SUMMER - 2014
PICKED POCKETS
The use of this saying brings to mind images of poorly dressed, dirty, castaway boys sent out to reach for coins and bills from strangers’ pockets to take back to their adult leader who controls their felonious behavior. Almost always this illegal transaction is pictured as an event between two individuals: the thief and his victim. There is a competition viewed here between the evil-intentioned criminal and his unsuspecting target. Yet our sympathy is often called out for both the young boy abused by his adult handler and for the injured party who has suffered undeserved monetary loss. None would deny that the boy’s act is robbery and immoral. Sometimes the difference between right and wrong seems so clear. But in this set of circumstances how should we set the blame? Must we admit that confusion occasionally hinders our ability to get swift and absolute justice?
Many of us refuse to accept such uncertainty in human affairs. We demand black or white. No grey. Simplicity in analysis is absolutely required. Do not bother me with ambiguity - the possibility of error. Either right or wrong that is what I want. How many of those who consider themselves clear-headed and intelligent must admit that they are unwilling to take whatever time is needed to consider all of the factors that must be understood to know what might be right or wrong in any particular situation. Most of us have been guilty more than just once of making snap decisions and instant judgements that effect the lives of others.
An example of three historical events may help to explain how a majority of an entire nation may have their pockets picked - not by a malicious single plunderer but instead by a seldom identified group of their fellow citizens.
Those events are:
- The manipulation of the social security system.
- The decimation of the progressive income tax system.
- The explosion in the national debt.
The Social Security System
Social Security is designed as a pay-as-you-go system paid for by payroll taxes drawn from employees’ wages and matched by an equal amount paid by their employers’ contribution. In the 1980s the percentage rate of payroll taxes withheld from wages and matched by employers’ contributions was dramatically increased. The new rate of taxation brought in far more revenue than was needed to cover the amounts of money being paid to current social security recipients. The excess revenue was not deposited into government accounts at private banks to draw interest and grow over the decades until the baby boomers were scheduled to retire. Instead, the Social Security Administration was only allowed to purchase U. S. Treasury bonds. The money used to buy those bonds was then added to other government revenues to pay for current government expenses. In turn this allowed politicians to reduce the highest marginal income tax rates on incomes of the richest citizens in the nation. In other words, the government was picking the pockets of wage earners so that taxes paid by the rich might be reduced. And this has been going on for decades.
The Progressive Income Tax System
As late as the 1970s the highest marginal tax rate applied to the incomes of the richest citizens was around 70%. In the 1980s politicians reduced the highest marginal tax rate to less than 40%. This of course resulted in a significant reduction in the total amount of income taxes paid by the richest citizens in America.
There was no corresponding reduction in the amount money spent by the government. Those government expenses continued to increase through the years and decades.
The Explosion of the National Debt
With the short fall in tax revenue to pay government expenses a new source of cash was needed to pay for the costs of government. The answer was to sell government bonds and to increase the national debt.
Who buys those bonds? Rich citizens, the corporations those rich citizens own, and foreign governments, individuals and corporations.
What a deal for those who have the cash: pay less taxes, buy government bonds, and receive interest payments on those bonds paid by the government.
How does the government pay that ever increasing interest without raising taxes? Cut government services available and reduce benefits given to less wealthy citizens.
So the rich citizens get more and the poorer citizens get less.
How did that song line go?
"The rich get rich and the poor get poorer. . ."
Yes, that was it.
Conclusion
There is a reason why student loans have exploded right along with the national debt.
There is reason why social security and medicare benefits are being called unsustainable.
Is this just another form of picked pockets?
