The topic: Should the federal government do more to address the growing gap between the 'haves' and have-nots' in the U.S.?
This topic reminds me of the remarks by President Ronald Reagan, “The nine most terrifying words in the English language are: I’m from the government, and I’m here to help.”
These words seem to apply rather aptly in light of the dysfunction we’re witnessing in Washington. From the fiscal mess to the partisan gridlock, perhaps we should not expect the federal government’s help nor should we desire its increased involvement in our lives.
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But for the sake of dialogue, let’s flip the question and ask what can the federal government do to limit the gap between haves and have-nots?
One option, that I’m sure many of my liberal friends would applaud, is taxing the wealth of the haves. Yet, America already has the most progressive tax system in the world. Confiscating more and more of peoples’ income might reduce the income inequality gap in the short term, but it would also disincentivize success and hurt the economy.
Another option might be some new federal program the government could enact to “help” the have-nots. However, the experience of social welfare programs over the last 40 years has been increasing income inequality, not decreasing it. Today, the government spends approximately $1 trillion on anti-poverty programs, but poverty rates are the highest in a generation.
On a side note, this is precisely what concerns a majority of Americans about Obamacare. It won’t deliver on its promises and America is broke — we simply cannot afford it.
Back to the topic at hand, low-income earners face greater obstacles to climbing out of poverty today and the middle class is getting squeezed, but it’s not by the blind forces of free enterprise. Rather, it’s an ever-expanding government that demands more in taxes, creates deleterious policies and enacts burdensome regulations that increase the cost of consumer goods. In other words, the federal government inadvertently has stunted upward mobility — the cornerstone of the American Dream.
Take these three quick examples.
On taxes, government at every level takes a little more from middle class families each year. According to the nonpartisan Tax Policy Center’s analysis of the 2013 federal tax increase, families making between $50,000 and $75,000 a year face an average tax hike of $822.
On well-intentioned, but bad policies, government’s expansion of subsidies for college tuition has fueled the rapidly rising cost of tuition. As a result, many poor students are priced out of a college education while others are buried by student loan debt, which in total now exceeds credit card debt nationally.
On harmful and burdensome regulations, the EPA has recently announced regulations on new coal-powered electricity plants that require the burying of carbon underground — an unproven technology that is not even commercially available. Coal-fired power plants produce almost 40 percent of our country’s electricity, yet the EPA’s edict, which is expected to expand to existing power plants later this year, will cost ratepayers billions in higher energy costs.
To address the problem of income inequality, the federal government should address barriers to upward mobility. This includes things like simplifying the tax code to make it fairer to families and businesses, targeting aid for higher education to the truly needy and eliminating harmful regulations that hurt the poor the most. In summary, we need a more effective and limited government that gives people the opportunity to rise.
John Allan Peschong served in President Ronald Reagan’s administration and later as a senior strategist for the campaigns of President George W. Bush. He is a founding partner of Meridian Pacific Inc., a public relations and public affairs company, and serves as chairman of the San Luis Obispo County Republican Party.