Big Daddy in Washington got big pockets. He gets money and gives money. Big Daddy collects income taxes and then pays all that money out to people who need it for something – school, food, housing assistance, disability, training and many other programs. Big Daddy got a big hole in his pocket and here’s why. The way it’s supposed to work is that Big Daddy pays out what he collects in individual income taxes – money in, money out. If you look at the mid decade years in the chart below, you will see the way it’s supposed to work – approximately the same amount of money went out to the needy as what came in from those who weren’t needy. Those that got give to those who don’t – and all that charity goes through Big Daddy’s pockets.
The green bars are individual income tax receipts. The red bars are the payments of all the Federal social assistance programs not including Social Security, railroad and military retirement.
Instead of sending our income tax to Big Daddy in Washington, each of us could just walk over to our neighbor down the street who is having a hard time for one reason or another and give them our income tax. But we wouldn’t get to fill out income tax forms which is an exciting way to spend a weekend or two. The person who needs the money wouldn’t get to fill out long applications for student grants or housing assistance or food stamps. Long applications and supporting documentation are fun things to do so we wouldn’t want to deprive people of that joy.
The past two years show clearly what the problem is. Lots of money out and not enough money in. So what’s Big Daddy gonna do? The Green People tug at Big Daddy’s pants and say “Hey, Big Daddy, raise taxes on the rich people!” The Red People kick Big Daddy in the ankle and say “Big Daddy, you got to reduce payments to all these needy folks!” Big Daddy sure has got a heap of problems.