Expanding Democratic Socialism in the 2020 USA Election

When a country provides financial benefits to one subset of its population, it is necessary to take away the same financial sums from another subset in the form of direct taxation or disguised redistribution programs. Disguised redistribution includes various tax incentives and credits, like the ones enjoyed by the Hollywood filmmakers amounting to the $330 million per year tax credits. Forgiveness programs include such actions as canceling debts owed and transferring the obligations to the taxpaying public, creating new and additional public debt, and grants such as Pell Grants. The subset of the population expected to receive the unearned benefits will always support the candidates or the party that most vociferously promises them. The rational or practical question as to whether the promised financial benefits can ever be delivered rarely serves as a barrier to a gullible subset looking forward to receiving them. The most prominent method that our leaders use to keep the masses satisfied is to create additional debt by borrowing and spending the money now and expecting someone else to pay it back later.

This country was created with personal sovereignty in mind where individual accountability and self-sufficiency was encouraged. Yes, you did earn it! Under democratic socialism control of the individual is moved from the self to the state. A massive group of government bureaucrats will take over almost every system controlling the actions and movements of its subjects. The government will have regulations for every action with severe punitive consequences for disobedience. Tax dollars will be used to prosecute.

Ownership of assets such as real estate, corporate holdings, and business enterprises will shift away from individual rights, title and interest will be transferred to state control through taxation and onerous regulation, like what is going on in California currently.

Direct taxation in the USA brings in approximately 3.3 trillion dollars which is used to run the entire federal government and its related programs. Taxes collected include Individual, Corporate, Social Security, Excise, and others. The total cost of operating the country is closer to 4.4 to 4.5 trillion dollars. The deficit is made up by having the government issue new debt instruments in the various forms of US Treasuries and US Bonds that are sold to the public. The public considers the debt instruments as assets because the principal and interest are due to them at a future date in a predetermined agreement. The proceeds of those sales pay for the deficit spending. These increased debt obligations will become an ever-increasing liability and the responsibility of the taxpayers.

The USA currently has a direct debt of 22 trillion on the books that the taxpayers are obligated to repay over time. These are funds that were borrowed to pay for the difference between federal tax receipts and the total cost to run the federal government. Each time the government makes the decision to spend money that it does not have it just creates new US treasuries, US bonds, and similar instruments and sells them on the open market. The fresh cash is spent, and the national debt liability goes up. The process reminds me of prestidigitation, also referred to as sleight of hand used in acts of skillful deception.

The above does not include future debts owed that are not funded such as social security and pension obligations but deferred to a future date for future generations to pay back. The current best estimate of direct debt and accrued unfunded pensions, unfunded social security and unfunded future Medicaid payments is estimated to be $220 trillion. This means that there is no money, none that has been saved, nor accounted for, but must be paid by future taxpayers.

Both major political parties use similar strategies when beneficial. Let’s review current promises by politicians totaling over 125 trillion for spending on their visionary pet programs. These promises are 38 times greater than our annual current tax collections. If the government decided on a 100% tax system for all workers who pay taxes, all the tax collections would make a very small dent in the size of the promised benefits. Figures below are taken from articles of current presidential candidates that suggest promises as part of their platform if they are elected. Additional promises come from already elected federal representatives.

The Green New Deal (GND) including (a) a net-zero emissions transportation system which probably would be cars that run on battery and solar energy. (b) guaranteed jobs, even if they are not wanted nor needed (c) a low carbon Electricity grid, primarily solar-powered (d) food security (e) Universal Health Care (f) guaranteed green housing. The cost for all of this is estimated from a low of $52 trillion to over $93 Trillion over 10 years.

Medicare or health care for all whether legal or illegal occupants of the country. This is estimated at $3.26 trillion per year or 32.6 trillion over 10 years.

Reparations designed to provide financial benefits for African Americans to pay for the injustices of slavery. That cost is estimated based upon 30 million to descendants of slave’s times $80,000 equaling $2.4 Trillion. Other estimates have gone as high as $14 trillion.

Reparations designed to provide financial benefits to the Gay, Lesbian and Transgender populations (LGBTQ). Estimates are $57 million.

Reparations to native Americans for all the stolen land and violence, proposed through various subsidies and free handouts such as rent.

