Today's American Revolution

The American Revolution – Part II

Dick McDonald
www.riseupamerica.us
www.dickmcdonald.blogspot.com


America was the first country in the world to attempt to cripple “Big Government”. It started a Revolution to free itself from a tyrannical big government - a government headed by a King who had imposed taxes on the American colony to fight a war with France. Taxation without representation was the rallying call of our patriots.

Eleven years after declaring its independence, America signed a pact with itself to be ruled by a constitution - a compendium of laws designed to put the individual in charge of the state. It established rights of individuals and prescribed limited powers to the central government. The Founders realized that a country governed by its people had a better chance for survival and success than any form of totalitarianism.

One of the most important feature of that document was that no taxes were imposed on the income or wealth of the people thereby assuring the population that “big government” would never again emerge to confiscate private property. The Founders believed their Constitution would insure freedom and liberty for all through capitalism. Capitalism was and is the economic discipline used when countries transact business with each other and the Founders made that the economic standard in America in transactions between its citizens.

That was then and this is now. The Constitution has been amended and slowly but surely the American people have ceded their power to the state and become powerless to force the politicians to work on their behalf – exactly what the Founders didn’t want to happen. The majority of Americans find themselves unable to live comfortably, pay their taxes and still save for retirement. Politicians have damaged the American economy with laws that suffocate capitalism. That is particularly true for the poor and middle-class in America. As a result today they are so frustrated by political inertia they are willing to let socialists and Marxist further cripple capitalism by expanding “big government” through punitive taxation on the "rich" members of society in hopes of finding a solution to their dilemma.

Considering that frustration many say that the 2008 election will usher in a new chapter in American history. They conclude that America had its collectivist cycle with FDR that lasted from 1932 to 1968 and the individualist cycle with Reagan that has lasted from 1968 to 2008. Many believe that America is again going to call on big government collectivists to run the American economy in the next term.

We believe that electing Democratic socialists is the worst possible solution to the plight of the ordinary American. It is no solution. The Democrats talk the talk but don't walk the walk - they just promise the American Dream but never deliver it.

In the American Revolution Part II the stakes are a lot higher than electing Democrats or Republicans. America has to reform a good part of its economic system to fix what is wrong – to achieve what the people really want and logic demands. The country is the most successful on the planet but it is only running on one cylinder – the country should be a lot wealthier and every American should be a lot closer to achieving the American Dream of financial independence – a whole lot closer.

History tells us that Democrats and Republicans have done nothing to really improve the lot of the poor and middle-class in America. Sure America has the richest poor people and the biggest middle-class in the world – but why should that be our benchmark. Too many are still poor, have no property and fewer prospects of achieving the American Dream than ever before. Through the combination of the Federal Reserve fueling inflation by printing too much money and the punitive taxes the poor and middle-class have to pay ordinary Americans today have no chance to reach that dream no matter which party is in power.

Common sense suggests that if the poor and middle-class were wealthy they would be able to afford things like retirement, higher education, higher gas, energy and food prices, their own home and the rest of those things promised in the American Dream. So what history can America call on to prove that it can solve this dilemma - solve poverty? We have ample proof that communism, socialism and big governments can’t – they never have. So what will work?

Believe it or not capitalism has proven it can solve poverty. We just need to start with those who became rich using capitalism. In the late 50’s I entered the tax field and the second income tax return I prepared was for the planet’s only billionaire – J. Paul Getty. Earlier this Spring Forbes magazine disclosed the names of over 1,000 billionaires mostly earning that status in the last 25 years. What happened to change the American economy so radically that it was capable of creating so many billionaires (those with over 1,000 million dollars)?

What happened was a massive change in the way the big government taxed the income of Americans. It was the first phase of supply-side economics. I call it the first phase because I hope the American Revolution Part II is the second phase. I consider these phases part of the return to what the Founders envisioned for America – a people free of taxation on income - free to use that money to grow the economy and improve their own living standard. This is what happened.

Twenty-five years ago the top income tax rates were dropped from 70% to 28% allowing the people to keep and invest more of their own money. In 2002 the government dropped dividend tax rates from 35% to 15% making investment even more attractive. Many people took advantage of these breaks invested in the economy and created an absolutely enormous class of wealthy Americans. Ordinary Americans call them the “rich”. By letting them keep their own property capitalism eventually made them rich and the country wealthier.

All of which brings me to the American Revolution – Part II. Let capitalism make the poor and middle-class wealthy too. Empirically capitalism can do it and do it easily. Now in your wildest dreams do you think the majority of the American people would buy into that plan – a plan that will make them wealthy? What are their prospects now?

They have been fooled into further “economic slavery” and an impending era of limits by their supposed advocates in the American socialist movement. Their champion, a street-organizer is a one-solution fits all kind of politician – tax the rich and redistribute that money to the poor and middle-class. Unfortunately his plan won’t work – Democratic socialism never has and never will. The poor and middle-class will never achieve the American Dream for the simple reason – that under Democrat rule they will never get a pool of capital to benefit from capitalism.

If I didn’t make it clear, American history is proof positive capitalism can solve poverty. The surge in America wealth in the last 25 years was triggered because the state stopped confiscating more than half of the income of the American taxpayer. Many invested that extra money and let their profits compound until they became wealthy. Had we kept marginal income rates at those high levels we would still be limping along and much poorer as a country. Unfortunately projections of tax levels under the street-organizer are predicted to rise to pre-Reagan levels - approaching 60%.

