Americans have become dependent on publicly provided “free lunches,” government programs without the taxes. The public whines about any attempt to raise taxes (other than those on the “rich”) while clamoring for all the entitlement programs the government can dish out. As a result of this whine and dining, nearly half of all households pay no income tax and the government must borrow forty cents of every dollar it disperses. Of course, there is no free lunch and the bill must eventually be paid. But it appears we will resist paying the bill until a crisis forces us to do so. Ask the Greeks and the Spanish how much fun that will be.
The Budget Control Act of 2012 helps to frame the problem. The Act calls for the imposition of major tax increases and spending cuts to be implemented after December 31 if Congress fails to reach a compromise on the budget. The tax increases come primarily from the reversals of the Bush temporary tax rate reduction and the Obama payroll tax holiday. Budget cuts under the Act will be widespread and automatic. Pundits have labeled the Act “draconian” and a “fiscal cliff.” Apparently we are doomed to fall into an abyss if the Act takes effect. Rest assured that our fiscal wizards in Washington will ride to our rescue to save us in the nick of time.
Chew on this. Allowing the Act to be implemented will give almost all Americans a strong dose of reality that there are no free lunches. If you like the government’s programs step up to the plate and pay for them. If you don’t like the size of the bill, cut down on some of the dishes by voting out big spenders. Remarkably, implementing the “draconian” Act only cuts the current deficit about in half. Lots of “free lunches” still will be on the table as the government will be borrowing twenty cents of every dollar it spends. That’s how out of control the budget is. Bon appetite.