"The Road We've Traveled": Just Another Complete Coincidence?

President Obama's re-election committee recently released a 17-minute video called, "The Road We've Traveled."



The title is a bit curious, isn't it?  It sounds completely innocuous but why "The Road We've Traveled"?  The title doesn't convey success nor does it imply a sense that the President has overcome obstacles.

Stuart Chase

Out of sheer coincidence, supposed coiner of the term New Deal, Stuart Chase, wrote a book in 1942 called "The Road We Are Traveling."  Or is it a coincidence? Read on an you be the judge.  Is this a path toward greater freedom for mankind or is it the road to a new serfdom?

The Road We Are Traveling was sponsored by The Twentieth Century Fund, since renamed The Century Foundation.  According to their web site, they support "progressive ideas that advance security, opportunity, and equality."  They claim to be non-partisan, but also freely admit, "we are not neutral."  One of the trustees is John Podesta who is founder of the Center for American Progress, who was also President Bill Clinton's Chief of Staff, and was also co-chairman of the Obama Administration transition team.  But I'm sure that's all a coincidence, too.

In the book, Chase outlines how the world in 1942 is changing from a system based on "free enterprise" into a new, unknown system that he calls "X".  Here is an excerpt from pages 94 to 97.  One might go so far as to call this a "fundamental transformation."

(click a page to enlarge the original)

In war and peace, boom and depression, the march toward centralized, collective controls has continued. Planning has often been identified with socialism. Yet orthodox socialists themselves are far from pleased with the collectivism practiced in Russia, Germany, Italy, Japan, Spain, and they look with grave suspicion on the New Deal. Something has appeared which nobody anticipated, nobody wanted and nobody really understands. Mr. James Burnham has called it the "managerial revolution," in the first intelligent attempt to understand it which I have seen. Many more studies will be needed before the mystery is cleared up. We have something called "X," which is displacing the system of free enterprise, all over the world. If we do not know yet what to call it, we can at least describe its major characteristics. They include, in most countries: 


Free Enterprise into "X"

• A strong, centralized government.
• An executive arm growing at the expense of the legislative and judicial arms. In some countries, power is consolidated in a dictator, issuing decrees. (see "The Power of the President: Recommendations to Advance Progressive Change" from The Center for American Progress, founded by John Podesta)
• The control of banking, credit and security exchanges by the government. (see  Dodd–Frank Wall Street Reform and Consumer Protection Act)

• The underwriting of employment by the government, either through armaments or public works. (see American Recovery and Reinvestment Act of 2009)
• The underwriting of social security by the government--old-age pensions, mother's pensions, unemployment insurance and the like.
• The underwriting of food, housing and medical care, by the government. The United States is already experimenting with providing the essentials. Other nations are far along the road. (in 1942, the United States had passed Social Security, but had not passed the "Great Society" welfare and Medicare legislation of the Johnson Administration) 
• The use of the deficit spending techniques to finance these underwritings. The annually balanced budget has lost its old-time sanctity. (all of President Obama's budgets have had nearly trillion-dollar annual deficits.  The United States Senate has passed no budget in over 1,000 days)
• The abandonment of gold in favor of managed currencies. (see "FDR Ends Gold Standard in 1933" and "Nixon Ends Bretton Woods International Monetary System")
• The control or foreign trade by the government, with increasing emphasis on bilateral agreements and barter deals.
• The control of natural resources, with increasing emphasis on self-sufficiency.
• The control or energy sources--hydroelectric power, coal, petroleum, natural gas.
• The control of transportation--railway, highway, airway, waterway.
• The control of agricultural production. (see "Family-farm advocates say new child farm-labor rules would destroy farms' generational structure")
• The control of labor organizations, often to the point of prohibiting strikes.
• The enlistment of young men and women in youth corps devoted to health, discipline, community service and ideologies consistent with those of the authorities. The CCC camps have just inaugurated military drill.
• Heavy taxation, with special emphasis on the estates and incomes of the rich.
• Not much "taking over" of property or industries in the old socialistic sense. The formula appears to be control without ownership. It is interesting to recall that the same formula is used by the great corporations in depriving stockholders of power.
• The state control of communications and propaganda.

These characteristics are incipient in some countries, full-blown in others. If you check off those which are observable in the United States in 1942; in Britain, in Germany, in Mexico, in Japan, in Sweden, in Russia, a comparison of checkmarks will show some amazing parallels. Is the whole list good or bad? That is a meaningless question. Some items point strongly to community survival, which is perhaps the most fundamental good there is. Some are clearly contrary to the liberal democratic ideal. Most of them are anathema to the doctrines of Adam Smith. Good or bad, there they are, in the middle of the stage.


