"The Constitution gives the power of the purse to Congress."
Yet, the Congress keeps voting for spending not authorized by the Constitution.
The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists. Ernest Hemingway
The government and its chiefs do not have the powers of a mythical Santa Claus. They cannot spend except by taking out of the pockets of some people for the benefit of others. Ludwig von Mises
MAKING AMERICANS FINANCIALLY INDEPENDENT
In his Capital Account column today, Greg Ip makes several important statements regarding the budget debate among Republicans.
Ip points out the Congress “has the power of the purse.” That does not mean the federal government has unlimited power to spend on programs not authorized by Article I, Section 8.
Over the past nine decades, the federal government under both Democratic and Republican control has spent taxpayers’ money that it is not entitled to. That’s why the federal budget is more than $7 trillion and the national debt is approaching $37 trillion.
(Democrats, on the other hand, are faking their outrage over the so-called proposed budget cuts, because FDR’s New Deal and LBJ’s Great Society programs are not in jeopardy of being abolished. In fact, Trump has stated numerous times that Social Security, Medicare, and Medicaid are not to be “touched.” In addition, the military-industrial complex is not going on a diet.)
A constitutional federal budget would be balanced several trillions less than the current monstrosity. The challenge is how to get there from here.
The Constitution is supposed to limit the power of the federal government. This has been the greatest failure in the history our constitutional republic—expecting the president, the Congress, and the Supreme Court to rein in government power.
Murray Rothbard stated unequivocally,… “the Constitution, regarded as an attempt to limit government, was one of the most noble attempts at limited government, curbing the State, in human history… it has failed, and failed almost ignominiously.”
The bottom line is that the federal government is one gigantic money laundering operation, taxing workers and businesses with the money used to build huge bureaucracies to redistribute income, a polite way of saying robbing Peter to pay Paul.
What to do to restore a limited government republic?
Ip claims “Entitlements are infamously difficult to cut.” Politically yes. Practically no.
To begin the “desocialization” of the US, all Social Security beneficiaries who renounce their monthly checks would no longer have to pay income taxes on interest, dividends, capital gains.
Everyone who has dividend and interest income would be able to reinvest these funds instead of paying taxes. And, if capital gains for seniors are tax exempt, can anyone say investment boom? Productivity would increase markedly as investing in American businesses would skyrocket.
The $1.5 trillion Social Security budget would decline substantially, and eventually virtually all retired Americans would be financially independent. This could take 10 years. For low income SS recipients this may take longer, probably 15 years.
This is the essence of the free market…savings ➡️ investment ➡️ capital formation ➡️ more goods and services…and lower prices!
Why would anyone oppose this unless they believe government spending is the grease for the economy? Only economic illiterates assert government spending is a boon for the economy.
How many senior could be moved off the Social Security intergenerational chain letter (Ponzi) scheme because they would able to keep is unsure at this time?
There is no way of knowing for sure. I will have to do some digging to see how many seniors would be interested in not having to pay income taxes on their investments. This would be a great question for a pollster to ask. Maybe AARP or other “senior citizen” organization could ask this question.
In upcoming posts I will discuss how to replace Medicare with free market medical care. See my open letter to Bill Gates about how to replace Medicaid with nonprofit medical centers.
Making Americans financially independent must be the goal if we are to avoid a financial crisis in the next few years.
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Perry Atkinson and I recently discussed the unfolding economic events.
James Bovard on protectionism.
Recent interviews discussing the state of the economy with Perry Atkinson, Jim Peters, and Randy Durham.
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Dave Campbell and I discuss MAFI on the Clarity and Chaos podcast.
Col. Mike and Dr. Mike and I discuss Trump and his promises on the National Security Hour.
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Restoring free enterprise, medical freedom, and a constitutional federal budget.
The insufferable Jim Cramer reveals his economic ignorance in a recent CNBC rant.
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Tom DiLorenzo’s pamphlet, Axis of Evil, is now available at the Mises Institute.
Order a free copy of Rothbard’s money and banking classic monograph. Or, you can read it online here.
My December 10 talk on medical care.
Bob Murphy interviews Dr. Keith Smith of the Surgery Center of OK.
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Murray Sabrin, PhD, is emeritus professor of finance, Ramapo College of New Jersey. Dr. Sabrin is considered a “public intellectual” for writing about the economy in scholarly and popular publications. His book, The Finance of Health Care: Wellness and Innovative Approaches to Employee Medical Insurance (Business Expert Press, Oct. 24, 2022), and his other BEP publication, Navigating the Boom/Bust Cycle: An Entrepreneur’s Survival Guide (October 2021), provides decision makers with tools needed to help manage their businesses during the business cycle. Sabrin's autobiography, From Immigrant to Public Intellectual: An American Story, was published in November, 2022. He is also the author of Why the Federal Reserve Sucks.