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September 14, 2005

Time to Raise Taxes!

In response to comments that the government should cut spending to pay for Huricane Katrina relief, Tom DeLay declared that the feds were running at maximum efficiency.

My answer to those that want to offset the spending is sure, bring me the offsets, I'll be glad to do it. But nobody has been able to come up with any yet...after 11 years of Republican majority we've pared it down pretty good.
How about starting with the "6,371 pet projects" in the Transportation Bill, Congressman?

How long will conservatives tolerate deficits, especially when their leader in the House says there isn't anything left to cut? Looks like it is time to start raising taxes.

Posted by Rick at September 14, 2005 07:34 AM

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Cut the fat, but don't raise taxes. It's easier to cut spending than to cut taxes once they've been raised.

Read that, also.

Posted by: Matt at September 14, 2005 11:36 AM

Matt, my post was largely tongue-in-cheek, but I do stand by the position that if Congress, including and especially Republicans (they are in control you know!), can't exercise discipline, taxes ought to be raised over going into debt. Debt is not a conservative principle - ask Eisenhower.

Posted by: Rick at September 14, 2005 01:23 PM

And lowering taxes to raise revenues is a conservative principle practiced by Kennedy, Reagan and, most recently George W. Bush.

Posted by: Doug Payton at September 14, 2005 01:37 PM

I've never regarded Eisenhower as much of a conservative stalwart. If you could provide me with some references that suggest otherwise, I'd be happy to hear them. The first national politician to be known as a conservative in the modern sense of the word was Goldwater, not Eisenhower.

I'm not defending debts, necessarily, but I'm neither accepting Eisenhower as any kind of movement conservative.

Posted by: Matt at September 14, 2005 01:45 PM

Okay, point ceded. I suppose I'm an Eisenhower Republican then on fiscal policy, but a Kennedy Democrat on National Security. It doesn't take a genius to figure out that long-term debt is bad. Does it?

My point is - if you can't pay for something, either don't buy or make more money. In government terms, making more money means taxes. I agree that raising taxes can thwart economic growth and that cutting taxes can boost revenue. But targeted spending can also boost economic output (just watch what happens in the gulf coast region in the next few years!).

However, despite decades of relatively conservative fiscal policy (Clinton's spending was tame compared to Bush's), we continue to slide into debt. Something has to give.

The current plan (cut taxes to increase revenue!) isn't working - because the spending is broken.

There are two parts to the tax cut to prosperity model, both of which are necessary - neither of which is sufficient: 1) cut taxes; and 2) cut spending.

At some point #1 doesn't make sense because #2 isn't happening. You can't keep cutting taxes in order to keep up with the increases in spending. That makes absolutely no sense and, frankly, is idiotic on its face.

So, I propose that Congress either exercise some fiscal discipline, or we raise taxes to foot the Katrina and Iraq war bills. If that position isn't logically consistent, then carve me up as a illogical fool. But, it sure seems commensensical to me.

Posted by: Rick at September 14, 2005 07:54 PM

I choose option A. Always have, and that's my fiscal disappointment with Bush. Yes, I'll bet targeted spending will boost the Gulf, but that should be the exception rather than the rule. As often as possible, in other than extraordinary circumstances (as we have now), government needs to get out of the way and not try to manipulate the economy. It can take care of itself

Posted by: Doug Payton at September 14, 2005 09:59 PM

Option A? How am I supposed to interpret that? ;-)

The problem is that there really isn't an option A/1 and B/2. They only work if they are together. Sure, they can depart for a brief period of time, but balanced budgets have been the exception for decades, not the rule. So, A is simply opting to fail.

Where's Gore's lock box? If there was such a thing, I would have supported his economic proposals in the 2000 campaign. Unfortunately, since he actually thought there was such a thing, it proved to me he couldn't be trusted with our money.

Posted by: Rick at September 14, 2005 11:10 PM

Sorry; to clarify, when you said "either exercise some fiscal discipline, or we raise taxes", my choice is fiscal discipline in concert with tax cuts. Unfortunately, DeLay doesn't seem to know what this is or how to do it if he thinks the federal government is currently a lean, mean, governing machine. I would think, at this point, a true conservative Republican could bury him in the next election.

