Reducing the Deficit: Government Jobs vs. Private Sector Jobs

President Obama and Gov. Mitt Romney have two very different visions of how the U. S. government should "raise the revenues" it needs to pay the nation's debts, and to provide for the common defense and the general welfare.

Assume for a minute

-- a. That the U.S. government needed revenues in the sum of $2,000 to do all of the above,

-- b. That there were only two American citizens,

-- c. That the "First Citizen" has a salary of $5,000 and pays $1,000 in federal income tax, and

-- d. That the "Second Citizen" is unemployed, has no income and pays no federal income tax.

I use this simple "two citizen" example for ease of understanding because nearly half of the American people (47 percent ) presently pay no federal income tax while the other half (53 percent) do.

So, assuming the government needs $2,000 in revenues to meet its needs. What are the government's options? There are only four:

-- Run the printing presses, and print more money;

-- Reduce government expenses to $1,000;

-- Raise taxes on First Citizen from $1,000 to $2,000;

-- Create a job for Second Citizen that pays him $5,000, and have him pay the same $1,000 in taxes that is already being paid by First Citizen.

Neither the Mr. Obama nor Mr. Romney advocates "running the printing presses." That may be implied in their policies, but neither would dare overtly advocate it. To do so they would also have to espouse "inflation" which always follows "running the presses."

As to "reducing government expenses," the record of the "$1 trillion-plus (!) deficits for the last four years demonstrates that President Obama is less likely to "cut government spending" than the Cubs are to win the pennant.

Mr. Romney may cut some spending, but he is candid enough not to tell the voters that he can eliminate the deficit simply by cutting expenses.

As to the third alternative, "raising taxes on the rich (about 3 percent)," President Obama tells America that this is his plan to eliminate the deficit. Gov. Romney says he will lower federal income tax rates for middle class and wealthy Americans, but eliminate deductions for richer Americans. But the governor states that his tax reforms will be "revenue neutral."

Gov. Romney's honestly admits his tax revision plan will not eliminate the deficit. The president's claim that that he can eliminate deficit by taxing the rich and extra 3 percent is utter nonsense. You can run the numbers yourself.

If the deficit is to be eliminated, it will have to be eliminated by creating good paying jobs, and by getting those who are presently not paying income taxes onto the federal tax rolls.

President Obama's solution seems to be to create more "government" jobs by hiring more teachers, more policeman and more government workers. If you hire a teacher and pay that teacher $50,000 a year, and if he then pays $10,000 a year in federal income tax, you have spent $50,000 in federal revenues (tax dollars) for a return of $10,000! You are merely redistributing tax dollars taken from First Citizens and giving them to the Second Citizens.

This is what Mr. Romney describes as Mr. Obama's plan "Government trickle-down economics." (This does not mean that teachers and policemen are not "necessary;" but it does mean that tax dollars are spent to hire them.)

Gov. Romney's solution is to let the private sector to create the new "good paying" jobs. One example of how he would do it, is seen in his energy policy. He would drill for more gas and oil, and dig for more coal. Under Mr. Romney's plan, the wages of the people who drill for gas and oil, and dig for coal wouldn't be paid by the American taxpayer. They would be paid by private industry. If the oil worker was paid a salary of $50,000, it would come from his employer, without cost to the government. But that individual would still pay $10,000 in federal income tax.

Under Mr. Obama's "government" employment plan, the government loses $40,000. ($50,000 to pay salary generating $10,000 in taxes). Under Mr. Romney's Plan the government has a net gain of $10,000 (no government salary generating $10,000 in taxes.)

If 50 percent of the American people pay $1 trillion in taxes, the goal should be to get 100 percent of the American people paying $2 trillion -- without cost to the government!

Posted Online: :   Oct. 09, 2012, 2:46 pm  - Quad-Cities Online

by John Donald O'Shea

Copyright 2012
John Donald O'Shea