I Want a President to Lift Government Off the Brow of Labor

Back in the 19th century William Jennings Bryan spoke for working men everywhere when he declared:

You shall not press down upon the brow of labor this crown of thorns You shall not crucify mankind upon a cross of gold!

With the splendid timing characteristic of professional politicians everywhere he spoke in 1896 just before the Alaska gold rush flooded the financial system with gold and started a boom that ended only in the Crash of 1907. So the crown of thorns got lifted from the brow of labor, and when the market crashed J.P. Morgan got the richest men in America into a room to get the economy moving again.

We should be so lucky.

For in the age of Obama it’s not gold that is crucifying mankind; it is government. Look at this chart, fresh from governmentrevenue.com.

Back in the bad old days of the crown of thorns at the turn of the 20th century, as you can see from the chart, the total revenue of all the governments in the U.S. was about 6-7 percent of GDP, and none of it was in income and payroll taxes. So when a working stiff went out to work he got paid approximately 100.00% of his wages. None of his wages went to the government.

That blue section of the chart represents all government revenues except income taxes and social insurance taxes. You’ll notice that it has about doubled since the heyday of the gold standard.

Unfortunately, that is not the whole story. It is not even half of the story. Starting in 1913, the income earners of the United States have had to pay income tax. Right now individual income tax (the red band) is about 11% of GDP and corporate income tax (the green band) is about 2% of GDP. Then, starting in 1935, social insurance taxes like the FICA tax (that’s the gray band) started to press down upon the brow of labor. That weight has increased steadily over the years to about 10% of GDP paid by the average working stiff.

Notice something? The social insurance taxes, the ones pressing directly on the brow of labor, have gone up most since World War II. Corporate income tax has gone down, even with its 39% rate. Yay lobbyists!

Now, it may be that Oliver Wendell Holmes was right to say that taxes are how we pay for civilization, but that was back in 1904. I wonder what the good justice would say now.

I know what I think. I think that most likely you are getting all the civilization you are likely to get with taxes at 7% of GDP. The rest is just price gouging.

The problem is that all that money, 35% of GDP, is not going for creative and innovative improvements to our way of life. It is going into spending on programs that haven’t changed in decades.

The fact is that the 35% of GDP that the government collects and spends is the administered sector of the economy. It is a rigid system and is jealously guarded by its beneficiaries and their special interests and they want nothing to change.

You’d think that big administered government programs must be the answer to all our problems. But the big story of the last 200 years is the Great Enrichment, and that has depended on bold persistent experimentation and innovation by businessmen. The only thing that government knows is force.

The choice is simple. It is business innovation versus government administration.

For example: the Obama years. In the innovation corner is the smartphone phenomenon that has just about put a smartphone into the hands of every American from the snarling 1% to the gentle-giant homeboy in the inner city. In the administration corner is Obamacare, a top-down administrative conceit that is wrecking health care as we know it.

Innovation is a daily miracle that puts new wonders in the hands of workers and consumers. Administration is a crown of thorns that presses down daily on the brow of labor and delivers bankrupt entitlements, failing schools for the poor, and subsidies and crooked deals for political donors and crony capitalists.

But wait, you say. A lot of those taxes are paid by the rich, and that is how it should be. The 1% pay about 20% of federal income tax. Very true. But the social insurance taxes are paid by ordinary workers. And the point about taxes is that you can never be sure who gets stuck with the bill. What if the income tax just lowers job growth?

It is time to elect a president who will lift the crown of thorns off the brow of labor, cut taxes and spending, and celebrate innovation instead of the dead hand of system and administration and special favors for Clinton Foundation donors.

Christopher Chantrill @chrischantrill runs the go-to site on US government finances, usgovernmentspending.com. Also see his American Manifesto and get his Road to the Middle Class.

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