Government Is Not Your Friend: Higher Taxes, Higher Fiscal Spending, Reduced Purchasing Power
Higher Taxes: Higher taxes are coming in 2025 regardless of which political party takes office (especially the Democrat Party).
Expect a higher capital gains tax rate (Democrat Party);
Expect a higher personal income tax rate (Democrat Party);
Expect a push to tax savings (Democrat Party);
Expect a higher corporate tax rate (Both Parties);
Expect the inflation tax to persist (Both Parties).
The answer? Get rid of all taxes on income and move to a national sales tax. A 10% sales tax equates to $2.8 Trillion in tax revenue (10% x $28 Trillion Nominal GDP).
Higher fiscal spending is coming under both political parties as both parties fail to curtail, or better yet, end entitlement spending.
Social security, Medicare and various other income security programs continue to expand in number and size, which has quickly put the United States on a path to fiscal insolvency. Here are fiscal spending categories through July 2024. Spending is up $300 billion year-to-date:
It would be best to end these entitlement programs and the taxes related to them, with some grandfathering for older individuals that have paid into this FDR tax hole for most of their adult lives. Allow Americans to keep all of the money they earn, only taxing at the point-of-sale. Instead, these foolish, Socialist entitlement programs are alive and well and are driving record fiscal deficits.
Large fiscal deficits combined with $35 Trillion in debt outstanding have the U.S. on a path toward fiscal insolvency.
The Trump and Biden Administrations have each run fiscal deficits larger than all previous U.S. Presidents combined as both administrations failed to curb spending (spare me the COVID lockdown excuse). This includes former President Obama who, with his culture of entitlements and bailouts, was the first U.S. President to run a fiscal deficit larger than $1 Trillion.
The $763 Billion of interest expense (year-to-date through July 2024, see first table above) on the U.S.’ $35 Trillion debt load (below chart), is now the second largest fiscal expense only behind Social Security ($1.2 Trillion year-to-date through July 2024).
Something’s got to give. What gives will be the U.S Dollar’s purchasing power. The currency devaluation nightmare is already in full swing. You have already lived it.
The Federal Government will print the money it owes under the various entitlement programs to cover the deficit shortfall. This money printing exercise is the very thing that eroded the value of the Dollar / created the dramatic price inflation of the past 4 years. Price inflation occurs when the money supply grows and that growth is not tied to productivity (i.e. handouts in the form of entitlement programs, covid “relief” and bailouts, including the recent BTFP bank bailout program).
Republican Party VP (JD Vance) called for a 40% devaluation of the Dollar, which would be incredibly stupid, yet that is essentially what has happened from 2020 through today as the Republican and Democrat Parties have each significantly grown the money supply as measured by M1 and M2 over the past 4 years and 7 months to support unsustainable fiscal spending levels (see M1 and M2 chart below). This money-printing exercise had led to record price inflation (CPI is understated).
What is needed is less Government, not more.
Americans should not want the Federal Government involved in their day-to-day lives. Yet, the Federal Government is a partner forced upon us like an arranged marriage. The Federal Government needs to be put on a radical starvation diet in order to save Americans’ purchasing power. Unfortunately, neither political party is interested in preserving Americans’ personal savings nor wealth.