Everyone with an interest in such things is wondering; "Are we still a private-enterprise free-market economy or are we now socialist?" After all, the government now owns or virtually controls the car companies, the banks, most of the healthcare industry (soon to be all), the biggest insurer, education, a chunk of the media (think about it), the mortgage market, energy exploration, everyone’s basic retirement plan, passenger trains, airport screeners, the postal service, and on and on and on… But I think all this misses the point. If we were still a private-enterprise free-market economy, we could easily reverse all this with one election. Unfortunately, that is not very likely even with 2010 shaping up to be a big win for smaller government, and to understand why, all one needs to do is “follow the money”; in this case, the tax money.
We have now reached the tipping point where half of the US population either pays virtually no taxes or perceives that they pay no taxes. (Source: US Gov.)
Thanks to 100 years of progressivism, a massively progressive income tax, the Earned Income Tax Credit (EITC), entitlements galore, and stealth taxes which no one is aware of paying, only a minority of Americans are openly paying the tab. That doesn’t mean that the others are paying nothing. They are paying plenty, but they do so in ways that are hidden from them. Payroll taxes are matched by the employer but no worker ever thinks of that money as theirs; it is. Corporate income tax is added to the price of everything we buy, but no one thinks of that money as theirs; it is. The costs of business regulation are built into the prices of goods and services but no one realizes it is a tax. When the Fed pumps out money and deficits skyrocket, no one thinks of that money as theirs: it is and when inflation hits, they learn it. The bottom line is that a majority of Americans now embrace socialism (although they don't recognize it as such) because they believe someone else will pick up the tab; they won’t.
The political reality is that we are no longer a reliable private-enterprise free-market economy. Majorities rule in a democracy and as long as a majority of Americans perceive they are getting a free ride on someone else’s dime, they will continue voting for entitlements, earmarks, socialism, re-distribution, and big government. We will not travel this path towards socialism in a straight line as history has already shown, but travel it we will! Just follow the money…