#68-The Ultimate P.R. Challenge: Raise Taxes, Make Americans Happy

Issue # 68 – Wednesday, September 4, 2019

http://dennyhatch.blogspot.com/2019/09/68-ultimate-pr-challenge-raise-taxes.html

Posted by Denny Hatch

The Ultimate P.R. Challenge:

Raise Taxes, Make Americans Happy!

"Budget Agency Predicts Trillion-Dollar Annual
Deficits for Years to Come, as Red Ink Explodes."   
—RonBlitzer, Fox News, August 21, 2019

https://www.foxnews.com/politics/national-debt-tops-22-trillion-further-increase-expected-with-baby-boomer-retirements

Right Now, the U.S. Treasury Needs Oceans of Cash, Or We’re Done For.
     The $22.5 Trillion National Debt—growing by 7.23% annually—can never be paid down in a country where the top income tax bracket is a pathetic 37% while more than 44% of Americans (plus over 60 Fortune 500 companies including Amazon) pay no taxes.
     Annual interest (debt service) on the $22.5 trillion National Debt is currently $263 billion a year and on course to quadruple to over $1 trillion.
     Debt service is, in effect, money going down the sewer. If these projections hold, the U.S. Government and future generations will be sliding down a razor blade for decades.
     At the end of this post are nine sources of revenue—relatively painless—that can be implemented quickly and save the country (and the world).

Open Letter to:
The Hon. Nancy Pelosi
The Hon. Mitch McConnell
President Donald Trump
  
Dear Speaker Pelosi, Majority Leader McConnell and President Trump:

A number of Julys ago we were driving in Normandy.
     France is the second most highly taxed country in the world.
     I was happy. Sublimely happy, which I seldom ever am these days.
     For starters, everybody in Normandy loved Americans! They remember! We were revered! Stars-‘n’-stripes fluttered everywhere, often alongside the Tri-colour, Union Jack and Maple Leaf. Our Yank accents drew smiles everywhere we went.

Riding in the back seat was our mesmerizing private guide to the action and order of battle at the D-Day beaches, buildings, bridges and bunkers—retired Colonel of the Welsh Guards (and world-class painter) Oliver Warman, RBA.

     So as not to waste time in a restaurant, the colonel directed us to the best take-out food in the area. We picnicked on phenomenal little meat pies, crisps and French beer followed by a belt of strong coffee that we consumed quickly on a bench at the Pegasus Bridge Memorial.
     Peggy was at the wheel. We were now enroute to Port-en-Bessin, a tiny Channel town that was the collection point for all the petroleum products needed for the D-Day invasion: gasoline, motor oil and lubricants.
     The sun was out; the day was glorious. The smooth paved roads were pure perfection. At one point I said to Peggy and Colonel Warman:
     “Y’ know… If I could wake every morning back home knowing all our roads were like these in France… that every American was guaranteed world class health care… a fine education for all kids from Pre-K on… and we had clean air, clean water, fast and safe rail and air transportation… no starvation… and reasonable protection from gun massacres… and immediate relief in times of environmental catastrophes…
     ...In short, if we were just like France, Sweden, Norway, Belgium and Germany...
     ...I would happily pay taxes of 50 percent—or more—for the peace of mind that life was going to be okay for all of us now and for future generations." 

You and Your Colleagues Running the U.S. Government

Are Shamelessly Presiding Over a Third-world Country. 

I live in Philadelphia.
     Drive up Walnut Street in Center City or head for the burbs on Lancaster Avenue (Rte. 30) or out-of-state on I-95 or the thumpity-thumpity Sunrise Highway that runs the length of Long Island, New York.      
     Our poor vehicles are being gangbanged by potholes, lousy pavement patches, pops, plunks, bumps and detours. When we take the Greyhound bus to New York, we really feel it.
     Okay, Spruce Street has just been repaved.
     But you can be sure that very soon a 120-year-old lead pipe deep underground will bust, spewing water and pandemonium. This happens all the time in Philly.
     Eighth at Walnut—where we live—was tied up for two months with closed sidewalks and single clogged lane of traffic, while harried workers in hard hats were crawling around underground “looking for a steam leak.”

I assume you've noticed these recent headlines:

     • One-Sixth of Americans Don’t Get Enough Food to Eat
     • Gun Violence Has Turned America into a War Zone.
     • Global Warming is Destroying Spaceship Earth.
     • 54,000 U.S. Bridges Are in Dangerous Disrepair.
     • The U.S. Ranks 53^rd in Life Expectancy in the world.
     • $300 Billion Needed to Replace America’s Ancient Water Pipes.
     • U.S. Air Traffic Control Runs on 40-year-old Technology.

