Who is more irresponsible, members of Congress or voters who ignore – even support – their irresponsible behavior?

We have reached the point that lawmakers rarely even attempt to pay for their priorities. (Sen. Joe Manchin (D-W.Va.), in his heroic effort to change the Build Back Better legislation from a budget-busting bill into the deficit-reducing Inflation Reduction Act, is the leading exception.) But most often we hear nonsense like tax cuts pay for themselves, or certain priorities are so important they should not be paid for, or we should just print more money, or in the case of the president, we don’t hear much justification — he just makes abrupt changes by executive order.  

We are going to have to make a change.

The best thing Congress can do to ease inflation and reduce recession risk is to enact a deficit reduction package designed to help stabilize the economy. It would require savings of roughly $7 trillion over a decade to stabilize the debt-to-GDP ratio where it is now, over $13 trillion to bring it down to 80 percent, and about $15 trillion to balance the budget — a goal that is sadly no longer reasonable this decade given how large the problem has become. Normally one would want to phase the changes in quite gradually, but in the face of inflation, some large upfront savings would be desirable. We have developed one possible outline with the Committee for a Responsible Federal Budget’s Fiscal Blueprint.

The Hill

I have concluded that a substantial percentage of the American people are just selfish. They want more and more from government programs and fail to realize government is not the source of anything – taxpayers are. Scandinavia is a model for both generous social programs and the broad-based taxes to pay for them. You can’t be responsible and have one without the other.

Scandinavian countries provide a broader scope of public services—such as universal healthcare and higher education—than the United States. However, such programs necessitate higher levels of taxation, which is reflected in Scandinavia’s relatively high tax-to-GDP ratios.

Adopting such public services in the United States would naturally require higher levels of taxation. If the U.S. were to raise taxes in a way that mirrors Scandinavian countries, taxes—especially on the middle class—would increase through a new VAT and higher social security contributions and personal income taxes. Business and capital taxes would not necessarily need to be increased if policymakers were following the Scandinavian model. In fact, the corporate income tax rate would decline.

It does not come as a surprise that taxes in Scandinavian countries are structured this way. In order to raise a significant amount of revenue, the tax base needs to be broad. This means higher taxes on consumption through the VAT and higher taxes on middle-income taxpayers through higher social security contributions. Business taxes are a less reliable source of revenue (unless your country is situated on top of oil). In short, Scandinavian countries do not place above-average tax burdens on capital income and focus taxation on labor and consumption.

The Tax Foundation

10 comments

  1. I have been watching the failed politics of our government for the last 50 years. When I was 16 going to high school in South Gate, CA, I had a great history teacher, Mr. Williams. He was a friend of the Nixon Family and we had plenty of after school discussions about the Watergate coverup.
    The corrupt political class and corrupt corporations control it all. The Banksters of Wall Street leverage large sums of money to make profit and control what laws get passed that benefit them. The average citizen has no ability to compete with the corruption. It is not the voter but the corrupt politicians that are to blame for the current political condition of our country.

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      1. RD – Blaming the voter is stupid. They only give us TWO real choices, D or R and then when the corrupt politicians screw things up, you blame the voter.
        The politicians have the power to change things, not the voter.

        Most people I know are not getting aid from the government, so no “FREE Stuff for any of them. They pay their own way and do not look for government to solve their problems.

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  2. I don’t see any indication that state taxes (other than property taxes) is accounted for in the chart… Do consumption taxes include sales tax?

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  3. How many of the people who want the “free” public services like the Scandinavian countries, would also want to change from our constitution-based federal republic form of government to a constitutional monarchy like the Scandinavian countries?

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  4. The vat will probably arrive here sooner or later as well as higher income taxes. It matters not whether you pin the blame on politicians or the people at large because the spending goes on. The annual budget deficit is a bear to wrestle with and there isn’t any will to do that.
    Our problems are greater than the Scandinavian countries as well as the rest of Europe. We have a massive defense budget that the rest don’t deal with and we spend money endlessly on foreign entanglements. We have open borders with escalating costs for healthcare and education. We have a huge underclass that sops up tax money and high costs for the result of a high crime rate. All these taken together cost a ton of money to deal with and I didn’t touch on the various retirement costs like social security and pensions for civil service and military.
    Yes, the population is spoiled and the politicos want to talk about Jan 6 and bashing Trump because that’s easier than dealing with the above. So that’s why I say it matters not whose to blame for this predicament.

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  5. You hit the nail on the head. It is the voters. I watched several YouTube videos of people asking students about money for various programs such as income for trans people, student loan forgiveness, free healthcare and they all think it is a great idea. But nobody asks how to pay for it. Why should they? The government has bailed out automakers, banks, and has given money to failed solar companies.

    Until Congress is forced to live within their means, nothing will change. People are ok was that because they borrow excess amounts too.

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  6. This might work out if our congress had the gonads to work things as they are in Scandinavian countries but the do not. The would just say: Oh look more money for us to spend and we would be no better off.

    Think along the lines of making Janet Yellen (a failed head of the FED), who helped cause this mess of inflation, as Secretary of the Treasury after Biden chose her. Common Sense by congress would have been to say NO find someone else.

    You too often show Common Sense, something most of our congress know nothing about.

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