The paradox of Ron Paul's budget+tax stance

[jon_perez]

Ron Paul and supporters often mention that the government's is in extremely dire straits fiscally speaking (this GAO paper seems to be strong proof that such grave concerns are true: http://www.gao.gov/new.items/d07362sp.pdf ).

But if Ron Paul wants to remove the IRS and end personal taxation, as well as terminate the Fed Reserve and return to "sound money", how does he expect the government to pay off its debts?

I'd like to hear a good plan for this, since while Paul's economic goals sound very very nice in theory, how it's going to be accomplished is a completely different thing, it seems close to impossible to pull off all three because "no IRS, no FED, reduce/eliminate deficit" will be - in the short to medium, if not also the long term - very very contradictory goals.

The primary strategy is of course to end myriad government subsidies and programs, but let's see how well that goes down for the majority of americans once they start feeling the pinch.

 

[qednick]

So you don't think the federal government waste any money at all then? You seriously don't think there's any cuts to be made anywhere?

 

[aravoth]

It would be very easy. Since the income tax only pays for the interest on loans borrowed from the federal reserve. Highways, freeways etc, are paid by the federal gas tax, schools are paid for by local levies and property taxes, the military is paid for by a corporate excise tax.

Step one : Abolish the federal Reserve. No more borrowing money.

Step two : Slice federal Programs, drastically, freeing up more money

Step three : use the surplus from slashing un-needed programs, and the income tax to pay off the debt. / Or, abolish the IRS and the income tax, and institute the fair tax for a period of 3-4 years. That would generate enough revenue to totally balance out the budget. (becuase you are not borrowing money anymore, so no new debts are being incurred)

Step four : once the budget is balanced, and the debt is paid. Aboloish the IRS and income tax / or abolish the fair tax, depending on what option you chose.

Step Five : Return to the gold and silver standard

Step six : Drink a beer and enjoy the fact that your money will never loose value, and that you just took down 2 of the most crooked organizations on the planet.

 

[mdh]

aravoth's pretty much got the right idea. Of course, none of this goes on over night. It can be done. It's taken us over a hundred years to get to this messed up point in terms of federal funds, and it's fixable in much shorter time than a century if everyone works together. Is it doable in one 4 year term? Not realistically, no.

 

[jon_perez]

So you don't think the federal government waste any money at all then? You seriously don't think there's any cuts to be made anywhere?

I think that to achieve all three goals of removing the IRS, the Fed *and* erasing the deficit will require massive scaling back of funding of government projects.

Reagan talked about something similar a lot, but I don't think he made much headway. I believe this is because the task is THAT difficult. The people are fickle, I'm sure that when government services start to deteriorate or disappear due to lack of funding, the same people who supported Ron Paul might be the ones who start whining...

Ron Paul by all accounts, seems to be a good and honest leader, but just because he's a good leader does not mean that all the policies he enacts will be painless even if they are ostensibly for the good in the long run. I think that's just something that Ron Paul supporters should keep in mind if he does become president.

 

[aravoth]

Yes the economic policies will be painful in the short run. But that pain is nothing compared to the dollar crashing, american companies going oversees, and america turing into a welfare state.

 

[qednick]

Dang, makes you wonder how we all managed before the IRS and Fed were created in 1913 doesn't it?

 

[Gabecpa]

Yes the economic policies will be painful in the short run. But that pain is nothing compared to the dollar crashing, american companies going oversees, and america turing into a welfare state.

Too late

 

[jon_perez]

It would be very easy. Since the income tax only pays for the interest on loans borrowed from the federal reserve. Highways, freeways etc, are paid by the federal gas tax, schools are paid for by local levies and property taxes, the military is paid for by a corporate excise tax.

I'm not sure how true this is. I also got hold of this fact in from Aaron Russo's "Freedom to Fascism", but you also have to consider other viewpoints such as: http://www.geocities.com/CapitolHill/Senate/3616/FedReserveFacts.html
a site that exposes what it claims are myths about the Federal Reserve.

For what it's worth, I fully believe in Ron Paul's sincerity regarding his views that the Fed Reserve is better abolished and, having done a fair amount of research into Ron Paul's writings over at lewrockwell.com , I am also convinced that he is quite knowledgeable in economic issues and would not propose crackpot solutions (but perhaps experimental/risky ones with a high risk/reward ratio?)

You can expect filmmakers like Russo to sometimes resort to a bit of hyperbole and selective editing and quotes to "emphasize" their points. Ron Paul himself knows how to play to an audience (as anyone running for office had better have some skill at), but nothing I have heard from Paul so far indicates that he carelessly bandies around "facts" and statistics for the sake of bolstering his position.

The man is a critical thinker and he is genuinely honest and I'm not sure he would claim that "the income tax only pays for the interest on loans borrowed from the federal reserve" which strikes me as a rather suspiciously simple-minded statement to make.

Step one : Abolish the federal Reserve. No more borrowing money.

Step two : Slice federal Programs, drastically, freeing up more money

Step three : use the surplus from slashing un-needed programs, and the income tax to pay off the debt. / Or, abolish the IRS and the income tax, and institute the fair tax for a period of 3-4 years. That would generate enough revenue to totally balance out the budget. (becuase you are not borrowing money anymore, so no new debts are being incurred)

Step four : once the budget is balanced, and the debt is paid. Aboloish the IRS and income tax / or abolish the fair tax, depending on what option you chose.