Study this list and think hard about it. At first reading, most Americans will not recognize it as something which applies to them. Yet there is not an item on the list which is not applicable in some degree to the United States. We have no official propaganda bureau yet, but the FCC controls radio broadcasting. Further, it is not a war list, though the war has increased the impact. These items are referents for "X," the new structure which is being molded, and for which there is as yet no name. Names are thrown around--"socialism," "state capitalism," "fascism,"-but they mean nothing, and only lead to confusion.


See also ...

• Download a PDF version of the complete "The Road We Are Traveling" [80.9 MB]
• A video rebuttal.

• And another, "The Road We Really Traveled" starring Barack Obama

A Hidden Gem: Even Authors Get It!

With Tax Day rapidly approaching, I thought I would share a little gem discovered while reading Steve Martini's political thriller, Shadow of Power, embedded on pages 126 and 127.

As dreaded April 15th engulfs me, I have just finished another frustratingly-confusing 80-plus-page love letter to my favorite uncle, Uncle Sam, who seems in constant need of ever more money. My accountant assures me that all is correct, but how am I to know for sure?

I thought about highlighting the particularly good or entertaining sections of this gem but then realized that I would end up highlighting most of it anyway.

"Only the insane of the eighteenth century could foresee that a bleak two lines added to the Constitution a century after its creation, authorizing the collection of a federal income tax, could result in a seventy-year rampage by government to mentally rape its own citizens with millions of pages of totally unintelligible tax laws, rules, regulations, and forms.

"Today we have special federal tax courts because the law is so convoluted that ordinary federal judges are presumed too ignorant and unschooled to understand the complexi­ties of laws and forms that every citizen down to the village janitor is required to understand, to obey, and to sign under penalty of perjury and threat of imprisonment.

"Nor could it be possible in the Age of Reason to foresee a Social Security system that if run by a private business would result in their arrest, prosecution, and conviction for operating a Ponzi scheme. In the real world, taking invested funds in the form of Social Security taxes, paying current claims, and skimming the rest for other purposes is called embezzlement. When government does it, it is simply called politics. In either case the arithmetic is always the same. When the scheme goes belly-up, its operators, if they're smart, will be in Brazil, or, in the case of Congress, retired, which is the political equivalent of being in Brazil.

"With all of this, the people in what is touted as the great­est democracy on the planet have no effective recourse. They cannot act directly to fix any of the obvious open sores or seeping wounds in their own government, because the founders didn't trust them with the only effective medicine, the power to amend their own Constitution. That is reserved the power to a serpent its creators never saw. 

"Short of revolution, something Jefferson urged take place at least every twenty years, the average citizen is left to pound sand by casting a largely empty vote to replace the devil-in-office with the devil-in-waiting and hope that the caustic nature of power to corrupt can somehow be neutralized.

"Praying for the devil to grow a halo, we all plod on, one foot in front of the other, trusting that somehow we will not follow the Soviet Union over the national cliff."

The Oppressive Progressive Income Tax: California Edition

I thought I would share a few charts on California’s Personal Income Tax (or PIT for short). I haven’t had time to analyze the federal IRS data yet. California’s PIT is more heavily progressive than the federal income tax and California relies on PIT for a greater share of total revenues (nearly 50% in 2006). California treats all income equally. Unlike the federal government, California taxes capital gains at the ordinary income level. Most of the taxes collected at the upper end are from stock and real-estate gains which have been devastated by the simultaneous downturns in both areas (hence the California budget disaster).

Recently, many in California pointed to the 2/3rds majority tax approval requirement as a stumbling block to patching the state government’s massive spending crater. Some argued that California needs to impose higher taxes on the rich because “we all know that the rich don’t pay their fair share.” These charts were meant to analyze these arguments.

The following charts use data freely available for download from California’s Franchise Tax Board (FTB, or California’s IRS).

I then sorted the percent of PIT taxes paid by population. I think that the chart speaks for itself, showing that the state’s need for revenues falls on a small minority of (i.e., electorally insignificant) taxpayers.


