On Freedom

Recently the Obama Administration released their 2013 budget for Congress to approve. 2012 is also an election year in which the importance of government and the value of freedom are consistently raised by presidential hopefuls. However, Republicans and Democrats alike continue to increase the size of government and encroach upon the freedoms guaranteed to citizens of the United States by the Constitution. Specifically, federal spending continues to grow, as a percentage of gross domestic product, meaning that more of our economic freedoms are being taken by the government. Albert Einstein said, “Everything that is really great and inspiring is created by the individual who can labor in freedom.” In order to remain fiscally responsible, the United States should adopt a Balanced Budget Amendment to protect the economic freedom of its people. The continuing deficit by the federal government in the national budget undermines the economic freedom of the U.S. people by producing egregious taxation to it’s citizens, significantly weakening the value of the dollar, and reducing savings and investment by individuals and corporations alike. 

Taxation is necessary to run an effective government, but irresponsible spending and poor budgeting on the part of the United States government creates erroneous taxation. Currently, U.S. corporate taxes are among the highest in the world. When a company makes a sale, costs are deducted from that revenue and taxes (35% corporate tax) are paid on what’s left over. The income is then distributed to the owners of the businesses who are then in turn taxed (30% income tax or 15% capital gains tax) on the profits that their business made. When they take that money to buy groceries or a car they are taxed yet again (5-10%) in the form of a sales tax. In order for the government to fund its outrageous spending it dips it’s fingers into nearly every transaction that takes place in our economy. Taxation is obviously mandatory and takes money away from citizens to give to the public. As we all know, public goods depreciate faster and are not maintained as well as private property. Individuals who argue that the government has an obligation to promote the economic security of its citizens would rightly be reminded of Benjamin Franklin’s warning, “Those who desire to give up freedom in order to gain security will not have, nor do they deserve, either one.” Government spending cannot and should not replace the individuals right and responsibility to work and create value in society in order to achieve financial security.  By taxing individual’s incomes and corporate profits, the government continues to take a larger share of the economic freedoms of the citizens of the United States. The more the government spends, the more it taxes its citizens, and the more its citizens are taxed, the less economic freedom they retain.

Inflation is another form of taxation which significantly reduces the value of the dollar over time. Even after the trillions of dollars that the government takes in through tax revenue, it is still not enough to cover the outrageous spending budgeted in year after year. The Deficit that we hear so much about is the difference between how much the government spends each year versus the the amount that it takes in. The “National Debt” is the deficit that the federal government has accumulated since the government was founded over two hundred years ago. It is now around 15 trillion dollars which is larger than the U.S. gross domestic product. In oder to fund this deficit, the Federal Government can do two things. First, it can go into debt by issuing bonds in the form of Treasury Bills, or it can have the federal reserve print more money.  When the Federal Reserve prints more money than is currently in circulation, inflation occurs - the more paper bills in circulation, the less value each bill retains. Thus, inflation is another method by which the government can fund it’s spending. However, because inflation devalues the dollar, printing money is just another method whereby the government can tax its citizens. When the government has to go into debt and dilute the value of the dollar in order to match its spending, it is not being financially responsible. Friedrich Nietzsche wrote, “Freedom is the will to be responsible to ourselves.” We as citizens cannot accept the fiscal irresponsibility of the federal government. Simply put, the more money the Federal Reserve prints the less purchasing power the money in our wallets contains. Government spending clearly undermines the economic freedom of it’s citizens by diluting the dollar’s value.  

One of the most fundamental rules of financial welfare is that you should not spend more than you make.  When the government consistently spends more than it takes in from tax revenue  it is clearly breaking this principle. With government spending so high and inflation rates that will make your savings accounts accumulate a net loss over time, there is little incentive for individuals to set money aside. As individuals set money aside, it losses value due to constant inflation of the dollar. It seems to be more wise to spend your paycheck before inflation dilutes its purchasing power. As government spending takes a larger percentage of gross domestic product, businesses have a hard time competing and the market’s growth is slowed. There is less incentive for businesses to invest in plant, property and equipment and grow their business over time. Risk is what has made America great and has also sparked much of the innovation and advancement over the past two hundred years. As Gandhi once taught, “Freedom is not worth having if it does not include the freedom to make mistakes.” With the government so involved in our economy businesses and individuals are less likely to take risk and make investments - it becomes too costly in the form of taxation and debt held by the public. Clearly, government's growing involvement in the economy reduces individual economic freedom and hinders savings and investment.

Because of unsustainable government policies and budgets individual economic freedoms are being undermined as a result of increasing taxation, devaluation of the dollar, and a decrease in savings and investment. The Balanced Budget Amendment is a clear and valid solution to check the government and protect the freedoms of individual citizens. I have always believed that I know how to spend my money better than the government does. I am sure you do to. Thomas Paine, an early revolutionary thinker of our nation, wrote, “Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it.” 

QUICK SURVEY:

What do you think about the US deficit and what do you think should be done about it?

Answer below in the comment box.