     • New York City Blackout Shuts Midtown, Traps People in Elevators.

     • World Food Crisis Looms if Carbon Emissions Go Unchecked.
     • 27.4 Million Americans Have No Health Coverage.
     • In 2017, Amazon Paid No Federal Tax on $5.6 Billion in Profits.
     • U.S. Government Running Out of Money Faster Than Expected.
     • America Is Shackled to a $22.5 Trillion National Debt.
     • All Americans Are Perpetually Angry—at each other or at something!

Today the Public Debt to GDP Ratio

Is a Tad Lower Than It Was in 1946. 

The key measurement is Public Debt to GDP Ratio. In other words, when the country owes more than our entire Gross National Product, the situation is dire.
     This was the case in the 1940s and 1950s following World War II when the country was mortgaged to the eyeballs in order to save ourselves and the world.
     As of this moment in time, the Debt Problem and the Economy are salvageable.
     It was dealt with then. It must be dealt with now.
     Or else...
 

It All Started with WWII and the
Five Guys Who Saved the World

William S. Knudsen?
     Bill Knudsen was a Dane who had worked for Ford and later was President of General Motors from 1937-1940. A skilled manager and the world’s leading expert in mass production, he was appointed by President Roosevelt to become America’s World War II production czar for $1 a year. He turned the entire United States into one giant defense plant—the “Arsenal of Democracy.”
     Knudsen was given the power—and had the knowledge—to walk into a factory, eyeball the facility and order management to drop everything and tell them precisely what to start producing—immediately!

"The Kleenex company was building machine gun mounts; a casket factory was making airplanes; an orange juice squeezer company was at work on millions of bullet molds. In New Orleans one man, Andrew Higgins, was designing and building so many naval vessels [landing craft], Hitler would call him 'the new Noah.' The United States was producing 45 percent of the world's armaments and nearly 50 percent of the goods. Factories had produced so many airplanes, jeeps, tanks, ships, submarines and amphibious vehicles, Joseph Stalin had declared the United States 'the country of machines.' In one factory, situated in what had been open fields and orchards just five years earlier, Ford Motor Company was churning out B-24's at the rate of one per hour, turning what had been the nation's largest and most destructive bomber aircraft at the beginning of the war into the most mass-produced American military aircraft of all time (and still is to this day)." 
       —A.J. Baime, The Accidental President
          A splendid new biography of Harry S Truman

Let's Talk B-24s.

The WWII Consolidated Vultee Plant,
Fort Worth, Texas Producing B-24s.

Imagine! Out of 19,256 monster B-24s produced in WWII, only thirteen remain! The rest were shot down, lost at sea or scrapped.

Tens of billions of (1940s) dollars (which would be trillions today) were spent on the War.
 These were not investments in anything useful—infrastructure, medical research, creating a health care system or strengthening Social Security—that would benefit future generations.
     This was stuff—all of it now gone—blown to bits, lost, discarded and scrapped.

How Did the U.S. Survive This Catastrophic War Debt?

     • The WWII U.S. economy was booming like no other in the world.
     • Thousands of war production plants were up and running. Come V-J Day (Victory over Japan) these massive facilities simply needed retro fitting to produce their prior peacetime goods and services.
     • When the boys came home, they had money in their pockets to spend.
     • Jobs opened up, especially when six-and-a-half million women war workers went back to being “homemakers.”
     • The country was starved for new cars, new appliances, new everything from nylon stockings to radios and rubber tires that had been denied by the War effort.
     • There was NO Medicare. NO Medicaid. NO COLA (cost of living adjustments) for Social Security. NO Obamacare. NO outrageous corporate deductions. NO tax cuts for the rich, rich. NO food stamps. NO Children’s Health Insurance Program (CHIP). No TANF (Temporary Assistance for Needy Families.
     • Everybody—citizens and corporations alike—paid taxes without a huge smorgasbord of loopholes and deductions.
     • The rich damn well paid their share—81% to 94%!

     Only Once in Recent History Has There Been Such a Waste of Trillions of Dollars Just Like World War II:
The Subprime Mortgage Crash and Recession of 2008.

Wall Street and the bankers—in a deluge of greed, stupidity and (yes) criminality—dreamed up the cockamamie theory that dim-witted consumers could buy unaffordable houses; if they couldn’t keep up with the payments, they could be easily flipped for a profit. It was a giant scam.
     The trillions of dollars in bailout money disappeared just like the WWII billions of tons of WWII ships, planes, weapons, uniforms and ammo.
     Out of the thousands of well-connected financiers, bankers, real estate moguls, miscreants, realtor con artists, crooks, who raped the system and tanked the economy, only one person went to jail.
     That one person who went to jail was… TA-DAH!

