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Archive for November 10th, 2011

I’m baffled by stupid Republicans (sorry to be redundant).

Some GOPers have agreed to put taxes on the table. Not surprisingly, Democrats are praising them for this preemptive surrender, patting these Republicans on the head for being good little lapdogs.

(The Democrats are also high-fiving each other since they openly admit that tricking Republicans into a tax hike has been their top political goal, but that’s an issue for another day.)

And what are Republicans getting in exchange for violating their no-tax promises? As you might suspect, they’re getting nothing. For all intents and purposes, the left is saying “that’s a good start” and waiting for GOPers to make further concessions.

Needless to say, this is very irritating. And I’m not the only person who is upset. Here is a column that I co-authored along with Grover Norquist, Mike Needham, Phil Kerpen, Al Cardenas, and Duane Parde. We explain why higher taxes are a bad idea.

Some are now suggesting that instead of addressing the real problems our nation faces — by reducing government spending — the supercommittee should recommend tax increases to meet its deficit reduction targets. Tax increases are what politicians always do when they are not willing to govern—that is, to cut and reform government spending. The problem, of course, is that tax hikes crowd out and displace spending reform. …Advocates of…raising taxes…have put forward several unserious arguments. First, they say, “let’s compromise.” Let’s be balanced, they insist, and promise to cut some spending and raise some taxes. Having pushed spending way up, they now want to pretend this spending is normal or, at least, inevitable. It isn’t. …Why should anyone be asked to pay more taxes just so Washington can continue to overspend? …What’s more, there are good reasons to be wary – we’ve been down this road before. In 1982, President Ronald Reagan was promised three dollars of spending cuts for every dollar of tax hikes. The tax hikes were real. But spending — in real dollar terms — went up, not down. In 1990, the same trick was played out — this time at the expense of President George H.W. Bush and the American people. A two-to-one promise brought higher taxes and higher spending. When tax hikes are on the table, the talk about spending cuts evaporates. Oddly enough, the tax hikes remain. The second argument is: “We won’t raise tax rates – we will just reduce deductions and credits.” Nonsense. Closing tax loopholes is all well and good. But doing so to raise revenues is just as much a tax hike as raising tax rates. The tax hike crowd is trying to confuse tax hikes with tax reform. In fact, closing tax loopholes to raise revenue is ultimately antithetical to tax reform — there would then be less revenue available to use to cut tax rates.

As a long-time advocate of the flat tax, I think the second point is very powerful. If you want tax reform, the last thing you should do is let the politicians take away loopholes without using the revenue to finance lower tax rates.

But the most important argument is the first one. Simply stated, higher taxes mean higher spending. Period. End of argument.

If taxes increase $300 billion, that means $300 billion more spending. If taxes increase $600 billion, that means $600 billion more spending.

And since America’s fiscal problem is too much spending, why should we let politicians have more money so they can make government even more bloated and wasteful?

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I’ve dinged Mitt Romney for his less-than-stellar record on healthcare, his weakness on Social Security reform, and his reprehensible support for ethanol subsidies, but I haven’t bothered to address his budget plan – in part because it seemed rather underwhelming.

Sounds like I haven’t missed much. Jacob Sullum has done the tedious work of reading through Romney’s plan, and he is unimpressed.

Mitt Romney said he wants to “eliminate every government program that is not absolutely essential.” That sounds good until you realize that Romney’s goal of cutting $500 billion from projected federal outlays in 2016 would, at best, leave the budget about 8 percent higher than it is now and only 11 percent lower than it would be without any attempt to restrain spending. The implication: Mitt Romney thinks 89 percent of what the federal government does is “absolutely essential.” And that’s what he says when he is trying to appeal to the fiscally conservative Republicans whose votes he will need to win his party’s presidential nomination. Who knows what he really thinks, assuming he has any firm convictions at all on this crucial question. …By contrast, the plan outlined by Rep. Ron Paul (R-Texas), one of Romney’s rivals in the race for the Republican nomination, would balance the budget by 2015. Clearly, Paul’s idea of “absolutely essential” government programs is a bit narrower than Romney’s. But whose isn’t?

Jacob’s analysis is on the mark, and he doesn’t let Romney get away with the business-as-usual Washington scam of claiming that a reduction in the projected growth of spending is actually a spending cut. Using honest math rather than DC math, Romney’s budget plan (assuming he is serious) would increase spending by 8 percent over the next four years.

To be fair, a budget that allows federal spending to jump by 8 percent over the next four years would satisfy Mitchell’s Golden Rule. Barring an unexpected downturn, the private sector would be growing faster than the government.

The problem is that even good politicians usually fail to fulfill their campaign promises. So if a politician today is saying that he will let spending climb by about 2 percent each year, that probably means it will increase 5 percent each year.

And if he isn’t proposing to eliminate a single cabinet-level department, that doesn’t suggest a strong commitment to fiscal responsibility.

It also means Mitt Romney thinks the Department of Housing and Urban Development is “absolutely essential.”

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