Economics
The Last Year of Freedom?
“Oh say does that star-spangled banner yet wave over the land of the free and the home of the brave?”
This year our church had the vision to hold a Fourth of July outdoor service down on the waterfront of our picturesque town. Hundreds of people showed up at Marina Park in Port Orchard at 11am where a praise band (that included our son Ryan) played over twenty tunes of Christian and patriotic music.
I had the privilege of leading the group in the Call2Fall application–a time of repentance and prayer on our knees before the God of heaven. We were joining thousands of others across the nation who were also on their knees confessing their sins and asking God for a desperately needed national revival.
First Christian Church pastor Kevin Hestead, gave the morning message as the sun broke through the clouds. He discussed the idea of freedom–and what a precious gift it is.
His remarks reminded me of the famous encounter that Ben Franklin had with an older women who’d come to hear about the results of the Constitutional Convention in the 1787. Upon seeing Mr. Franklin leave the meetings, the woman innocently asked him, “What have you given us, Dr. Franklin?”
His reply was one for the ages: “We have given you a a republic, madame–if you can keep it.”
If you can keep it.
I first pondered those words in 1976 while reading Rus Walton’s classic book One Nation Under God. They struck me as wise, prophetic–and a warning.
Liberty can be lost in one generation. It can be here one year and gone the next.
As I listened to the sermon on Sunday, July 4, 2010, a disturbing thought came to my mind:
“Could this be the last year of liberty?”
At first glance that thought seems rather foolish. America has known an unprecedented degree of freedom as a nation for two hundred and thirty-four years. The Statue of Liberty in New York harbor speaks to the nation and world of our love of liberty. For over a hundred years we have been the freest and most prosperous nation on earth–with only 6% of the world’s population producing over fifty percent of the world’s goods and services.
But this year, for the first time, we dropped from our lofty pedestal as the world’s champion of freedom. As I pointed out in an earlier blog, the United States is no longer the pre-eminent beacon of liberty in the world. That ranking goes to Hong Kong (part of a Communist nation) and Singapore where much investment capital is headed. The Index of Economic Freedom has the US plummeting to eighth in the world in economic freedom and sinking fast.
Due to the staggering Obama administration deficits, the Congressional Budget Office now predicts that the US debt load will reach 62% of GDP by the end of the year–far above the normal level which has averaged between 36%-40% for decades.
Debt is slavery–not freedom. “The borrower becomes the lender’s slave” (Proverbs 22:7) is the true axiom from Scripture. But there are other considerations in liberty versus bondage.
Human freedom actually has a number of dimensions–and they work in a general order.
The first is spiritual freedom–what my pastor shared on Sunday. Jesus Himself said, “If you abide in my word then you are truly my disciples and you will know the truth, and the truth will set you free” (John 8:32). The beginning of liberty in a human being is being set free from the power and penalty of sin through faith in Jesus Christ. Being “born again” is a description of the spiritual freedom that comes through submission to God and casting off of “self.” It is the first step of human liberation.
The second is moral freedom which is the result of Christ’s work in our hearts. When we are reconciled to God, the Holy Spirit begins to empower us to make the right moral choices and become the kind of person we can never be in a self-centered, unredeemed state. Faith gives birth to morality in free peoples.
Moral freedom leads to economic freedom and prosperity, including increased creativity and a strong personal work ethic. It is faith, morality, and hard work that changed America from a mediocre group of colonies into an economic powerhouse in the 20st century. Prosperity is s fruit of faithful, moral character. This was the secret to America’s greatness in past generations.
And economic liberty leads to national security, which is military freedom. It was America’s rebirth of faith, morality, and economic vitality in the 1980s that defeated the Soviet Union and caused the fall of communism on a global scale. It is “right that makes might” as Abraham Lincoln once told us.
I am concerned for my nation in all of these arenas–faith, morality, economics, and national security. Freedom in our nation is on its last legs–and it may not take much to lurch us off the cliff.
And something is coming in less than six months that could just be the nail in the coffin.
