Who would have ever thought that any president of these United States of America would have to stand before Congress -- and before the American people -- and publicly declare that the United States is a free country, standing for liberty.
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In his State of the Union address on Tuesday, President Trump made an unequivocal pronouncement against the multiplying cries for socialism in America.
“Here, in the United States, we are alarmed by new calls to adopt socialism in our country,” the president said. “America was founded on liberty and independence -- not government coercion, domination and control. We are born free, and we will stay free. Tonight, we renew our resolve that America will NEVER be a socialist country.” [Emphasis added.]
Unsurprisingly, many on the Democratic side of the chamber did not stand in unison to agree, nor did they even clap. No, no, they have the wheels of the socialism freight train started now, and they will give not an inch to stop it in its tracks.
Free lunch? Yes please, that sounds nice. Hmm, how about a free education with a side of free health care? Why don’t we even throw in student loan forgiveness, free housing, a guaranteed job, or forget the job, and let’s just give – you guessed it – free universal basic income while we are at it.
America’s unique origin in escaping an overbearing, oppressive and overly-taxing government is likely the reason we have historically supported more freedoms, including economic freedoms, than our European cousins. But that is undeniably changing now.
The shifting political winds are reflective of an underlying new positive attitude toward socialism in America. A recent Reuters poll found that 70 percent of Americans support Medicare-for-all, which includes a majority of Republicans. (A new poll released by the Kaiser Family Foundation found support drops, however, when participants were told the plan could lead to higher taxes.)
A Gallup poll from last summer also shows that a majority of millennials view socialism positively, while only 45 percent see capitalism positively. This reflects a double-digit decline for capitalism from eight years ago.
A string of recently-declaring Democratic presidential candidates – Sen. Kamala Harris, D-Calif., Sen. Elizabeth Warren, D-Mass., and Sen. Kirsten Gillibrand, D-N.Y., (to name a few) have literally announced their candidacy alongside a list of the free goodies their presidency would bring. Americans seem unphased, even supportive.
This is our failure America, in not holding our government accountable. They have been allowed for too long to fake it, to spend money that we do not have to pay for services we cannot afford on a sustainable basis.
For the last three decades, we have spent significantly more than we have collected in tax revenues resulting in a federal debt of $22 trillion.
This has been carried out for the last 30-plus years such that the American people have been lulled into believing that we can spend without end, without the pain of an European tax scheme (40 percent to more than 60-plus percent). So why shouldn’t we add Medicare-for-all, free college education and even UBI – universal basic income?
But it is all an illusion. Economists typically use debt-to-GDP ratios to show that America’s fiscal health is not as bad as Japan, Greece or Italy, among others, but with ending 2018 federal debt at $21.9 trillion and 2018 GDP of just under $21 trillion, we have debt-to-GDP exceeding 100 percent. This is something that is fiscally acceptable during economic downturns, but is unprecedented during good economic times, like those under President Trump.
And the real problem is the fiscal gap, a more transparent accounting measuring promoted by Boston University economist Laurence Kotlikoff to accurately reflect committed future spending less projected tax receipts. The US fiscal gap exceeds $220 trillion, or over 1,000 percent of GDP – showing the real weight of the social services America has already promised to deliver.
To give perspective on such a number, the current fiscal gap would require an immediate 64 percent permanent tax increase to fix before adding any more socialist goodies like Medicare-for-All, free education and UBI. Even the left leaning Urban Institute calculated that for just the first ten years alone, Medicare-for-All would cost an additional $32 trillion. $32 trillion when our total federal debt since the beginning of our republic is $22 trillion … WHAT!
And many on the extreme left promoting the wonders of socialism seem to get tired or annoyed with even addressing the prerequisite questions about their costs, with rising star Rep. Alexandria Ocasio-Cortez, D-N.Y., stating that by spending so much more we will somehow actually have savings.
Others say that you can just print more money, but inflating our way out of this economic hole is a non starter, since both Social Security and Medicare make inflation-adjusted payments. This means that if we try to inflate our way out, the costs of our biggest social programs just go up proportionally-- solving nothing.
Economic equality comes at the heavy price of freedom (yours). People logically act in their own self-interest even if it is to their long-term detriment, like a bug sucking its host dry. Most will take advantage of the government’s offer for "free" anything – thus the reason the road to America is packed while the road to Venezuela is empty.
But let’s be clear – “free” is not free to our country. The great Roman empire imploded and collapsed under the weight of their own debt and extreme taxation. Are we determined to go down that same road?
Let us have renewed hope today that President Trump stands to say no.
Rebecca Walser is a tax attorney, a certified financial planner, and the author of Wealth Unbroken, who specializes in the strategic planning of maximizing lifetime wealth while minimizing tax through her practice, Walser Wealth Management (www.walserwealth.com). She earned her juris doctor degree from the University of Florida and her Master of Law degree in taxation from New York University. She is a frequent national media contributor.
*This Opinion column was updated on Feb. 6 with reaction to President Trump’s State of the Union address.