Sunday, March 25, 2007

The Impending Republican Disaster

by Dick McDonald
March 24, 2007

Have you ever wondered why the Democrats are so successfully demagoguing the economy? In spite of absolutely overpowering statistics to the contrary, 65% of the people bought the media lie that our economy was in trouble and installed Democrats in Congress. Democrats probably tipped the scales in 2006 promising to do something for the people. They promised “middle-class” tax cuts. To the uninformed, “tax cuts” are what Republicans do, not Democrats. So after they won, the Democrats forgot about their promise but not its effectiveness.

They have begun their mantra to drive home that the Republican’s “trickle down” made the rich richer and a $50 Million Christmas bonus to a Wall Street CEO proved it. Trickle down has created 932 billionaires according to the latest Forbes. The income disparity is beyond the pale and they are going to stick that unfair distribution of wealth on Republicans and “their” capitalism. I promise the people will respond to that issue as the Republicans are content to spend like drunken sailors and are in a defensive mode about the Bush tax cuts.

Republicans appear absolutely dumbfounded. Here they improved the lot of everybody by “trickle down” and the Democrats are honing in on that very successful economic theory as it created an income disparity of enormous proportions. Republicans are relying on their stats and the Democrats their emotions. The Democrats are going to win in 2008 barring any stupid move by the terrorists that will insure a Republican victory. They have the advantage; they have a bread and butter issue; a tried and true pocketbook winner that Americans usually vote for.

Republicans are whining about immigration, gay marriage, abortion, Christian morals, anti-war leftists and every issue under the sun that has no direct effect on the voter’s pocketbook. Republicans have no bread and butter issue so the 85% of the voters that feel Congress is incompetent will glom onto any party that promises them tax relief. At this point I say the Democrats and their promise to even out the playing field will destroy Republicans in 2008.

Academe and the media will beat the income disparity drum so hard that it will be deafening and predictably emotional. I suspect Republicans will retreat to their past trickle down victories and get their head handed to them. If you don’t believe me just reflect on the made-for-television dramas of Valerie Plame, Global Warming, Bush’s lies, Clark’s intelligence and the rotten economy and you begin to believe that the NYT and its girls can make Americans believe anything.

I have advanced the “rise up” theory of economics which postulates that the 15% presently collected by government in the form of payroll taxes be diverted to personal accounts of each taxpayer and invested in the stock market for their 40 to 50 year working life. As a part of that plan, the taxpayer would have no right to invade the funds and Congress would have no right to confiscate them as they would be the private property of the taxpayer accumulating until he retires.

The $360,000 a $60,000 a year truck driver would have withheld in 40 years if invested at zero (0%) return would still give him a $360,000 nest egg. However, in 40-year increments the S&P 500 has returned over 12% annually for the last 25 years and near 10% since 1871. At a 10% return per year that truck driver would have a nest egg of $4.8 Million. With a nest egg that large and with a continuing 10% return he would get a $40,000 monthly retirement check and still be able to will his kids the entire $4.8 Million nest egg. A $7.25 an hour minimum wage earner would have a nest egg of $1.2 Million and a $10,000 per month retirement check in 2006 dollars after 40 years.

This is a bread and butter issue the Republicans could adopt and finally win the approval of the people; you know the 85% who think they and the Democrats are doing a lousy job. It happens to be a very Republican issue. It cuts a trillion off the national budget and gives the people the biggest tax cut in history. That cut favoring the poor who must pay payroll taxes whereas the rich become rich through untaxed dividends and capital gains. In addition we would extinguish the existing unfunded Social Security and Medicare liabilities and eliminate the need for tens of thousands of public and private retirement and old-age medical plans that would be easily financed out of a retirees own income.

The knee jerk reaction is that this is a plan to “privatize” Social Security. It is not so shallow. It promises to make the poor rich. Those who can’t compete for the big bucks just have to be stable and industrious during their working life and the personal account will deliver their bonanza. To my way of thinking this is not only an economic imperative it is a social imperative as so much pain in the world is caused by unnecessary poverty. If everyone in the world was forced to save and invest 15% of their lifetime income in their own capitalist economy there could be peace on Earth someday soon.

Don’t let anyone tell you we can’t afford it. We owe only $2.2 Trillion to all foreigners and we have a $400 Trillion country. We are so filthy rich it is embarrassing. And the Democrats are going to shove this fact down our throats if we don’t counter their income disparity issue with one that makes the poor rich, reduces our budget, gives all a tax break and pays off our unfunded liabilities. Now there is a winning bread and butter issue. Remember they vote with their pocketbooks.

Adding rise up to the trickle down is the moral thing to do. It is a fair thing to do. It is also the American thing to do. Our negative savings rate that impedes our growth when changed to a forced 15% savings will explode our economy and the pool of capital we have to turn the world to democracy and free markets and hasten the day of Peace.

Dick McDonald maintains a blog at

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