Author and radio host Ken Talbott, of TheWalkShow.com has alerted me to the following possible death blows to American freedom. In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011:
First Wave: Expiration of 2001 and 2003 Tax Relief
In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011:
Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:
– The 10% bracket rises to an expanded 15%
– The 25% bracket rises to 28%
– The 28% bracket rises to 31%
– The 33% bracket rises to 36%
– The 35% bracket rises to 39.6%
Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.
The return of the Death Tax. This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.
Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.
Second Wave: Obamacare
There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:
The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).
The “Special Needs Kids Tax” This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.
The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.
Third Wave: The Alternative Minimum Tax and Employer Tax Hikes
When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. The major items include:
The AMT (Alternative Minimum Tax) will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.
Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated.”
Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.
Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.
Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there. (PDF Version. Read more: http://www.atr.org/sixmonths.html?content=5171#ixzz0skDBRGLz.)
These areas describe the economic bondage that will take an exponential jump next year. I personally believe they are the result of the first two–increasing unbelief and elimination of God from the public arena, and a dizzying array of immorality in personal lives and families.
But I am not giving in. Freedom can be reborn and it must begin with me.
Let’s re-kindle the passion and power of Patrick Henry’s famous speech delivered at St. John’s Church in 1775. His remarks are famous for the line, “Give me liberty or give me death!” But the speech in its entirety says so much more about the cause for freedom. Here is Henry’s call to every American in every generation:
“There is no longer any room for hope. If we wish to be free- if we mean to preserve inviolate those inestimable privileges for which we have been so long contending-if we mean not basely to abandon the noble struggle in which we have been so long engaged, and which we have pledged ourselves never to abandon until the glorious object of our contest shall be obtained-we must fight! I repeat it, sir, we must fight! An appeal to arms and to the God of hosts is all that is left us!”
Is this the last year of American liberty? Over my dead body! While I’m alive, I will confess my sins, pray to God, look to Christ, live morally, work hard, vote and work for change in November, and put my trust in a mighty Redeemer.
“Oh say does that star-spangled banner yet wave over the land of the free and the home of the brave?”
Ignorant, Incompetent, or Revolutionary About the Economy?
All politicians these days run on the theme that they will create jobs–even if they don’t have the foggiest idea how to do so.
There’s a state representative in my district who boasts with each newsletter and press announcement that his number one priority is creating jobs. However, he’s a liberal progressive whose “day job” is to work on a governmental board that creates no wealth, just talks the talk.
Then there is Congressman Joe Sestak–yes, that Joe Sestak– who was offered a “job” in the Obama administration if he would step out of the Pennsylvania primary to make room for Arlen Specter. When interviewed about his priorities, he remarked “I want to create jobs for working families.” However, he’s spent most of his life as an Admiral in the Navy and now as a Congressman. He knows very little about how to create private sector jobs. Besides, last time I checked “all families” work. (Am I missing something?)
Which brings me to President Obama and his administration. They spent 862 billion in their first few months on a “stimulus package” that was supposed to halt the recession and create millions of new jobs. Here’s what the Heritage Foundation says about that failed effort:
“Our nation’s unemployment rate is hovering near 10% not because of record job losses…but because of record job non-creation. Private sector employers have gone on strike. Contrary to what the President’s economic wizards and New York Times columnists believe, massive government deficit spending does not stimulate job creation. President Obama does not have a secret vault of money he can just throw at the American people. The resources the government spends come from the economy. When the government increases spending, it crowds out the resources that business owners could have invested in their enterprises.”
Then came along last week’s Department of Labor jobs report, which showed private sector job creation fell by 190,000 between April and May of this year. Again according to the Heritage Foundation, “this bad news jolted markets worldwide including the Dow Jones Industrial Average, which fell 3.2% Friday to its lowest level since early February. In total the U.S. economy has now lost a net of 2.2 million jobs since President Barack Obama signed his stimulus bill, and his administration is now 7.2 million jobs short of what he promised his $862 billion stimulus would help create by 2010. This morning on MSNBC, former Rep. Joe Scarborough (R-FL) pressed prominent Keynesian economist and director of the Earth Institute at Columbia University Jeffrey Sachs on whether it was too early to declare President Obama’s stimulus a failure. Scarborough had to ask the question twice, but Sachs finally relented: “It did fail.”