Now that the rich are wealthy what about those left behind? How can they get on our capitalist band wagon? What will make the poor and middle-class rich other than redistributing money from the wealthy? The answer is simple. Get them a pool of capital to invest in the stock market that over their working life will compound and make them wealthy too.

A pool of capital is almost too easy to find in America. For starters try privatizing the 15.3% in payroll taxes confiscated by big government from every worker’s paycheck throughout his working life. It is his money and the government is his government. Invested in the stock market for 40 years earning the historical rate of return will make the taxpayer a millionaire capable of funding an affluent retirement and the best medical care on the planet. As this plan would be involuntary just like Social Security and Medicare is today, it would present no hardship.

Today the people are screaming for big government to do something to stop the economic bleeding. Privatizing these entitlements would be a first step in restoring the “crippling of big government” our Founders had in mind. The enactment of private accounts would cut the government’s budget in half by removing entitlement funding. See below to learn how this revolutionary plan would still pay off all obligations under the discontinued plans.

Many of those elite Americans - wealthy and indoctrinated in liberal philosophy - are opting to back the socialists in the Democrat party in 2008 with full knowledge that their own wealth will be untouched by liberal legislation. As hypocritical as it is, this is the America way – selfish and individualistic. Oh they talk about solving poverty but see to it that their government never has that kind of money.

Those elites, the Democrat party and the real socialists along with the Republican party have absolutely no interest or legislative plan to improve the financial strength of the poor and middle-class. Promises to give them a $1,000 tax break and lower income tax rates and preferential education will not make the poor wealthy. In fact when you look up who is trying to make the poor rich on Google you only find several religious articles excusing the church from that responsibility. Oh they will hand out food and provide temporary shelter but attempt to make them rich – forget it. The standard excuse is let them get educated, work hard and get lucky.

There is no single impediment in the way of making the poor rich than the refusal of the political class to give the poor and middle-class back 15.3% of their lifetime income to invest in their own economy for the 40 to 50 years of their working life. As Americans save so little today (it often slips into negative figures) what better way to make America wealthier than to make all its citizens millionaires.

The Democrats derisively called the first phase of the supply-side revolution the “trickle-down” theory. If we made a class of rich people that invested in the economy it would trickle down to the poor. It did just that. However, by comparison to the wealth showered on the “rich” by “trickle-down” a great gap in comparative income and wealth has evolved.

Ordinary Americans are besides themselves because that disparity along with punishing inflation has led them to look for an answer and the only person listening is the street organizer. He understands the plight of the poor and middle-class as he has been schooled in collectivist dogma of the communist, socialist and Democratic socialism movements. Of course he is smarter than to be one of them, he is no doubt a capitalist using populism to get the power needed to employ the only arrow he has in his quiver – taxing the rich. That policy guarantees the continued poverty that underlies the support of his party and his run for office.

So here we are at the cross roads. Unfortunately the American people have been offered only one road – continued economic stagnation. Electing the street organizer will only make it worse but electing his adversary and their party only guarantees a continuation of the inability of ordinary Americans to achieve the American Dream.

The only recourse ordinary Americans have is the power they exhibited in 1776 to fight the totalitarians and recently to preserve their sovereignty by opposing amnesty. It is going to take a grass roots movement on the part of the American people. People on Main Street will benefit by becoming wealthy and people on Wall Street will benefit by making the capital markets explode with a massive source of new capital. The only people scarred by this revolution will be the politicians whose entitlement industry will be dismantled and their ability to dictate how Americans have to suffer an era of limits or other political cruelties will be extinguished.

Americans are not on the cross roads, they are not facing a new chapter in American history in 2008 they are on the precipice of a hill ready to be plunged into socialist punishment in the canyon below. It is not terminal. America is too big and too savvy to let socialism creep too far into their society. Presently the underclass in America don’t have an alternative to their dilemma – they are going to have to start their own American Revolution Part II.

We at the Ownership Society Institute have a website and book promoting this second phase of the supply-side economic revolution – we call it the Rise Up America plan and it can be found at www.riseupamerica.us. There are tables on the site that illustrate how even a minimum wage earner will end up a millionaire at retirement. There are tables illustrating the explosive growth the economy would realize if it adopts Rise Up.

The standard objection to what most people know will make them wealthy – privatizing entitlements – is that we can’t afford the transition. They ask where are we going to get the money to pay off all the present retirees and those retiring in the near future who don’t have time to accumulate a significant nest egg. The Plan answers that question illustrating how not only to fund private investment accounts and pay off all old program liabilities but in the process increase the value of the US dollar. See here and here and here.

You might want to check out Rise Up America as it promises to:

Make the poor rich
Make America wealthier
Extinguish $45 trillion in unfunded debt
Reduce the Budget by $1.3 trillion
Deliver the largest tax cut in history
Make 100% of Americans capitalists
Increase the value of the US dollar
Make American products competitive
Reduce management-labor difficulties
Cut our national debt from $9 to $5 trillion
Economically emancipate women
Increase retirement benefits

And Much, much more!

Happy Independence Day

Ownership Society Institute
Dick McDonald, Managing Director