Sunday, April 18, 2010

Red Flag Warning: Getting Something for Nothing

The Watchman has live most of his life under the old saying you can't get something for nothing. Similarly the 1960s trumpeting of 'there is no such thing as a free lunch' also seems to have been a slogan frequently impacting life of the Watchman. But Atlas I was wrong. Terribly wrong. I was sold a bill of goods and like so many, many others believed it was imperative for one to work hard to get ahead, to make something of my self, and, well, to use that work to get 'something'. I now wonder how much happier I would have been had I understood these two supposed fundamental principles were wrong? Indeed you can get something for nothing and there is a free lunch. Let me explain. ran an article explaining just how nearly 50% of Americans got something for nothing. Elizabeth Factor and Mallory Factor authored an article entitled, "Guess Who Didn't Pay Taxes on Tax Day?" They reported almost 50% of Americans did not actually, in the end, pay any tax at all to the U.S. Federal Government.

"The Tax Policy Center projects that 47 percent of all U.S. households will pay no federal income tax for 2009. And, the bottom 40 percent of income earners actually receive a cash payment from the government at tax time. This cash payment is styled as a “refund” but it is actually a net cash transfer from the government--not a refund of taxes actually withheld on income. And for many Americans, this cash transfer from Uncle Sam actually exceeds all federal, state and local taxes that they pay in any form during the year including sales taxes and social security taxes." (

To be fair to President Obama's oft quoted response to Joe the Plumber about redistributing the wealth, this tax system has been well in place for decades providing something for nothing to millions. What is so different today is the percentage of non-paying taxpayers is increasing to a point that endangers the fundamental freedoms of our nation. When nearly 50% of those who benefit from the blessings of our nation without appreciating the cost, then it is most easy to see they will continue to vote for their own self interests, i.e. elect representatives who will keep the free lunches coming.

So what do the freeloaders, an apt description as they place a load on the system that supports them and they get to reap the benefits for free, get? Besides cash pay-outs as described in the referenced article, they receive: national security, clean air and water, national parks and forests playgrounds, superhighways, air traffic control, coast guard, police and fire protection as subsidized by the federal government, Pell grants for education, civil rights, weather service, disaster aid, flood protections, public health services, banking and savings protections (FDIC), transportation safety, homeland security, food and drug protection, agricultural product protections, and the list can go on and on. All these somethings for nothing.

The problem as pointed out in the article will come as any good economist knows is when the "price" pressure exceeds the customer's ability to pay that goods and services will either have to be discounted, (get cheaper or poorer quality) or the goods and services are no longer available for sale. As the present effort to redistribute wealth increases, those who do pay the price for the goods and services of government, are going to look else where to invest and earn income that is not taxable. Some may even opt for the idea of doing a 1960's "dropping out" of the work sector altogether, legitimately asking why should they be the ones to foot the bill? The consequences of this attitude is to ultimately stagnate the American dream for all. What will happen when tax revenue isn't sufficient to pay out for the free lunches?

The Watchman believes we will painfully soon find out. Already our nation is in debt so deep our grandchildren will be still paying interest on it when they are old. When revenue doesn't keep up with the need of government, our government prints more dollars. In turn, eventually, our society will pay a terrible price in rising inflation. And who is hurt worst by inflation? The very people who are getting the free lunch today. The lower income earners, minorities, and those on fixed incomes such as retirees. Make no mistake, there will come a time of consequence for our liberal excesses of today.

So if you are one of the 50% who paid zero tax this year, yet benefited from those who did, consider sending Uncle Obama, $1.00 for each person in your family. Pay for at least one lunch this year. Make it a Happy Meal to go.

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