Also keep in mind that the American economy needs to add 50,000 jobs per month just to keep up with population growth. So the loss of 2.2 million jobs since the stimulus is abysmal indeed.
I think it’s time to be brutally honest about the leaders who are running the economy in our nation. This need for probing evaluation reminds me of a famous C.S. Lewis teaching in Mere Christianity where he shared the truth about Jesus Christ. He said that there are only three ways to look at the life of Jesus. Based on his life, words and works, he was either:
- A liar,
- A lunatic,
- Or Lord of heaven and earth.
All people must choose based on these three choices. There are no others.
Using similar logic, I believe there are only three rational choices we can make about the economic performance of our current national leaders. They are either:
- Ignorant when it comes to creating jobs,
- Incompetent in their governing skills,
- Or revolutionaries who don’t really want to create jobs but desire to fundamentally transform America into a different kind of nation.
Ignorance
It’s hard to believe that a group of people from Ivy League schools are ignorant about job creation, but wiser minds have been saying for decades that secular universities are educating people away from common sense. Many of our government elite have been trained in a liberal environment that is anti-free enterprise and pro-Big Government. Their ignorance comes from a man-centered worldview that denies freedom and accountability before God and exalts human governments as instruments of social improvement. They do not understand that governments do not create wealth–they only confiscate it and re-distribute it to non-productive sectors.
Here’s the time-tested formula for economic advance: Faith in God produces human liberty and moral character. Character produces vision, initiative, creativity and hard work, that when combined with limited government and low taxation, produce jobs, wealth and prosperity.
The opposite is also true. Secularization diminishes moral character and human worth producing less initiative and drive creating more dependency on others. Higher taxes and increased social spending inhibit the free market from producing wealth and growing prosperity.
God. Morality. Freedom. Prosperity. These are the American (biblical) ingredients for success.
Are our present leaders simply ignorant of these principles?
Incompetence
The Carter administration is often viewed as the most incompetent of the modern presidencies. Jimmy Carter also believed in Big Government solutions, higher taxes, and social re-distribution (it was his Community Re-Investment Act that sowed the original seeds of the mortgage meltdown of 2008). In foreign policy he was seen as a weak leader who dithered while American hostages were taken and multiplied “malaise” among the public. It took Ronald Reagan to point the nation back to God, morality, freedom, lower taxes, and peace through strength.
After eighteen months in office, it appears that Barack Obama is a gifted orator and campaigner, but a very incompetent leader. It’s no wonder. He’s never led anything in his life except a brief stint of community organizing. He has no executive experience, he’s painfully cerebral in reponding to needs and crises (four month delay in sending additional troops to Afghanistan, no response to Nashville flooding, and slow and inept response to protecting the shores of the Gulf States from the BP fiasco). And on foreign policy, he has emboldened both Iran and North Korea by his weakness and dissed America’s only democratic friend in the Middle East–the nation of Israel.
Is the Obama administration sincere, but just over its head in trying to lead our nation?
Revolutionaries
Most people believe that our president and those around him are really smart people. They just can’t be this ignorant about how to stimulate job creation! Not with all those Ph.Ds! They are also hard-working folks who can’t be guilty of gross incompetence!
That only leaves one honest choice: What they are doing to the American economy is deliberate. They know what they’re doing and they’re doing it fervently and incremently because at heart they are revolutionaries who want to fundamentally change America from a Christian-based, freedom loving nation to a secular-oriented social democracy like much of Europe. Many believe this is the major driving force behind the lack of job creation and massive growth of government. They don’t want to create more jobs–they truly want to create more dependency which increases their power and paternity.
The present Administration in the United States is not doing much for the nation. They are either ignorant of free enterprise, incompetent in governing skills, or revolutionary in outlook.
Maybe they are a little of all three. You make the call.
Today is a primary day in many states. I am praying that the American people take an honest look at their current leaders and pray fervently and vote wisely on June 8, in November, and in 2012.
