Confederate President Jefferson Davis remarked during the War for Southern Independence that “If the Confederacy fails, there should be written on its tombstone: Died of a Theory.” President Davis was referring to the political theory of states’ rights and how it was undermining the war effort, as state governments were constantly resisting repeated calls for cooperation with Richmond.
Should America fail, our tombstone should read: Died of Politics. As the nation stares a serious fiscal crisis in the face, most of the political talk in the last couple of weeks has centered around a Missouri US Senate candidate’s stupid remarks about rape, as the Democratic Party and its allies in the media attempt to tie the comments to every single Republican, including Romney and Ryan.
Our political culture has become so inundated with petty, partisan politics that it is becoming more and more difficult to get much-needed reforms enacted because any serious discussion of major policy changes is meet with the usual litany of demagogic attacks designed to scare one group or another in order to score political points.
One of the biggest problems facing the United States, which almost no presidential administration will dare touch, is the huge unfunded mandate in the Social Security and Medicare systems. A new estimate has the overall mandate tab at a staggering $117 trillion. But since these programs are considered the “third rail” of American politics, and therefore untouchable, nothing will ever get done.
It seems we can’t even discuss serious reform proposals. President George W. Bush attempted a partial privatization of Social Security, only to have the Left drag out its oft-repeated demagoguery and sufficiently frighten enough of America’s senior citizens to kill the proposal. Even though a privatization plan would be a huge benefit to future retirees, it was killed by politics. Paul Ryan’s Medicare plan is facing a similar assault.
The South American nation of Chile had a retirement system modeled after the United States, which was also in bankruptcy. In 1981, the government there put politics aside and switched its government-run system to a privatized version where its citizens can invest in individual retirement accounts in the private sector.
The result has been one of the fastest, most robust economies in Latin America, and Chileans will have a much greater return on their money, more than 10 percent per year. Compare this with our Social Security system, where you are lucky to get 3 percent. Instead of a monthly Social Security check for $1,000, it would be nearly $4,000 under that system.
Since the Chilean reform, eight other Latin American nations have implemented similar systems. In Europe, Poland has followed suit. Our politicians, however, allow politics to get in the way of such progress, which seems to be par for the course with our current crop in Congress, demagogues on one side of the aisle, cowards on the other.
Nations in Eastern Europe have long been in the process of studying Reaganomics and beginning to implement flat tax systems and fiscal policies that have proven to work. Estonia, Slovakia, Georgia, Ukraine, Serbia, Bulgaria, Albania, and Russia (Yes, Russia!) have all dumped complicated tax systems similar to ours in favor of the flat tax.
Other nations are considering doing likewise, even China. For those that have instituted reforms, the results have been staggering. Revenues have greatly increased, as well as economic growth, while tax evasion and the underground economy have become almost non-existent, according to the Hoover Institute. At least 25 nations around the world have revolutionized its tax code with this simple system.
A flat tax or the fair tax would be a boon to our economy. It would simplify the code and free up billions of dollars not spent on accountants and lawyers that could be invested in the private sector. Imagine filling out your taxes on a single index-sized card and mailing your check into the IRS, with no taxes on savings or your estate after you die.
Even corporations would come under this plan. That’s billions that can be invested in the company for higher wages, better benefits, and more innovation. In short, the flat tax system has worked miracles everywhere it has been implemented.
But here in the United States, the beacon of freedom for the rest of the world, a nation that was born from a tax revolt, cannot get similar reforms enacted. Why? Because of politics! Democrats consistently demagogue the issue, using their oft-repeated class warfare rhetoric of “a tax cut for the rich,” a cry heard at every turn.
I find it quite embarrassing that instead of leading the world on many of these important issues, we find ourselves, because of politics, having to learn lessons from Chile and Bulgaria.
The United States, once the leading nation on earth in terms of innovation and progress, is now regressing. Other nations of the world follow the America of old; we seem to want to keep Barack Obama. Other nations move toward freedom, we towards tyranny. And should we continue to follow this path, we do so at our peril.
This column appeared in the Laurel Leader Call (Laurel, MS) on Tuesday, September 11, 2012.