Saturday, April 14, 2012

Economics in the 1960's

President Lyndon Johnson, with the cooperation of a Democrat majority in both houses of Congress, created two of the nation's biggest spending schemes: the war in Vietnam, and the "Great Society" programs. These big-ticket items created deficit spending and debt which would continue for decades. Looking back, we can see the fiscal disaster, but at the time it was not so obvious. There were some people at the time who saw clearly the looming financial disaster which LBJ's programs would cause. Senator Barry Goldwater wrote:

Here is an indication of how taxation currently infringes on our freedom. A family man earning $4,500 a year works, on average, twenty-two days a month. Taxes, visible and invisible, take approximately 32% of his earnings. This means that one-third, or seven whole days, of his month labor goes for taxes. The average American is therefore working one third of the time for the government: a third of what he produces is not available for his own use but is confiscated and used by other who have not earned it. Let us note that by this measure, the U.S. is already one third "socialized." The late Senator Taft made the point often. "You can socialize," he said "just as well by a steady increase in the burden of taxation beyond the 30% level we have already reached as you can can by government seizure. The very imposition of heavy taxes is a limit on a man's freedom."

From our later perspective, an annual salary of $4,500 may seem small, but the percentage numbers are still relevant. If we add together sales tax, income tax, property tax, gasoline tax, cell phone tax, and dozens of other taxes on everything from beer to airplane tickets, we realize that the government is taking a greater and greater portion of every working American's income. We're feeling the pain of such taxes now, but the seeds of this suffering were planted in the 1960's.