Our future depends on what John Adams wrote on a plaque that hangs in the White House:
“May none but honest and wise men ever rule under this roof” (women too).”
Back on Uncle Sam’s Plantation
What does the African-American community think of Barack Obama? Do they remember the 1960’s? Do they remember how their ancestors began life in this world on the good old American plantation?
Star Parker knows–and she’s uniquely qualified to tell her story to her fellow African Americans and all the rest of us. This article is so good, so true, it will make you cry. RB
By Star Parker
Six years ago I wrote a book called Uncle Sam’s Plantation. I wrote the book to tell my own story of what I saw living inside the welfare state and my own transformation out of it.
I said in that book that indeed there are two Americas — a poor America on socialism and a wealthy America on capitalism.
I talked about government programs like Temporary Assistance for Needy Families (TANF), Job Opportunities and Basic Skills Training (JOBS), Emergency Assistance to Needy Families with Children (EANF), Section 8 Housing, and Food Stamps.
A vast sea of perhaps well-intentioned government programs, all initially set into motion in the 1960s, that were going to lift the nation’s poor out of poverty.
A benevolent Uncle Sam welcomed mostly poor black Americans onto the government plantation. Those who accepted the invitation switched mindsets from “How do I take care of myself?” to “What do I have to do to stay on the plantation?”
Instead of solving economic problems, government welfare socialism created monstrous moral and spiritual problems — the kind of problems that are inevitable when individuals turn responsibility for their lives over to others.
The legacy of American socialism is our blighted inner cities, dysfunctional inner city schools, and broken black families.
Through God’s grace, I found my way out. It was then that I understood what freedom meant and how great this country is.
I had the privilege of working on welfare reform in 1996, passed by a Republican Congress and signed 50 percent of its Democratic members.
I thought we were on the road to moving socialism out of our poor black communities and replacing it with wealth-producing American capitalism.
But, incredibly, we are going in the opposite direction.
Instead of poor America on socialism becoming more like rich American on capitalism, rich America on capitalism is becoming like poor America on socialism.
Uncle Sam has welcomed our banks onto the plantation and they have said, “Thank you, Suh.”
Now, instead of thinking about what creative things need to be done to serve customers, they are thinking about what they have to tell Massah in order to get their cash.
There is some kind of irony that this is all happening under our first black president on the 200th anniversary of the birthday of Abraham Lincoln.
Worse, socialism seems to be the element of our new young president. And maybe even more troubling, our corporate executives seem happy to move onto the plantation.
In an op-ed on the opinion page of the Washington Post, Mr. Obama is clear that the goal of his trillion dollar spending plan is much more than short term economic stimulus.
“This plan is more than a prescription for short-term spending — it’s a strategy for America ‘s long-term growth and opportunity in areas such as renewable energy, healthcare, and education.”
Perhaps more incredibly, Obama seems to think that government taking over an economy is a new idea. Or that massive growth in government can take place “with unprecedented transparency and accountability.”
Yes, sir, we heard it from Jimmy Carter when he created the Department of Energy, the SynfuelsCorporation, and the Department of Education.
Or how about the Economic Opportunity Act of 1964 — The War on Poverty — which President Johnson said “…does not merely expand old programs or improve what is already being done. It charts a new course. It strikes at the causes, not just the consequences of poverty.”
Trillions of dollars later, black poverty is the same. But black families are not, with triple the incidence of single-parent homes and out-of-wedlock births.
It’s not complicated. Americans can accept Barack Obama’s invitation to move onto the plantation. Or they can choose personal responsibility and freedom.
Does anyone really need to think about what the choice should be?
“The trouble with socialism is that you eventually run out of other people’s money.”
Star Parker is the founder and president of CURE, the Coalition on Urban Renewal & Education, a 501c3 non-profit think tank that provides a national voice of reason on issues of race and poverty – in the media, inner city neighborhoods, and public policy.
In addition to heading CURE, and its network of inner city clergy nationwide, Star is a syndicated columnist for Scripps Howard News Service, offering weekly op-eds to more than 400 newspapers worldwide.