Friday, February 19, 2010
The Lost Tension in the Spending Versus Tax Debate
But it occurred to us like a bolt of lightning from above that despite all of this talk and writing about fiscal issues, there is one critical issue missing in the whole national debate, one that would accelerate the decision-making process on the part of Congress and most importantly, the American public towards some sort of fiscal sanity once again.
That critical missing link is ‘fear’.
There is zero ‘fear’ by any of the affected parties right now that anything different will happen to them if we don’t take any action to solve these enormous, bone-crushing deficits and build-up of national debt. Nobody is afraid of the consequences of their inaction…so consequently, they do nothing. It is a vicious, insipid and ultimately completely stupid circle.
Let’s go to the videotape:
Democrats won’t cut spending, unless it is in defense, in which case they will reduce spending with abandon. They will raise taxes, but only if it is all borne by the upper 1% of the income-earners in America. What they incorrectly presume with impunity is that these wealthy people will part with their hard-earned money without a fight or the advice of expensive tax accountants and lawyers. The Democrats also incorrectly presume that amount of money they can confiscate from the highest 1% of Americans will make any difference at all in balancing our budgets. (it won’t..we can confiscate all of Bill Gates and Warren Buffett’s $75 billion in assets and that will run the US government for less than 70 hours)
Republicans always want to cut taxes at the drop of a hat, but they do not want to cut spending with the same abandon which would at least honor their ‘limited government’ heritage bequeathed to someone by Jefferson. (No one believes that anymore apparently) That is why the GOP so unceremoniously let the only thing that has ever worked on budget discipline, PAYGO, die an ignominious death around 2003-2004 without even giving it a proper burial. In fact, between 2001-20006, Republicans spent more money than even the most liberal of all liberals, Speaker of the House, Tip O’Neill could have ever imagined spending during his reign in office.
So, there you have it….all of the easy avenues have been used forever with impunity….raise spending; cut taxes, spend freely and never stop adding on additional debt for your kids to pay back…one day…after we are all dead and gone.
Here’s what is missing and what we would like to support as a ‘new way’ out of this conundrum: Think of enormous debt being far worse than lower spending or higher taxation could ever be on this economy and your future. ‘No New Debt! No New Debt!’ Can’t you just hear the roar of the crowds at the Democrat, Republican and Tea Party Conventions next time around? (ok, maybe not yet...but you should)
Why is this true? No republic we can find in history has ever succumbed due to low taxation alone. Or higher spending alone. But thousands of them have succumbed to the killer of humongous national debt caused by an excessive spending/taxation imbalance and the attendant interest that has got to be paid on the principle each and every year.
When those payments can’t be made to bondholders, especially foreign credit holders, that is when things start to go sour for any spendthrift national government. Just ask the president and parliament of Greece right now….we bet they wish they had paid attention to balanced budgets 10 years ago.
Here’s what we suggest any political leader should say to the American public so we can all see the consequences of not taking action on this enormous budget deficit dilemma: “I am going to attack this budget deficit by voting for every spending reduction first and foremost that is presented, especially from the great CBO Budget Options books (see Vol. 1 and Vol. 2). However, if you don’t agree with that approach, and we don’t get to balance by spending reductions first, I am going to support taxes across the entire population, not just the super-wealthy, so we can generate enough revenues to cover the spending you say you don’t want to reduce.
Because I am simply not going to vote for any more debt to be laid on our children in any fashion and I will only vote for any debt ceiling increase if we are on a rapidly-declining glidepath to balance in the next 10 years.”
And if you don’t like that, send someone else up there to Washington to fill that seat. Because I am not going to be a part of the strangulation of the American economy by this idiotic and totally insane national debt.”
That should lay out the options in a much more clear way for the American public to understand what is really at stake here. If you don’t support Congress as they cut spending; you are saying you want to pay higher taxes. And so they should give it to you.
It is your choice.
glasses courtesy of http://celebritystyleblog.wordpress.com/tag/sarah-palin-glasses/