Step Five : Return to the gold and silver standard

Step six : Drink a beer and enjoy the fact that your money will never loose value, and that you just took down 2 of the most crooked organizations on the planet.

All in a day's work, eh?

 

[Bryan]

Keep in mind that as massive as income taxes are "individual income taxes account for only approximately one-third of federal revenue. Eliminating one-third of the proposed 2007 budget would still leave federal spending at roughly $1.8 trillion-- a sum greater than the budget just 6 years ago in 2000!"
http://www.house.gov/paul/tst/tst2006/tst041006.htm

 

[aravoth]

All in a day's work, eh?

Hehehe. I can't remember the name of the comission that Regan initiated. But during his first term regan investigated the entire tax code, and where all the money went from the income tax. And thats what he found, that before any money from the income pays for programs, it pays off the debt. Was it the blue comission? I can't remember.

 

[jon_perez]

It's good to hear there's some support for the assertion that terminating the Fed and the IRS would balance each other out fiscally speaking.

 

[jon_perez]

Yes the economic policies will be painful in the short run. But that pain is nothing compared to the dollar crashing, american companies going oversees, and america turing into a welfare state.

The United States is already a "welfare/nanny" state in many respects. That is not all bad. Many of the European states operate like this and run skillfully, a "welfare/nanny" state (it's too bad this has negative connotations) can mean a higher quality of living for its citizens who do not have to think about work, work, work all the time.

On the other hand, corruption and vested interests, if not properly monitored, can do grave abuse to such a concept and make things worse for all the citizens in the long run.

It's about striking a balance as well as skillful implementation of policies. The latter is perhaps something that has not been happening much in the US. I believe the amount of taxpayer money wasted in abuse of Katrina aid claims is frightening.

 

[qednick]

jon, I think the immediate objective would be to start decreasing wasteful spending instead of federal government having carte blanche to waste money like it's going out of fashion.

Government is notoriously well known for being inefficient at running anything. I think government should run less and leave certain things to the free market. Otherwise, you end up with massive monolithic bureaucratic entities run by jobsworths who have nothing better to do than make rules just for the sake of making rules. I know because I've had first hand experience - I was born and raised in the UK and things over there are a joke now due to massive government.

How to achieve that... I'll leave that to the experts. All I'm concerned with is are my grandkids going to be comfortable or broke depending on what we do now.

When it comes to politics, people keep talking about left-wing this or right-wing that. I no longer think left or right, I just look forward.

 

[qednick]

The United States is already a "welfare/nanny" state in many respects. That is not all bad. Many of the European states operate like this and run skillfully, a "welfare/nanny" state (it's too bad this has negative connotations) can mean a higher quality of living for its citizens who do not have to think about work, work, work all the time.

On the other hand, corruption and vested interests, if not properly monitored, can do grave abuse to such a concept and make things worse for all the citizens in the long run.

It's about striking a balance as well as skillful implementation of policies. The latter is perhaps something that has not been happening much in the US. I believe the amount of taxpayer money wasted in abuse of Katrina aid claims is frightening.

Which European nanny states do you think are skillfully run?

They reckon 1/3rd of the UK population relies on some form of welfare to make up their living now. They are letting tons of immigrants in from former eastern block countries to make up the shortfall in pension contributions for current retirees. They have reduced numbers of police to such low levels that crime is rampant and sometimes it takes 2-3 days for police to arrive after emergency calls. The police are too busy tied up in red tape trying to avoid lawsuits because if a crime victim or a police officer hurts a criminal the criminal will sue them.

If you want to read some amusing (but ultimately sad) stories of the British nanny state, visit http://nannyknowsbest.blogspot.com/ and read some of the ridiculous stories on there.

Because I've lived in both countries, I have experienced the rise of the Big Brother nanny state first hand and, sadly, I see the exact same thing happening here. I support Ron Paul because he seems to be the only candidate willing to reverse that trend rather than jump on the nanny state welfare state big government bandwagon so they can line their own pockets.

 

[Gee]

Stopping the war and pulling out a lot of our overseas troops would free up a lot of money. So would cutting the department of education. The later would probably take more time, though, since you don't want to disrupt the school system or cut off funding to it, you just want to downsize the bureaucracy. If Dr. Paul somehow managed to get the Federal ban on some drugs like marijuana lifted, that could pay off BIG time. Not only would enforcement and jail costs be cut, but its sale and production would be taxed as well.

Then there are corporate subsidies... The federal government gives out a LOT of money to corporations (20 billion just to argiculture).

Don't forget the TSA... You've got to love all the federal employees standing around in 2-terminal airports with spectrum analyzer machines sniffing for terrorists

I disagree that it would be so painfull at first. Lower taxes and less regulation nearly always equal more economic growth. Look at the Reagan years, yeah he totally failed to cut back on spending, but his tax cuts did help.

Of course, you need the support of congress, and even then things would have to be scaled back gradually. I'm not hopefull, but its do-able.

 

[Hancock1776]

Harry Browne Plan

Back when Harry Browne ran for president on the Libertarian ticket, he spoke about selling off some of the vast government assets.

Government owns so much land on this continent it would make your head spin. The government is also the biggest investor in insurance companies. Why does our government need to own stocks?

That alone would cover those entitlements a great deal, and at the same time diminish the government's dominance over our property and economy.

There is PLENTY of fat on this pig, and the more I see of Ron Paul, the sharper he looks. I am convinced he is at least 10 times smarter than me, and has already worked out how he's going to pay for those stupid entitlement programs before he phases them out.