Taxes vs. Benefits: You Can't Have it Both Ways

This is in response to a Facebook conversation that got too lengthy. Consequently, it might seem disjointed to the casual reader.

While there are many types of pensions, I suspect corporate-financed defined benefit plans are what you consider to be at risk. Actually, retirees and those currently involved in such plans have little to worry about, since those funds, by law, must be put away for the benefactor and only a small fraction of that money can be invested in the parent company. So…the money is already in the bank. In addition, the ERISA Act of 1974 backs this money with a federal guarantee (much easier prior to the Bush tax hacks, since this security represents your tax dollars at work). These companies could all fail now and it would have negligible effect on the current pensioners, with the exception that the investments would no longer earn the returns they once did. Ask any financial manager about defined benefit plans and s/he will tell you they are a dinosaur. Personally, I have a defined contribution plan, where my employer puts money into an account for me now, but cuts me free once I retire. This would not be enough to live on, so I pretty much match these contributions. This is certainly much more common now.

Corporations exist for only one purpose. To make money for their shareholders…and primarily for their largest shareholders, since that's where the governing votes are concentrated. The worker is merely a tool to that end.

The government has only one way to make money, by levying taxes. But what should the government spend that money on? The Constitution is pretty clear. Ignoring the "establish justice," "ensure domestic tranquility," and "secure the blessings of liberty" clauses for now, the two remaining provisions are:

1) "Provide for the common defense…" No argument here. I think that is very important, but I do not agree that a 40 year-old should feel that the government is obligated to support him/her with a pension for life for working in the military for 20 years. This person can't get another job? I've worked for my employer for 20 years. If I went to the HR director and said I was leaving and I wanted her to pay me half my salary for life, I'd get laughed out of the office. You might retort that I am not putting myself in harms way for my country, and there is a different standard in play. During conscription, I might agree…but not with an all volunteer force. Individuals enter knowing what the risks are. I appreciate that there are people willing to take those risks very much, and I am honored by their service, but that is not a blank check. When servicemen and women are injured it is our duty to help them, but my blood boils when someone with a hangnail claims they should be getting disability funds. How do we pay for all this? With all those tax dollars Bush gave away.

2)"Promote the general welfare…" (ah, notice that is says "promote," not "provide,"). So we now have a dilemma: what should we promote, and how should we do it? Again, the primary tools of the government are legislation and the use of revenue to fund that legislation. So what things can be promoted, and what have the legislators considered important in the past. These are the points where the national discussion must be focused. Historically the legislature has been concerned with:

Safety (food and drug, firearms, transportation, child labor, and criminal and family laws, for example);
Fiscal security (minimum wage, consumer protection, and debt relief laws, for example);
Education (Eisenhower, ESA, NCLB, etc.), and
Health (food and drug again, Affordable Care Act, etc.).

All of these are big ticket items. Which of them are sacred rights of citizenship, and which are merely privileges? That is where the debate is focused. Nineteen different polls this year indicate that Americans want higher taxes. They just want someone else to pay them. Sorry, you can't have it both ways. Here's an idea: Let's tax everyone equally. No loopholes, all income is included, and the cutoff is somewhere around $30,000/year for a family of four. About five years ago the CATO Institute found that, at the time, we could do our bushiness at the then current level if we all paid 17%. Sounds pretty good to me.