Make no mistake: this tax cut will reach 120 million families and put $120 billion directly into their pockets, and it includes the most American workers ever to get a tax cut.

This is an interesting statement, insofar as it characterizes a tax cut as putting money “directly into [the] pockets” of taxpayers. I’m having some trouble with this characterization. Suppose you are walking down the street when you are pulled into a dark alley by a common thug. He throws you to the ground, grabs your wallet, and opens it up. He takes out the $200 in cash it contains and runs off with it, all but a $20 bill, which he leaves behind. Has that thief just put $20 directly into your pocket? Should you be moved by his generosity? Should the fact that the theif left your $20 blunt your protest that he took the other $180?

The answer to these questions depends on your presuppositions regarding ownership of property and wealth. If you assume that the thief has a superior right to your money, then the answers to the above questions are all “yes.” If the thief has a right to your money, then anything he leaves you is a gift. But if your right to your money is superior to the rights of the thief, then you own him nothing.

Shifting back to the direct context of taxation, for President Obama’s statement to be true, that his tax cuts are putting money “directly” int your pockets, it would have to be true that the Government has a superior right to all of your money. If the Government has legal rights to all of the wealth in the country, then anything it lets you keep is a gift. If it does not, then cutting taxes is not putting money into pockets; rather, it is merely refraining from taking it.

The White House press secretary also made some statements that rasie some serious eyebrows. He said:

If anybody involved looks at the facts, they’ll find out that this president promised and this president delivered on putting more money back into the pockets of hardworking Americans, cut their taxes, made it more affordable to buy a home, made it more affordable to send their kids to go to college, provided tax incentives for businesses to create jobs through things like clean energy.

Aside from making the same incredible boast about putting money into Americans’ pockets by not taxing them as much (assuming it is even true), this statement raises issues about government spending. The first half of the statement claims that President Obama will lower taxes. The second half of the statement claims that the Government will subsidize things like personal residences, college educations, and business models. But if the president intends to lower taxes, how will he pay for these federal subsidies? In addition, how is the Government going to pay for these unbelieveable bailouts? As I understand it, there are only three basic ways the Government can pay for new programs.

First, it can spend less in other areas. This is a basic budgeting principle. If you want to have more money to spend on things like clothes, that means you have to spend less money on other things like fast food. But the very sugestion that this administration will be spending less seems fairly laughable. Where is all this money going to come from?

A second answer for how the Government can pay for new things is by increasing revenue. The primary revenue-generating method used by the Government is the income tax. But President Obama is promising to increase spending while descreasing taxes. How can this be? One answer is that he plans on using one of the other two methods to fund his programs. Another answer is that he doesn’t really plan on lowering taxes, overall. This latter approach is the Robin Hood approach. By significantly raising taxes on the most productive (and therefore most wealthy) segments of society, the Government can maintain – if not increase – its cashflow by simply shifting the financial burden to a smaller subset of society. Since the lower classes of society generally feature some sort of entitlement attidute, this is a pretty easy sell. This is the mindset that claims that the affluent are oppressing the poor by the very nature of their affluence. This injustice can be corrected by taxing the rich to give to the poor. This view is better known as a variant of Socialism.

The third answer is that the Government can pay for new prgrams by creating the money to pay with. Because American currency is no longer backed by a finite, valuable substance such as gold, that means that two things are true: First, the value of the American dollar is determined by the strength of the American economy. The wisdom of this reliance can seriously be doubted, especially in times like this. Second, the Government can simply print money as it pleases. This second implication is very important because it amounts to an indirect tax. Whenever the government prints money without taking an equal amount out of circulation, it dillutes the pool. That is, it incrementally devalues every other dollar in circulation. This is inflation and it results, indirectly, in the Government taking your money. It does this not by taking your dollars, but by taking away the value of your dollars.

This should scare people. Aside from the notion that you can spend your way out of a recession, these comments by the Obama administration indicate that the foundation of President Obama’s worldview is government ownership of everything and the necessity of redistributing everything accordingly.

Anyway, on to business.

I am not all that interested in economics per se, nor do I consider myself a political guru by any stretch. Nonetheless, I wanted to offer up a remark about the astonishing $700,000,000,000.00 government bank buyout that is currently occupying headlines.

I don’t pretend to know all the details of this plan, but obviously, someone is going to have to pay for it and everyone knows the U.S. government is already dead broke. That fact also brings up an interesting corollary that I am not seeing mentioned in the media: We are in this position because of widespread and rampant financial mismanagement. So why do we think that the federal government (which already has a $10 Trillion debt to testify to its financial management prowess) is going to make the situation better? And even if we could be sure it would, does that necessarily mean that it should?

It makes me nervous when the government interferes in free markets for the purpose of economic engineering.

One other point that goes to my caveat regarding politics. I would consider myself conservative, but I would not call myself a Republican. One reason for this is exemplified by this issue. If liberals can be counted on to increase government spending to pay for gratuitous government programs, why can’t conservatives be counted on to keep the government uninvolved and let the market regulate itself? Why does the choice seem only to be where we spend the $700 Billion we don’t have?