PhilStar 3, On endless wars, endless welfare and public debt

This is my third guest article in Philippine Star. Here are the three papers:

Commentary: Is mining taxation’s purpose to create more taxation?
Bienvenido Oplas Jr. - Philstar.com
November 10, 2018 | 10:47am
https://www.philstar.com/news-commentary/2018/11/10/1867452/commentary-mining-taxations-purpose-create-more-taxation

Strong US dollar and how to deal with it
Bienvenido Oplas Jr. - The Philippine Star
September 22, 2022 | 12:00am
https://www.philstar.com/business/2022/09/22/2211288/strong-us-dollar-and-how-deal-it

On endless wars, endless welfare and public debt
Bienvenido Oplas Jr. - The Philippine Star
October 18, 2023 | 12:00am
https://www.philstar.com/business/2023/10/18/2304520/endless-wars-endless-welfare-and-public-debt

NICE, France –  Ever rising government spending on wars, subsidies and freebies, funded by rising taxes and borrowings leading to high interest and inflation rates. These are realities discussed by many people almost anywhere in the world.

I am attending the Tholos Forum 2023 from Oct. 16 to 18 here in France and some of my fellow participants from Europe and US are discussing the economic distortions of continuing proxy war in Ukraine against Russia, and soon escalated war between Israel and Iran-backed groups Hamas in Palestine, Hezbollah in Lebanon, and possibly Iran itself. And the US and NATO preparation for possible confrontation with China over Taiwan.

Then there is the unabated illegal immigration by the millions yearly in US and Europe. And because these are welfare states, US and European countries have to provide basic necessities to these illegals, money generally borrowed as their existing revenues are not even enough to cover domestic spending for their citizens and infrastructure projects.

These two issues alone – endless wars, endless subsidies – are escalating instead of subsiding. This leads to rising public debt as a percent of gross domestic product (GDP). I checked the International Monetary Fund (IMF) Fiscal Monitor, net lending as percent of GDP remain always in negative or deficit for decades for many countries.

Gross debt of the US at 56 percent of GDP in2002 has jumped to 103 percent in 2012 and 121 percent in 2022. For France, gross debt of 60 percent in 2002 jumped to 91 percent in 2012 and 112 percent in 2022.

The Philippines gross debt of 65 percent of GDP in 2002 has significantly declined to only 37 percent in 2019 but quickly jumped to 52 percent in 2020. Thailand has a similar trend while Vietnam has initially followed the US and Europe trend but kept its debt to only 35 percent in 2022 (see table).

On day 1, Oct. 16 of the Tholos Forum, the dinner speaker was Grover Norquist, president of the Americans for Tax Reforms (ATR) and he talked about US politics and evolution of Republicans vs Democrats debate on taxes and spending.

When US president Ronald Reagan pushed and implemented his big tax cut policies around 1985, he wanted an independent think tank to guard it and monitor GOP legislators to never entertain any tax hike. So ATR was formed that year with Grover as its president until today. I first met Grover in their office in Washington DC in 2004 when I was an Atlas International Fellow and I attended several free market-oriented conferences and meetings in the US for a month.

The main function of ATR is to ask politicians especially Republicans to sign the “Taxpayer Protection Pledge.” The Pledge is to make “no-new-taxes” promise and rhetorics by candidates and incumbent legislators and governors be put in writing. Then ATR announces and publicizes the politicians who sign the pledge. It is an effective pressure work on US politicians, that is why most tax hike laws were sponsored by Democrats and some Republicans who did not sign the Pledge.

ATR and Tholos Foundation have international network of center-right groups, think tanks and NGOs. The Tholos Forum here in France has nearly 60 participants from the US, Europe, South America and Asia, many from taxpayer groups. We are three Asians here, me, Raymond Ho from Hong Kong, and Yuya Watase from Japan.

In the case of the Philippines, we are lucky being not involved in any war abroad, domestic insurgency has been controlled, but there is continuing noise and lobby often silently sponsored by the US, to raise military spending over territorial disputes with China. But the bigger problem is endless subsidies and freebies that continue to compromise whatever new revenues that come and thus public borrowings remain high at P2+ trillion a year from 2020 onwards. The military and uniformed personnel (MUP) pension is also another fiscal drag because these personnel never contribute to their own future pension, which is rising and not constant, tax-free, and passable to spouse when the personnel has died.

Around the world, people need to assert their right to keep the fruits of their hard work by resisting endless wars, endless subsidies and freebies that will require endless taxes and borrowings. If external war-mongering countries would only step back, countries with territorial disputes tend to talk to each other, long negotiations but no war. And people should go back to assuming more personal and parental responsibilities in running their own lives. More government responsibility in education, healthcare, housing, pension, etc. has corrupted people’s values. We should stop this.