Don’t Cry For Me, America
By Daniel at 21 December, 2009, 10:46 pm
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http://hotair.com/greenroom/archives/2009/11/21/dont-cry-for-me-america
In the early 20th century, Argentina was one of the richest countries in the world. While Great Britain ’s maritime power and its far-flung empire had propelled it to a dominant position among the world’s industrialized nations, only the United States challenged Argentina for the position of the world’s second-most powerful economy.
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In 1916, a new president was elected. Hipólito Irigoyen had formed a party called The Radicals under the banner of “fundamental change” with an appeal to the middle class.
Among Irigoyen’s changes: mandatory pension insurance, mandatory health insurance, and support for low-income housing construction to stimulate the economy.
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With an increasing flow of funds into these entitlement programs, the government’s payouts soon became overly generous. Before long its outlays surpassed the value of the taxpayers’ contributions. Put simply, it quickly became under-funded, much like the United States ‘ Social Security and Medicare programs.
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Under Perón, the size of government bureaucracies exploded through massive programs of social spending and by encouraging the growth of labor unions.
High taxes and economic mismanagement took their inevitable toll even after Perón had been driven from office. But his populist rhetoric and “contempt for economic realities” lived on. Argentina ’s federal government continued to spend far beyond its means.
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And by 1994, Argentina ’s public pensions - the equivalent of Social Security - had imploded. The payroll tax had increased from 5% to 26%, but it wasn’t enough. In addition, Argentina had implemented a value-added tax (VAT), new income taxes, a personal tax on wealth and additional revenues based upon the sale of public enterprises.
These crushed the private sector, further damaging the economy.
A government-controlled “privatization” effort to rescue seniors’ pensions was attempted. But, by 2001 those funds had also been raided by the government, the monies replaced by Argentina ’s defaulted government bonds.
By 2002, “government fiscal irresponsibility induced a national economic crisis as severe as America ’s Great Depression.”
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And here we are - looks like CONgress is following history to a T! I wounder how this will end? It’s “different” this time?!?
- choclabs3
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