Here, in Georgia, the guru of Georgian Conservatism is none other than Neal Boortz, who has written two books on the FairTax, Mike Huckabee won Georgia in the Republican primaries hands-down because he was the only vocal supporter of the FairTax; it's a drastic understatement to say that Georgia is FairTax land, no senator or congressman can hope to get elected unless he supports the FairTax.  The thing is, the FairTax never sat well with me and I've never been able to figure out why.  The very basic premise (after all, Neal Boortz has written two books on the subject) is that the IRS be abolished (I'm all for that), along with it goes the income tax (all for that too), the nullification of the 16th amendment (again, I support it), as well as the abolition of several other taxes, and, finally, the part that doesn't sit well with me: an astronomical consumption tax to be the government's only real source of revenue.  On the surface, it sounds reasonable, right?  I mean, finally!  A tax plan that will beat back governmental growth and force it into the constraints that the Constitution provided.  Unfortunately, it makes some assumptions about government that are quite naive.

    Since the 1920s, we have worked very hard to undermine the strength of a production economy to replace it with a consumer economy.  Rather than save and produce, Americans spend and serve--not exactly the formula for a strong economy.  We are currently seeing the unraveling of that entire system of loan-and-spend economics that was the result of our obsession with fairness and our apparent trepidation towards laissez-faire.  Our government has built institutions and systems to insure that we have plenty of money to spend whenever we want to spend it on whatever we want to spend it.  This built a culture that gives us money that, in essence, is valueless because there is an endless supply of it carrying no intrinsic value.  The Great Producer has become the Great Debtor, and this is why I fear the FairTax.

    The FairTax assumes, in correctly, that a lone consumption tax will discipline and irresponsible government by restricting its income (or in the government's case: outtake) to a single source.  And what of it?  What if their revenue is reduced to one source?  Why, the irresponsible government we have will try their best to suck every droplet of water from that stone by encouraging rampant consumerism at all costs--almost to the point of mandate--in order to fill its coffers and fund the very institutions that have destroyed our economy and will continue to undermine it even with the FairTax.

    What if the FairTax is passed?  What if, by some strange miracle, Saxby Chambliss actually passes the FairTax proposal (probably by pretending it's some kind of sweeping welfare initiative)?  What happens now?  Well, the government, obviously, would downsize a couple things here and there, including the IRS, to make room for the new budget, but they would leave a couple government departments like the Federal Reserve and they're business-regulatory arms, because, obviously, we'd still be shaky in the knees about laissez-faire.  What would they do with these?  Well, to put it plainly, they'd destroy the country; and rather rapidly.

    They wouldn't cut too much, so they will be short in the budget, so what will they do?  That's where the Federal Reserve will come in.  The Treasury Dept. will give them debt in the form of Treasuries to sell to other countries and they'll get the printing presses running, printing dollars upon dollars and keeping inflation down artificially, actually merely delaying it.  Now that the government's budget is dictated by mere consumption, thereby mostly excluding savers from paying a lot of taxes, they'll need to get people spending even more to fill their belly and to at least keep face to foreign investors in the dollar.  Further inflation of the currency will be the first step in order to put the money out there that they can get back through that consumption tax; the effects of that inflation would be delayed as it usually is.

    That, they'll accomplish with the same methods they used in the past to force unwise loans in order to pump-up whatever bubble was most suitable to their short-term political gains.  They'll build up the capability of the FDIC to insure more bank assets per account, get the Attorney General to threaten investigation (as Janet Reno did) on banks that refuse to make ludicrous loans, tell the SEC to look the other way, and continue to allow Fannie and Freddie to do their thing, creating more debt to sell to the world market.  Yes, exactly what they did to cause this economic collapse, but ten-fold.  The reason we have the mixed (NOT free-market) economy we do, is because this government, in need of control, is incapable of living within a budget, it needs more and more money, going after more and more of the GDP and brokering as much debt as possible in order to borrow money it could then turn around and use to further the agenda that threatens the very foundation of our country.  Taking away more sources of government revenue, would only make this government more desperate for a cheap, and unearned buck.

    The only way that the FairTax would work was if the FDIC, the SEC, the Federal Reserve, and every other commercial-regulatory arm of the government went away with the 16th amendment and the IRS.  Being that the government is so very good at scaring us about the rigors and risks of laissez-faire and actual free-markets, they would never allow those to be abolished, though they rightfully should anyway.  I mean, this is a government that seizes control and refuses to let go no matter what damage their control does.  A world without an income tax is also a world without regulation on business and anti-trust "laws", and oh, what a day that would be.

And that's the Real Spit
-WilliamPitt

http://williamdavidpitt.bustablog.com