Posted by: Doug Payton at September 15, 2005 05:51 AM


Did my comment get cut or did I goof up?

I made a comment suggesting I agree with you, that our budget is too big. But then I pointed out that at least a couple of parts of the budget that I would cut are our huge military budget and our auto-industry subsidizing road/transportation budget.

This is on subject because I wanted to point out that progressives are not pro-big budget, that I'd have a much smaller budget than our current leadership does. We are pro-responsible society and that is what true progressives would be all about, which should be fine with conservatives and libertarians, I'd think.

I hope that my comment disappeared by my mistake and not because you didn't want to hear from me.


Posted by: Dan Trabue at September 15, 2005 08:56 AM

Sorry. I was looking at the wrong spot. Truly sorry to have momentarily doubted your integrity. You've given no indication that you were the type to censor reasonable comments.

Posted by: Dan Trabue at September 15, 2005 09:22 AM

"my choice is fiscal discipline in concert with tax cuts"

Doug, this is not Sophie's Choice. I'm saying you get both or none. It simply doesn't make sense to accept tax cuts when there is no fiscal discipline. Tax cuts should be a reward for fiscal discipline. So, rescind the Bush tax cuts (or let them sunset) or exercise fiscal discipline. You can't choose "both" knowing full well that one part of the equation isn't being dealt with, nor is there much hope that it will in the future. Heck, we have the absolute best case scenario: Republican controlled House, Senate, and Executive!


The fact that many good conservatives won't concede this point makes me worry for the future of the Republican party. Heck, makes me worry for the future of our nation.

Posted by: Rick at September 15, 2005 02:13 PM

That we aren't getting it, as troubling to me as that is, doesn't mean we can't get it. Fiscal discipline and tax cuts are what I want, and what I look for in a candidate. That's my goal.

Now, realizing I won't always get my goal, and indeed that I'm not getting it now even with Republicans in charge of the legislative and executive branches, this still doesn't mean I want to throw in the towel on the whole kit and kaboodle. To say, at this point, "OK, well then raise taxes" just gives politicians of both stripes permission to continue in their foolish ways. Why, oh why, would we want to do that? This would accomplish the following things, all bad ideas:

* Give Democrats a talking point about how raising taxes is the way to raise revenues, and cutting taxes never does, in spite of evidence to the contrary, including the Bush tax cuts, which have raised revenues. This makes cutting taxes in the future that much harder.

* Stunt the economy, which has been going gangbusters since the tax cuts pulled them out of the Clinton recession, the tech bubble, and the 9/11 economic hit. Now, this may be OK, as the economy may be about to boom with all the reconstruction about to occur in the Gulf, and that might offset the hit. But that's a roll of the dice.

* Require John Doe to tighten his belt to help Katrina victims, but allow the feds to go merrily along without a care in the world, money-wise. That's not leadership.

* Open the door for a Democrat in 2008. Dubya's dad made the mistake and paid for it with his defeat. Dubya himself didn't make that promise, but I think the base would be inclined to stay home if they saw him to be, not just a non-vetoing big-spender, but also a tax increaser. (To be honest, the fact that he's already 2 out of those 3 may be enough.)

* It would shift this burden from us to our children and grandchildren. It's not theirs to bear.

If Bush was going to go really conservative on us, he's present a package of spending cuts, the money from which would go to Katrina aid. That would be the responsible and gutsy thing to do. Yeah, I know it won't happen. In the meantime, if we need to raise revenue, we should do what is working right now; grow the economy by cutting taxes.

Posted by: Doug Payton at September 15, 2005 04:21 PM

Meanwhile the deficit balloons. Again, the cut taxes and spending plan has not worked - at all. The cut taxes part to raise revenue has worked, but the federal spending has also raised revenue and boosted the economy (defense sector under Reagan and Bush for example). Meanwhile the deficit and debt has ballooned.

