message even though i knew you didn’t mean it in that way.
Willy,
do you really believe that business in America creates the poor? I am not asking this rhetorically. I really want to understand how you have arrived at that point. I cannot put my head around your logic on this. I do try, as you know, to see things from all sides and this is one I cant get to.
Willy,
do you really believe that business in America creates the poor? I am not asking this rhetorically. I really want to understand how you have arrived at that point. I cannot put my head around your logic on this. I do try, as you know, to see things from all sides and this is one I cant get to.
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Bravo! Once again all I can do is agree with you.