Mr. President: Growing Government and Shrinking the Private Sector is the Wrong Thing to Do

President Obama wants to tax the rich in order to hire and retain more teachers and other public-sector workers. Let's examine what this really means, since he doesn't explain it simply and clearly. {Hint: Maybe that failure is because there's an election in 2012. More on that later.}

We spent a record amount of $3.6 trillion in the fiscal year just completed. Each year we accumulate more and more debt due to ongoing huge deficits. The president now wants to spend $35 billion more than the $3.6 trillion spent last year.

Presumably he's reviewed in detail the first $3.6 trillion and concluded that it doesn't have any unnecessary spending in it. Otherwise we could reprioritize our spending choices and limit ourselves to the already astronomical level of last year's $3.6 trillion.

Since all of the current government spending is deemed by the president to be necessary and as or more important than the need for additional teachers, he says we must come up with another $35 billion, all to achieve higher public employment. The reality, of course, is that the president wants to please the public employee unions and try to embarrass the Republicans at the same time. {There's an election in 2012, remember?}

Democrats Seek Funds for States outlines the president's plan:

"Senate Democrats said Monday they would seek to pass a bill that would send $35 billion to state and local governments to retain and rehire teachers and other public-sector workers.

The bill would be the first standalone element of President Barack Obama's jobs program that Democrats will try to advance after a broader package was defeated in the Senate last week. It would be paid for by a 0.5% income-tax surcharge that would kick in starting at $1 million in annual taxable income.

Senate Republicans are expected to largely oppose the measure, leaving it unlikely to move through Congress. Democratic senators from swing states may also oppose it.

"Senate Democrats are still focused on the same temporary stimulus spending that's failed to solve our jobs crisis instead of bipartisan legislation that would lead to private-sector job growth," Senate Minority Leader Mitch McConnell (R., Ky.) said in a statement.

Congress has twice acted in the past two years to provide states with money aimed at averting public-sector layoffs. Unlike Congress, most states have a requirement to balance their budgets each year, which in times of economic difficulty can force them to cut public-sector workers.

Mr. Obama, who is on a three-day bus tour through North Carolina and Virginia, on Monday called on lawmakers to pass the measure. "We're going to give members of Congress another chance to step up to the plate and do the right thing," he said in Asheville, N.C."

Here's my take. President Obama's view of the right thing to do is to always and forever increase government spending, regardless of the size of government and our nation's financial condition. Although we just spent a record $3.6 trillion in the 2011 fiscal year just ended, the president wants to set another spending record in 2012.

But he also needs a villain, since 2012 is an election year. Enter the rich folks, aka fat cats. So here's my question, Mr. President.

Are we so addicted to government spending that we're willing to ask the Chinese and others to loan us more money which will result in doubling the U.S. government debt again in just a few short years? And if we are, what do we expect the Chinese reaction to be? How much do they love our public employee union officials and politicians?

As for punishing the rich and getting them to pay more taxes than they already do, why not go big time? In that connection, my guess is that the Obama faithful and "Occupy Wall Street" crowd would love to tax the rich to the fullest extent possible.

So if the real plan is to hire as many teachers and other public employees as possible, let's really go for it and punish the bad guys at the same time. Rather than raise only another $35 billion from the rich, why not raise the ante tenfold to $350 billion? Or even a hundredfold to $3.5 trillion?

That would make the millionaire surcharge 5% or 50% rather than the 0.5% as currently proposed. And $350 billion or $3.5 trillion isn't chump change, even to the president and his big spending allies. Proposing that would start a serious conversation about spending, taxing, growth and such. And that's a conversation worth having.

Besides, everybody knows that hiring more public employees would be a better use of the rich people's money than leaving it to those rich folks who earned it and may mistakenly believe that it's theirs to do with as they wish, including investing, saving or maybe even giving it away.

Or do the people not yet know that the best use of that rich people's money is for additional government spending, as the president argues? I think not.

Now don't get me wrong. I love teachers. I had lots of them while in school, have been married to one for forty five years and one of my daughters taught school for several years as well.

But what I don't love is unaffordable and unsustainable government spending growth. Nor do I love bigger government at the expense of a bigger economy and private sector.

While I certainly don't prefer government growth to private sector growth, neither do I prefer collectivism at the expense of individual freedom. In fact, I believe that an ever growing government is dangerous to the health of our economy and society, including its national security.

And while I neither envy nor hate those who are rich, it's ok with me if others choose to do so. As free Americans we have the right to like, envy or even dislike our fellow Americans as we choose.

That said, our individual likes and dislikes won't make the U.S. economy perform better. How we may feel toward other individuals is simply irrelevant to our nation's prosperity and security.

So President Obama wants us to believe that this additional $35 billion growth in new government spending is about helping out the teachers by taxing the rich a little bit more. He's concluded that the level of government spending needs to grow some more. I disagree, and I hope you do, too.

In the end, the president's proposal is simply about further growing government at the expense of the private sector.

If we elect to allow the government to play Robin Hood and take from the rich to give to the government so it can in turn give to the teachers, we won't take that same money away again or allow those who earned it to use it for a different purpose in the future. We can only take it once, and we can only spend, invest or give it away once, too.

So if we do choose as a society to confiscate it through taxation, as a society we should make an honest effort to do what's best with that money which we have taken.

Here's my point. If we want to take money away from the rich for whatever reason, why not give the amount taken to the nation's creditors instead of to the teachers? That at least would reduce our 2012 deficits. Maybe we'd then "only" have a deficit of $1.165 trillion instead of $1.2 trillion as predicted. Then our debt would "only" increase by slightly less than $100 billion monthly.

The fundamental problem with the take from the rich and redistribute what's left to others idea is that we really need to focus on economic growth, regardless of what the president says. That means additional private sector investment. More teachers and other public sector employees won't help us grow.

But if we choose to take from the rich and give that money to either the teachers or the creditors, in each case we'll have lower future economic growth. That's not a desirable outcome for anyone, and especially not the poor among us.

So maybe the simple and clear explanation for the lack of clarity of Obama's proposal is attributable to choosing the short term interests of the teachers over the long term interests of the poor. If that's the case, it's no wonder the president has chosen not to explain himself fully, simply and clearly.

Summing Up

Taxing the rich to pay creditors would mean smaller economic growth, lower deficits and less additional government debt. That outcome, however, is far more preferable to taxing the rich and hiring teachers, resulting in more government, a smaller economy and additional government debt.

Nevertheless, taxing the rich to hire teachers is exactly what our president is recommending as the "right thing" to do. President Obama is flat wrong when he gives "Congress another chance to step up to the plate and do the right thing."

He wants us to tax the rich to pay for more growth in government spending. He wants bigger government. And that means a smaller economy and private sector. That will result in more poverty.

What he doesn't even offer up as an alternative to higher taxes is to reprioritize by reducing spending in other areas or using any increased taxes to pay down debt in lieu of hiring more public employees.

Why not cut government spending instead of growing it?

Finally, it would be better to cut public spending, increase private investment, grow the economy and shrink the deficits and debt than to do just the opposite. Unfortunately, just the opposite is exactly what our president has deemed to be the "right thing" to do.

He's even campaigning using that nonsensical argument. Let's hope our fellow Americans aren't fooled.

Thanks. Bob.