Universal Child Care for all legal and illegal occupants. Assume 21 million kids between ages 1 and 5 times $10,000 per year equals $210 billion per year or 2.1 trillion over 10 years.

Regarding immigration, stop all deportations, allow totally open borders and get rid of the INS. Never mind that 63% of all illegals who enter this country go on taxpayer subsidies and welfare at approximately $1,600 per month, per person. Currently, about ? million enter each year. Assume with no borders and no limitations that it may increase 5 times or more. Example 1,600 X 12 X 2.5 million new entrants equal an additional annual expense of $ 48 billion dollars each year while trying to assimilate. This figure would compound each year with additional new entrants and new births. This does not count the cost of medical and education expenses. For comparison native American-born American households are on welfare.

The cancellation of all college debt of 1.7 trillion that is currently owed.

Free college tuition for all including illegal immigrants of about 70 billion per year or 700 billion over 10 years

Give all 64 million social security recipients a $200 dollar each raise per month reflecting an immediate increase in government expense of 154 billion per year, or 1.54 trillion over 10 years. This expense is expected to dramatically increase because 10,000 additional people are retiring each day and will expect benefits. Since social security relies on current wage earners to pay taxes that is transferred to social security, federal tax receipts must immediately go up by 43% for this one item alone.

Guaranteed national income in the form of Earned Income Tax Credit. This is a form of welfare. Even though the person did not pay taxes, they will receive a check of up to $12,000 per family or $1,000 per month for every citizen over 18. This is referred to as a Freedom Dividend otherwise known as Universal Basic Income. This would cost over $3.9 trillion per year or $39 trillion over 10 years. This is very close to the yearly current expenditure of the entire federal government.

Bailout public employees underfunded pension plans: Because the pension plan administrators used false and misleading yield projections over the last 10 to 20 years the pension funds are underfunded to the tune of $7 trillion nationally. They can only pay out about 42% of the amount promised. Presidential candidates are quick to ensure that the solution is to allow them to borrower from the federal reserve and give them preference over social security underfunded retirees. This transfers the cost of the pension plan mismanagement decisions shortfall to the general taxpayers.

 The “free stuff” promises menu in excess of $125 trillion will surely tempt voters who think that benefits are free and that no one, and especially they, will ever be required to pay or suffer a diminished lifestyle. Our country has a well-lubricated system that encourages its occupants to try to get more out for themselves than they put in. Do you remember when Senator Dirksen was noted for saying, “A BILLION HERE, AND A BILLION THERE, pretty soon, you’re talking real money.” He was reported to have made the comment on The Tonight Show with Johnny Carson. Well, we can now seriously rephrase this to state, “A TRILLION HERE, AND A TRILLION THERE--------.”

All the illusionary free stuff and free-spending over a short period of time will dramatically diminish the purchasing power of each dollar. The move toward socialism will also stimulate the productive class of USA occupants to begin looking for a new dominion to transfer their residences and wealth.

The confiscation of guns, elimination of the first, second and fourth amendments, constant surveillance, monitoring all social network postings and grading accordingly, public posting of social grading, and controlling all occupants’ movements will be the standard operating procedure. Only criminals will possess guns.

The socialist has a vested interest to expand illegals, increase the size of government bureaucracy, and promising more free stuff are all used to expand powers of the elite. Continuously manufacturing fake news, fake hate, fake outrage and propaganda are handy tools to convince the gullible.

What comes to mind here is the Weimar Republic’s (Germany) hyperinflation from 1914 through November 12, 1923, which averaged 29,500 percent per year. This was equivalent to 21% per day. Argentina’s hyperinflation between 1975 and 1990 averaged inflation of 300% annually, and Venezuela’s current inflation rate is 8 million percent or 21,000% per day. Talk about eroding the purchasing power of the currency. In all cases, socialism ends up promising benefits that are impossible to pay for and are paid with borrowed money and issuing new debt that can only be paid back by issuing additional new debt.

The erosion of the sovereign currency value will always be monumental. Prosperity will be replaced with misery and desperation.

Dan Harkey

Business and Private Money Finance Consultant

Cell 949 533 8315

[email protected]

This article is intended for educational purposes only and is not a solicitation.

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