STARKVILLE — Perhaps more than any two sets of numbers, the conventional political wisdom is that the national average price of gas and the nation’s unemployment rate will have much to do with the outcome of the presidential election and future control of Congress.
If the national jobless rate climbs back toward 10 percent and if the national average price of gas begins to approach $4 per gallon, those numbers should impact the election negatively for incumbents. There are other bedrock issues, including the war in Afghanistan, nuclear uncertainties in Southeast Asia, Iran and several Third World regimes, the Arab Spring movement in the Middle East, global economic concerns, trade imbalances and the growing U.S. problems of debts and deficits.
Yet the more pressing issue as it relates both to U.S. domestic and foreign policies is the impact of entitlement programs and the growth of individual dependence on government spending. Without dealing with the issues of taxing and spending here at home, the U.S. can and will have a decreasing influence in the world’s economy and in world affairs.
The math is pretty simple. There are some 67.3 million Americans who are dependent on taxpayers for food, shelter, income, education, health care and other support. Entitlement programs now account for some 70 percent of all federal spending.
The numbers will get worse. Over the next 25 years, America will witness the retirement of some 77 million people — the vaunted “Baby Boomers” — who will begin drawing Social Security checks, collecting Medicare benefits and receiving long-term care under Medicaid.
At the same time, some 49.5 percent of all Americans pay no federal income tax. Why? Let’s say a young couple with two young children is making about $25,000 a year. Under the current tax structure, very standard tax deductions and exemptions will reduce their taxable income to $0. At least half the Americans who pay no federal income tax are in that category because of exemptions and deductions.
Social Security benefits are exempt from taxation, which accounts for another 22 percent of senior Americans who don’t pay federal income taxes. Earned income child credits and child care credits exempt another 15 percent of those who don’t pay federal income tax from the tax rolls.
It’s a misnomer to suggest that those who don’t pay federal income tax don’t pay taxes. They do – and in no state is that more evident than in Mississippi. With sales tax generating some 42 percent of all state taxes collected, most of those exempt from federal income tax still pay, and that’s without including property tax, state income tax, excise taxes and others.
With 49.5 percent of Americans not paying any federal income taxes while 67.3 million Americans are dependent on the federal government for sustenance, the certain oncoming entitlement crush becomes all the more daunting and threatening to the nation’s future.
What presidential and congressional candidates should be talking about is repairing this nation’s fundamentally broken tax structure, limiting entitlements to the originally intended purpose of programs like Social Security and Medicare, and providing paths (if not forcing paths) to get more Americans off the rolls of government dependence and onto the rolls of contributing taxpayers.
• Sid Salter is journalist-in-residence at Mississippi State University. Contact him at sidsalter@sidsalter.com.
