Is there any reason for today's Americans to care about what happens to tomorrow's Americans? After all, what have tomorrow's Americans done for today's Americans?
Moreover, since tomorrow's Americans don't vote, we can dump on them with impunity. That's a vision that describes the actual behavior of today's Americans. Let's look at it.
Businesses, as well as most nonprofit enterprises, by law are required to produce financial statements that include all of their current and expected future liabilities. On top of that, they are required to hold reserves against future liabilities such as employee retirement.
By contrast, the federal government gets by without having to provide transparent and honest financial statements. The U.S. Treasury's “balance sheet” does list liabilities such as public debt, but it does not include the massive unfunded liabilities of Social Security, Medicare and other federal future obligations.
A conservative estimate of Washington's unfunded liabilities for the year ending in 2011 is $87 trillion. That's more than 500 percent of our 2011 GDP of $15 trillion.
Former Congressmen Chris Cox and Bill Archer have written an article — “Why $16 Trillion Only Hints at the True U.S. Debt,” The Wall Street Journal (Nov. 26) — pointing out our dire economic straits. They say, “When the accrued expenses of the government's entitlement programs are counted, it becomes clear that to collect enough tax revenue just to avoid going deeper into debt would require over $8 trillion in tax collections annually. That is the total of the average annual accrued liabilities of just the two largest entitlement programs, plus the annual cash deficit.” Let's analyze that.
Washington would have to collect $8 trillion in tax revenue just to avoid accumulating more debt. If Congress simply confiscated the entire earnings of all taxpayers earning more than $66,000 and all corporate profits, it wouldn't be enough to cover the $8 trillion per year growth of U.S. liabilities.
But the message coming out of Washington, especially from our leftist politicians and the news media, is that we solve our budget problems by raising taxes on the rich. If Americans were more informed, such a message would be insulting to our intelligence.
In 2011, Congress spent $3.7 trillion — about $10 billion per day. Households earning $250,000 and above account for 25 percent, or $1.97 trillion, of the nearly $8 trillion of total household income. If Congress imposed a 100 percent tax on all earnings above $250,000 per year, it would bring in about $1.9 trillion. That would keep Washington running for only 190 days.
The profits of the Fortune 500 richest companies come to $400 billion. That would keep the government running for another 40 days, to mid-July.
America has 400 billionaires with a combined net worth of $1.3 trillion. If Congress fleeced them of their assets, stocks, bonds, yachts, airplanes, mansions and jewelry, it would get us to at least late fall.
The fact of the matter is there are not enough rich people to come anywhere close to satisfying Congress' voracious spending appetite. The true tragedy for our future is that there are millions of uninformed Americans who will buy the political demagoguery and treachery that our problems can be solved by taxing the rich.
Walter Williams is a professor of economics at George Mason University.