ANTI-DESANTIS AD

 

AN ANTI-DESANTIS AD CLAIMS HE SUPPORTED 23% SALES TAX. The truth is that DeSantis supported the Fair Tax several years ago.  I did too.  It would replace the entire income tax with a 23% tax on retail sales, but every person is sent a government check each month for 23% of about $40,000 (1.3 times the poverty rate).  Add these two and the result is people who are low income then pay no net tax while those who are upper incomes pay nearly 23% tax on things purchased.  Very low income people get a bigger check than the amount spent on the sales tax—hence a benefit.  Meanwhile the rich would gladly accept a 23% tax rate. No tax forms to fill out--businesses who already fill out state sales taxes would find it only a minor burden to fill out another for federal. Frugal seniors who don’t buy much, pay far less tax. Everybody wins with a Fair Tax. But the lying asses who made the ad against DeSantis don’t tell the whole story, claiming that he only wanted to raise sales taxes to 23%.

   In 2019 I and a few others successfully introduced a plank in the State Republican Platform to replace state income tax with Fair Tax.  To cover the amount raised by state income tax it would require about 2.5% increase of sales tax.  The people who really hate a Fair Tax are the people who have a fabulous exemption and pay little or no state income tax—big shots for whom the legislature has written narrowly targeted exemptions in the past. It’s a corrupted system. Oklahoma has by far the most tax exemptions of any state. Those of us who pay state income tax, are just suckers, I guess.

Why bring this up? When I was young I concluded that when I retired there likely wouldn’t be any social security for me.  I was wrong—but not by much. And unlike other young people in the anti-war era, I had a lot of sympathy for seniors—people who had worked very hard and if they had savings, inflation reduced it constantly. Worse, in order to cash out their savings they have to pay Uncle Sugar high taxes. Didn’t seem fair.  Nor is it fair to make tax arguments that are simpleton and wrong. Here’s facts about seniors.

     Most recent census, nearly half (43%) of seniors have no savings.  Some have pensions, but about 1 out of 4 have nothing but Social Security.  Seniors spend avg. $4000 per month but avg. SS is $1800 per month. Next time you are in a room of gray heads, just count, 1,2,3, 4^th one has nothing but SS to live on. 11% over age 75 are still working. Avg. future long term care costs are $120,900.  Now you can say, “People didn’t save like you did, Dave!”  True but financial planners say you need 10 X annual salary saved to maintain that lifestyle.  That’s about $700,000 per typical household. But median retirement account for retirees is $104,000, down from 134K since Biden.

    It will take years or a rough recession to flush inflation out of our system. I guess we’ll have to live with this and defeat Biden and socialist Dems.  But I wish the Republicans will remember the serious lessons of inflating long after that, instead of making circular firing squad, jib-jab campaign cartoons.

1973

1973.  I remember it well. Trying to finish a degree and programming with punched cards. I’d get tired of doing physics derivations that were 4 or 5 pages long and go over to the college library and read an economist I had just discovered, Milton Friedman, who wrote a monthly magazine article.  In the spring of 73 things were booming.  Farmers, flush with cash from Nixon opening up trade to Russia, bought all new pickups and tractors.  All their old equipment was circa 1948-52, the last time farming had been good. Food prices shot up 10% that spring and farm products rose at an annual rate of 50%.  All the other commodities then took off too.  Things looked oh so rosy. 8% annual growth!  Unemployment was 3.4%.(When Dems called Trump on his claim to lowest unemployment in history, they were actually correct until 2019 saw 3.3%) Nixon had lifted his price controls and people couldn’t get supplies.  Ponca City still has plumbing horror stories about copper-aluminum pipes that ruptured 15 years later , installed as a substitute in a copper shortage.  The Dems controlled Congress with a Veto-Proof Majority.  Nobody could stop their deficit spending. But Friedman was worried about Fed expansionism, keeping interest rates low.  He wanted us to watch the alternate money supply, M2 and adjust interest accordingly. And Congress was living on the edge, he insisted, with massive spending. Meanwhile, shortages of certain commodities started showing up.  Coffee went sky high. People substituted roasted barley and even milo for a true battery acid. Every product seemed rushed from the Chevy Vega to Disco music. Ha! Ha! Ha! Ha! Stayin’ alive! Today we are all enthused about the end of COVID and want to travel.  In 1973 everybody went traveling too while Nixon fought for his political life, vetoing nothing.  By the end of summer inflation had risen to 11% and continued at that pace until 1980 when Paul Volcker’s Fed made the Fed Discount rate 18% and prime rate was 21%.  Gasoline went from 35 cents to over a dollar in 7 years. People felt so hopeless that only Jessica Beale’s movie “Flash Dance” about hope in dying Pittsburgh was relief. The Fed got inflation under control at the cost of a horrid 4-year recession. But that wasn’t the only recession with inflation (stagflation) in the 70s.  The 1973-74 winter saw things collapse with OPEC withholding crude oil  and Gerald Ford could just kiss his idea about running again good-bye.  But the thing about Congress is that they didn’t recognize any problem with deficits. And the Fed was slow on the trigger to raise interest rates.  You’d hear Congressmen argue that Congress had always spent money before to no ill effect.  The Fed argued that their quarter point raises were what they had always done before and things always went back upright.  If inflation gets its claws into a demand-fueled , supply constrained economy, it doesn’t let loose easily, Friedman warned.  Indeed, labor unions wanting a 3% raise would tack on 5% for inflation and demand 8%.  Suppliers “charged ahead” to next year’s prices.  Everybody wound up speculating in natural resource stocks that bubbled and collapsed in 1979.

            Today, it seems so similar. Obstinate Dems and Fed, commodities going up fast, people hoping for a spending spree after they buy that new house.  Demand everywhere, supplies low, housing wild. Maybe gild the lily with  popcorn ceilings, a shake roof, and  paneling on that house.