86% of U.S. Tax Revenues (estimated to be over $3 trillion dollars this year) comes from Income and Payroll Taxes. Considering our national debt is already over $23 trillion-- the U.S. has to open up its economy just to make the mortgage payments.
Here is a question for you. Is it ethical to borrow money you cannot possibly pay back?
A close personal friend of mine recently accused me a being a Sophist. (A remarkable accusation when one considers The Socratic Review sells no ads, charges no subscriptions fees, and solicits no donations-- but I digress).
With that bit of disclosure disclosed, let me go on to say that this commentary will be completely devoid of philosophy and statecraft, and will instead be entirely Sophist in nature. I hope you enjoy it.
Much discussion in the press this week has been centered on the U.S. President and his suggestion that the United States needs to get back to work as soon as possible. This judgement has in turn been countered by myriad sources contending that risking lives to "save the economy" is heartless, reckless, and deadly. Furthermore some of the more rabid voices insist it is entirely "political" in motivation, and that the president is only taking this stand because he fears a poor economy will damage his re-election ambitions.
Whereas I cannot possibly know what goes on in any person's mind (let alone the president's) and whereas I'm sure Mr. Trump would like to be elected to a second term-- I cannot help but wonder if his position is more couched in experience than expedience.
I make a point of not taking partisan sides in this column, but I have to freely observe that this particular president-- as a man who made his living buying highly leveraged real estate and servicing astronomical debts while doing so-- probably understands the current situation better than most economists would like to admit.
86% of the U.S. annual tax revenue is collected in payroll and income taxes; taxes that don't come in if no one is working. Since we were looking for $3 trillion in tax revenue this year-- 86% of that amount ($2.6 trillion) comes out to about $215 billion per month in withholding taxes that the federal government does not have in its checking account.
What makes this worse of course is our national debt. At $25 trillion dollars, our whole annual national revenue is basically the equivalent of paying the minimum payment due on your credit card. You'll keep your credit rating intact, but you won't be paying anything down, and you certainly won't be increasing your open-to-buy.
Many socially justice minded people like to point-out the plight of the U.S. wage workers who live"from paycheck-to-paycheck, bereft of any social safety net." The sad reality of this line of commentary of course is-- that they are no better off than the government they are turning to for help. The entire U.S. Government (quite literally) lives from paycheck-to-paycheck-- and has been doing so for decades!
If this were the only problem, it would be horrific enough. But it isn't. The United States owes itself (since most of the debt is owed to retirement accounts and unfunded pension liabilities who have purchased Treasury Bills) over $25 trillion dollars-- 86% of which is secured by income and payroll tax revenue; a source that all economic trends indicate are drying-up entirely.
I say this because there is little compelling reason to rehire employees when this crises is over. Both the tax code and commonsense make investing in robotics and interactive point-of-sale and distribution systems far more attractive. As this crises stretches on (and capital reserves deplete) CFOs all over the world (let alone the United States) will be scrambling with plans on how to move automation and mechanization projects forward immediately rather than in the ten or fifteen years previously planned. Their company's survival will depend on it.
And for the Star Trek aficionados out there who believe this is good news-- a paradigm shifting age of de-monetized Aquarius-- don't get your hopes up. After years of globalization and being a consumer versus a producer nation-- we will be in a world of hurt without currency to buy things? When was the last time you and your neighbors eviscerated a rabbit? Gathered wild fruits and grains? Milled corn or wheat down at the Grange mill? Spun thread and weaved cloth? Had a good old-fashioned sewing bee?
Yeah. I didn't think so.
But there is a silver lining. American citizens need to start realizing that our government (their government) is in way over its head. We need to ask the philosophers and the statesmen to sit this one out. This is a job for the Sophists.
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