Democrats & Liberals Archives

One Step Forward, Two Steps Back (Do the Math)

This could be said to be an unofficial sequel to my last entry I guess we can file this under “what are they thinking?”

The link above is to an article that says not only will the Senate vote to carve a path of destruction through undeserving programs to save 35 billion, but they are about to follow that all up with a 70 billion dollar tax cut. Somebody has to explain to me how this qualifies as fiscal conservatism. Wait, no, they don’t have to.

Today's Republican party wants to have its cake and eat it, too. They voted for an expensive war, a new cabinet department, a new medicare entitlement, knowing that these things would cost hundreds of billions of dollars. They did this knowing revenues were down because of the economic downturn.

All this new spending. You would think they would have just decided to go no further.

Ah, but this is the party of tax cuts, of Laffer Curves, of supply side economics. Not only could you run the government more cheaply, you could make more money doing it.

That's the theory, at least.

In practice, the growth supposedly guaranteed by these tax cuts is happen at a slower rate than during the time those restrictive tax rates were in effect. Of course we know that excessive taxation does not increase economic power. But what about a government that's paying for itself? What about a strong dollar, and good employment? What about people's trust in the economy to work out fairly, rewarding people's good investments with a minimum of the arbitrary risk of deceptions such as untrustworthy accounting.

Growth could also be dependent on things like fairly priced utilities. I hardly think excessive gas prices, and manipulation of power markets abitrary to true supply and demand do good things for the economy.

More importantly, paying for these tax cuts by cutting government spending is not always a responsible (or in the end, economic) decision. Budget cuts in disaster preparedness for FEMA were a disaster themselves, and I don't wish to be the guy who explains in the next post-terrorist attack commission how it is the Bush administration was so big on Homeland Security, yet dropped funding for first responders, and failed to do much to seal our borders.

Spend a little money on regulation and its enforcement. Spend some on homeland security, preventing attacks. Spend today's cheaper tax dollars rather than tomorrow's more expensive treasury bills. Stop funding our competition. Stop directly taking chunks of revenue out of the equation when it's very unlikely you're going to cut spending. In short, budget with some common sense. Tax enough to make the money you're going to spend, spend enough in the right places to do this country some good and keep the economy working smoothly. Prepare for disasters and terrorist attacks better so we're back on our economic feet quicker.

In short, treat this like a system where the laws of mathematics apply, where money doesn't grow on trees, and sometimes a government has to ask for more money when it takes on more expenses. Now, some people have said that giving the government more taxes to pay for things just encourages more spending. But if you haven't noticed, folks, these people have been perfectly happy to spend more when there's not any money. Allowing them to continue this exercise in fiscal irresponsibility will no more scare them off of deficit spending than not giving money to a crack addict will discourage them from stealing. The real answer is to get better people in charge of the money, not use the patent lack of discipline on certain folks part as an excuse not to bite the bullet.

Posted by Stephen Daugherty at November 4, 2005 10:43 PM