Martha Stewart (for insider trading and perjury).  

The Obvious Fix for the Debt and Infrastructure:

An Avalanche of Cash Pouring Into the U.S. Treasury. 

With an annual $21.3 Trillion GDP, there’s plenty of money to tap into.
     But we dare not speak its name: taxes.
     For America’s politicians, increased taxes are the third-rail.
     Why is Congress terrified of dealing with taxes?
     The specter of higher taxes terrifies members of the Senate and the House. They all remember how six short words cost George H.W. Bush a second term: “Read my lips. No new taxes.”
     Bush caved and taxed. He lost the presidency to Bill Clinton.

The Ultimate Source of All Our Financial Ills:

Cost to Be a Member of Congress: $18,000 per Day.

Every member of Congress has one overarching agenda that trumps [sic] all else: Get re-elected no matter what the cost.
     Base salary of a Senator and House Member is a niggardly annual $174,000 plus some expenses. Other “earned” income cannot exceed 15% of the base salary. Honoraria are disallowed.
     If a congressman pays for two residences (home state and Washington, D.C.), pays alimony to an ex-wife and has two kids in college, he leads a life of financial desperation.
    In D.C. the typical congressperson is forced to live in sparse dorm-like quarters and mooch food and booze at every political, corporate and lobbyist breakfast, lunch and dinner anywhere in the D.C./Maryland/Virginia environs.
     The average member of Congress spends 4 hours a day—every workday—out of the office in a telemarketing boiler room with a script pleading with donors for money.
      The absolute necessity: raise $18,000 a day every workday or find another job.
     On the first Wednesday morning in November after Election Day, the four-hour-a-day fundraising starts again so these underpaid sad sacks can buy their jobs in the next cycle.
     No wonder the Darth Vaders of dark money—PACs and lobbyists—are able to bribe Congress with tens of millions of dollars, guaranteeing none of their silly laws will interfere with the flow of dollars into industries, corporations and the oligarchs that run them.

Nine Sources of Cash to Save Our System

That Joe and Jane Lunchbox Won't Notice

#1. "Society's Quantity Usurping of Air Tax": S.Q.U.A.T.
Every human being in the U.S. (all 320 million of us and our pets) has the right to breathe. Air is free.
     But let's talk about machines—great and small—that gulp air, turning it into carbon emissions, greenhouse gasses and climate change.
     From smallest motorized scooters and oil-guzzling home heating units to trucks, buses, yachts, giant jet airliners and the largest moving objects on the planet—cruise ships and oil tankers—suck up humongous amounts of air and spit out pollutants that are destroying the planet.
     They should be penalized.
     Academics talk about Emission Taxes and Carbon Credits:

"...a generic term for any tradable certificate or permit representing the right to emit one tonne of carbon dioxide or the equivalent amount of a different greenhouse gas."

     Huh?
     This is woolly-headed, think-tank gibberish, impossible to visualize.
     Let’s call these penalties S.Q.U.A.T. — “Society’s Quantity Usurping of Air Tax.”
     If you usurp more than your personal share of air, you pay SQUAT on the fuel you burn—a percentage per gallon of gasoline, diesel, aviation fuel, heating oil and heavy fuel oil for ships.
     Fuel users will lobby hot and heavy against SQUAT—American Automobile Association, airlines, shipping companies, corporations, cities and states.
     Truth be known, the United States has the cheapest fuel—and taxes on that fuel—in the world.

In short, Americans have been spoiled for centuries, thanks to politicians’ fear of raising taxes and riling voters and big business. With SQUAT, Americans will be joining the rest of the world.
     Sure it’s a tax. But it shows up in tiny incremental amounts when we pay at the pump, buy groceries and fork over our credit cards for airline tickets, retail goods and services. Everything becomes a tad more expensive.
     To ease our transition into joining the rest of the world, we could raise the price of oil products 1% every four months for the next 10 years. Nobody will notice.
     NOTE: Another huge source of pollutants and global warming: farts and poop of cattle and livestock. There must be a way to measure and tax these transgressors.

#2. V.A.T. (Value Added Tax).
Over 140 countries in the world—including all OECD countries—impose Value Added Taxes—a small tax on each link in the progress of manufacturing and services.
     Like SQUAT, the slight increase in costs is hardly noticed.
     The only major country absent from the roster: The United States.

