Amnesty or Immigration reform: Both Government Ponzi Schemes

In his March 2012 Discussion Paper No. 6423, titled The Shadow Economy and Work in the Shadow: What do We (Not) Know?, Friedrich Schneider (Department of Economics, Johannes Kepler University of Linz and IZA) wrote: Smith “defines [shadow economy] as market-based production of goods and services, whether legal or illegal, that escapes detection in the official estimates of GDP”. Put differently, one of the broadest definitions is: “…those economic activities and the income derived from them that circumvent or otherwise avoid government regulation, taxation or observation.” (P. Smith, 1994; Assessing the Size of the Underground Economy: The Canadian Statistical Perspectives, Canadian Economic Observer, Catalogue No. 11-010, pp16-33)

David Zeiler, Associate Editor, Money Morning wrote: “Doing what they can to survive in a dour job market, millions of Americans exist in an underground economy that has ballooned to $2 trillion annually.” (What America’s $2Trillion Underground Economy Says About Jobs; 4/29/13)

Zeiler stated: “The rapidly growing amount of unreported wages in the U.S. Is costing the nation billions in lost tax revenue. The Internal Revenue Service estimated that the losses from unreported wages have grown from about $385 billion in 2006 to about $500 billion last year.”

In an August 2010 appearance on Neil Cavuto’s Fox Business News program, Neil and I discussed Obama’s state of denial vis-a`-vis Social Security. Obama had told a crowd that Social Security was completely solvent, and that it “wasn’t in crisis.” Obama claimed Social Security “just needed a few modest adjustments to strengthen it.”

But as I pointed out to Neil, the only adjustments Obama could make to Social Security were to raise taxes, raise payroll taxes, raise the retirement age, and/or raise taxes on businesses. Which as I also pointed out would raise consumer prices, raise cost of food, raise the cost of goods and services, and result in higher unemployment.

I expressed to Neil that in the next 20 years 80 million baby boomers, that’s a rate of over 10,000 per day, were going to be retiring. Based on the decreasing number of persons paying into Social Security, the amount pilfered by Congress, and the number projected number of retirees, the day will arrive very quickly that those retiring would either not receive what they were supposed to receive on Social Security or no Social Security benefits at all. I further noted that was the scheme behind obamacare. It was a cheap Ponzi scheme to bolster Social Security. Neil pointed out that the dirty little secret behind obamacare was that, “It was to save Medicaid from going belly up by laying over it a system that hides that reality.”

Bob Rueteman of CNBC reported that by 2017, Social Security would be paying out more than it was taking in. (CNBC; 2/8/10) Forbes.com reported that Medicare trustees were saying Medicare would go broke by 2016 (Forbes.com; Trustees: Medicare Will Go Broke By 2016; 4/23/12) The New York Post reported December 7, 2013, that “Obamacare Created a Medicaid Time Bomb.”

Which brings me to my intended point. Realizing that continuing to print worthless paper and giving it the misnomer of currency (which implies said paper has a value worth more than the ink printed on it) while tempting, is not a sustaining measure.

So what does Washington do? They look for way to “kick the can” down the road. And they do that by granting amnesty to illegal aliens. And let there be absolutely no doubt that is the principle reason both parties are pushing amnesty. Albeit the Republicans, being more insidious than Democrats, are calling their amnesty plan “immigration reform.”

Currently, there ere are approximately 30 million illegal aliens in the United States. Granting amnesty would allow Obama to go back to a specific point in time and grant amnesty to all illegal aliens in the country since that time based upon certain provisos conditional to same. The chief proviso being that illegals would be assessed a tax debt based upon the period of time they were here illegally along with their paying annual taxes going forward.

Amnesty is nothing more than another government Ponzi scam fraught with unimaginable unintended consequences. Obama’s “banana republic” dictatorial threat to use executive orders was nothing more than Kabuki Theater.

Every president since Reagan has had this fiscal sword of Damocles over their heads. For political gamesmanship Democrats pilloried President George W. Bush when he advocated taking action pursuant to Social Security. Obama has used banana republic tactics in an attempt to accomplish the same end.

What they deny or fail to realize is that unless Washington cuts spending back to the level of at least a decade ago and steadfastly refuse to authorize any new spending, amnesty will be a band aid on the “USS Sinking Fast.”

And while this theater is going on, the American people are being misled by both parties and by whatever agenda-driven news network they are fooled into believing is telling them the truth.[adsanity id=11817 align=alignnone /]