If distributed equally, the “average” state tax bill would be $3,100. By population, 85% of taxpayers paid below the average while just 15% paid above the average. Amazingly, half of the entire PIT tax bill is paid by just 2% of taxpayers. The other 98% of taxpayers pay the other half. The 2/3 majority requirement is the ONLY real check against runaway spending, and admittedly not a very good one.

Back to the 2/3rds discussion for a second. The majority of Californian’s already pay less than the “average”, even at the 66.7% population level. In fact, that electorally-strong 2/3rds contributed just 6% to the entire PIT tax bill. The electorally-weak 1/3 contributed the other 94%. Remember the 2% that pays 50% of the PIT bill? Well, because PIT is half of California’s revenues, those 2% provided a full quarter of the entire state’s revenues (thank you, my beloved fellow Californian). That 2% of taxpayers equates to a city the size of Riverside, CA or about 280,000 people. Remember, the state’s entire population is roughly 37 million, so we’re talking less that 0.8% of the entire population. But this is fair, right (he writes with fingers dripped in sarcasm)?

Let's look at it another way. Would you agree that all California residents benefit from state government? Do all state residents benefit equally? Sure, some argue that the rich benefit more because they have more to lose while others point to the costs of welfare and social programs at the low end. So let's look at the effective cost of state government by population. This following chart shows the effective cost of $1 of state government. Those taxpayers that pay below the “average” cost pay less than $1, those that pay above the average pay more. We won’t even discuss the estimated 7%-8% of the population that is here illegally and likely pays nothing in PIT.


Two-thirds of Californians effectively pay only 25 cents on each $1 of state service that they receive. A full half of taxpayers pay less than 12 cents. The remainder of that cost is subsidized by those at the upper end. High wage earners (we should all be so luck), effectively pay over $500 for every $1 of service.

Here is where the conflict emerges. We have two different systems when voting on spending and tax-related measures.

On one side, we have "one person, one vote". Many who vote in favor of more spending will never have to pay for the consequence of their vote.

On the other side, we have the progressive income tax system where top income earners pay more for government programs, despite having just one vote.

Politicians love to promise new spending to win votes and guarantee re-election. Voters love new services for which they do not have to pay. The progressive income tax system gives both the politicians and voters what they want without any pesky checks and balances.

Let's use an illustrative example. Say that, in order to ensure re-election, the dominant political party decides that every Californian MUST have a 50-inch HDTV on which to watch (and snicker at) the Governor's latest action flick. Due to State's buying power, the State can buy these TVs for $1,000. Just vote "Yes" on the ballot proposition and you too can have one of the beauties. The cost will be painlessly applied to your annual Personal Income Tax bill.

If you are in the bottom two-thirds of the taxpayer population, you pay just 25 cents or less on the dollar. Effectively, you are insulated from the true cost of operating the state government. This means that the $1,000 TV costs you $250 or less. If you are in the bottom 30%, the cost is only $100 or less because you effectively pay 1 cent on the dollar or less. So which way are you going to vote? I'd guess YES.

Now, let's say that you happen to be in the top 15% of taxpayers. Due to the progressive income tax, this means that you effectively pay more than $1 for every $1 of service. "That's fair," you say, "because they earn more money." Okay, let's look at the top-most 2% of taxpayers, you know, the ones that pay 50% of the entire bill. These "lucky" citizens effectively pay $4.75 and much, much more for every $1 of government service. That $1,000 TV effectively costs a minimum of $4,750 to these taxpayers. For the very top taxpayers, the bill comes to an amazing $507,000! All this, despite that these taxpayers likely already have two better-quality TVs at home. If you are in this category, I'd guess that you would vote NO. Unfortunately for you, you are electorally insignificant. It REALLY DOES NOT MATTER if you think this is a good idea or not but you WILL have to PAY FOR IT.

At the ballot box, the top 15% of taxpayers can NEVER prevail in a free and fair democratic election against the majority for popular programs. Want a low-cost 50-inch HDTV? Vote "YES" and make somebody else pay for. Want free higher education? Vote "YES" and make somebody else pay for it. Want free medical care? Vote "YES" and make somebody else pay for it.

The politicians that use these techniques appeal to the broad masses, ensuring re-election. There are no checks and balances against such abuses. While I have not found "smoking gun" evidence, it does offer an explanation for California’s constant overspending (above inflation and population growth), the lack of fiscal discipline, and the domination of one party in the California Legislature.

There is also a separate debate as to whether the excess tax money better serves society when in the hands of government, or left in the pockets of those that earned it. By California’s example, even a spoiled rich heiress might make better spending decisions.