#3. Raise the Top Tax Bracket Back Up to 90%.

Warren Buffett and Bill Gates agree the rich should pay more taxes. In addition, more than 400 millionaires urged Congress not to cut their taxes.
    As shown in the chart above, during WWII and in the 1950s, the top federal tax bracket was as high as 92%.
     While this sounds onerous, the rich-rich don’t pay a flat 90% on their income. The tax is graduated so that only income (for example) over $10 million is taxed at the 90% rate.
     With the current paltry top tax bracket of 37%—and over $1 trillion a year in deficits—the U.S. economy is unsustainable.

#4. Force All Corporations to Pay Federal Taxes.
Sixty Fortune 500 corporations paid no federal taxes in 2018. Amazon not only paid no Federal Taxes in 2018, but also received a $129 million tax rebate from the Federal Government. This is gaming the system.

#5. Every Individual American Should Pay Something in Federal Income Taxes, Even If It's Only a Couple of Dollars.
For example, Donald Trump reportedly lost $1.17 billion over ten years and paid no federal taxes during eight of those years. Yet he lived large like a mid-East 17^th century potentate in some of the priciest real estate in the world (e.g., Trump Tower, New York and Mar-a-Lago, Palm Beach, Florida).
    Worse, more than 44% of Americans pay no federal income taxes.
    It seems to me if a person gets away without paying any taxes—for whatever reasons:
     • The system is being gamed and we are all being ripped off.
     • What’s more, if paying no taxes is a habit, will non-payers suddenly start paying taxes next year… and the next… and the next—even though circumstances have changed for the better?

#6. Hundreds of Preposterous Tax Loopholes Should Be Examined with Many of Them Eliminated.
Some examples, no doubt dreamed up by industry lobbyists paying money to desperately poor politicians’ campaign funds and private PACs:
     • Yacht Deduction
     • 15 Days of Free Rental Income
     • Breast Augmentation Tax Deduction
     • Cat Food Deduction
     • Viva Las Vegas Tax Deduction
     • Home Office Deduction
     • 529 Plan Double Dip Loophole
     • Lifetime Learning Loophole
     • Personal Swimming Pool Deduction

#7. At Least $1 Trillion Should Immediately Be Invested in Infrastructure.
I remember April 2, 1980 when the Prime Rate (the lowest rate of interest at which money may be borrowed commercially) was a horrifying 20%. Today Prime is a low, low 5.25%. Money is cheap. It’s a great time to borrow.      
     According to The Boston Consulting Group, one trillion dollars spent on infrastructure will result in the creation of “three million or more jobs over the next five years."
     This means 3 million workers will be earning union wages, paying taxes, injecting a massive infusion of money into the economy, saving for retirement. By the time the infrastructure work is complete, America will take its place once again among First World countries.
     • 54,000 decrepit bridges will be safe to use.
     •100-year-old buried lead pipes would be replaced, meaning no more bursts and floods and no more “Flint Water”—all of which will cost billions to repair.
     • Interstates and local roads will be paved and safe.
     • Air and rail transportation will be modernized, efficient and safe.
     • Falling-down schools, hospitals and libraries will be refurbished and modernized.
     • The fragile power grids and Internet systems will be updated and safe from international hacking and the terror that would otherwise ensue.
     • The entire infrastructure system will eventually be paid off through tolls and taxes.

#8. America Spends Over $20 Billion per Year on Fossil Fuel Subsidies.
Abolish them. 

#9. What Else Is Out There That Can Be Cut? 
(1) How about the mortgage deduction? For example, Peggy and I are pensioners. We rent. Why should people with houses get to deduct their mortgages when we don't get to deduct any rent? (2) How about charging tolls on the 48,181 miles of toll-free Interstate Highways? (3) Does the U.S. Navy/Pentagon really need 10 Nimitz Class carrier task forces roaming the seas with 75,000 personnel at a reported cost of $65 million a day? (4) What else can be cut?

Takeaways to Consider

• The federal budget was indeed balanced just once in the past 50 years. In 2008 there was no deficit and a wee bit of the national debt was repaid.

  Note the teeny red blip at the bottom of the chart in 2000.

     In short, if the American people would be willing to pay a little more for goods and services with new and increased taxes that nobody will notice, we the country and the planet will be saved for ourselves and future generations.

• We did it in the 1940s and 1950s.

• We did it in 2008.

• This is do-able and fairly painless.

• Make me happy. Raise my taxes. I’ll love it!

 Denny Hatch

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