All I hear you saying is that so long as the economy grows, it doesn't matter what happens to our debt. Is that right? At what point is national debt not acceptable to you? When it's $250,000 per American? $500,000? $1,000,000?

What is your plan to get us out of debt, or to reduce debt to a sustainable level? And I don't want to hear an idea - I want a plan that considers the political economic constraints and is based on the assumption that politicians - all politicians - are rational actors and spending is how they get re-elected.

An idea without an implementable plan is only a dream. You are dreaming if you think you the government can keep cutting taxes as a means to alleviate the national debt.

I say rescind or let sunset Bush's recent tax cuts until spending is reigned in. Oh, it would sure be nice for Bush to weild the veto pen as well...

The political economy for conservativism is hot right now with Republican control over the house, senate, and executive, but the problems have only gotten worse under Republican leadership. It's not a failure of conservative principles, it's a failure of implementation by self-interested politicians.

The conservative notion that politicians will one day wake up and cut taxes and spending to balance budgets is as cockamamie as the Utopian socialist ideal where people will magically forgoe self-interest and live cooperatively without greed.

The river of truth flows through the valley of two extremes.

Posted by: Rick at September 15, 2005 04:42 PM

Don't know why you're saying I think the national debt is acceptable. I'm saying we should cut spending. I'd like to see a balanced budget amendment with a plan to pay off the national debt. I personally don't have a plan with me that takes everything into consideration--I am not a lawyer or politician--but until politicans buy into the idea, no plan will make much of a difference. There are plenty of detailed plans for tax reform, but unless a political party buys off on it, they're just books. (Ask Rep. John Linder how long he's been trying to get Republicans to buy into his idea.)

I may be dreaming to want fiscal responsibility, but your phrase "until spending is reigned in" is just as fanciful. Sunsetting the tax cuts followed by business as usual by politicians who, as you say, are re-elected by spending will do just as much damage to the debt. Requiring slightly less dreaming, but dreaming nonetheless, is the hope that Bush uses his veto pen. I'd love to see that, too. That's part of my dream. I guess it's part of yours, too.

The ideas that raising taxes and hoping for reduced spending is somehow the truth between fiscal responsibility and socialist utopia just doesn't sound right to me. I understand why you classify balanced budgets with utopian hopes. But remember that we didn't get into this mess in the course of 4 or 8 years. Liberal policies, buttressed by the media, have given us a culture that expects this sort of irresponsibility (as long as it benefits "me"). It will take time to pull us out of that. What appears like a short-term, pragmatic move, will only delay that recovery.

Posted by: Doug Payton at September 15, 2005 05:12 PM

Points well taken Doug.

Utopian Socialists (not communists) believe that if people could "just get along" and cooperate, then society would approach Utopia. They forget that people are basically selfish and the free-rider problem is intractable given our sinful nature.

Likewise, 535 Congress men and women are rational actors - selfish and subject to the same free-rider problem.

You wrote: "but until politicans buy into the idea, no plan will make much of a difference."

Agreed, but again, assuming that politicians in a system of single-member districts elected in a first-past-the-post electoral system will ever "buy into the idea" is to assume that rational actors will act irrationally (in the economics sense of the term "rational").

The failure of utopian socialism and the failure of fiscal conservativism has nothing to do with the merits of the arguments, rather, it has everything to do with the assumptions underlying these models. Both movements violate the foundation of politcal economic theory - that all "actors" behave rationally.

One way to stop the pork-spending is to stop electing people by single-member districts. The free-rider/prisoner's dilemma problems of FPP systems is why parliamentary systems of representative democracy are so popular throughout the world.

Posted by: Rick at September 16, 2005 01:57 PM

OK, now I understand why new democracies have taken up that system vs ours, even when we were the ones liberating them. That's bugged me before, but I can see why it might make sense. Thanks for the education.

Posted by: Doug Payton at September 16, 2005 02:26 PM

I have it wrong. Not necessarily parliamentary, but proportional representation systems. A system can be parliamentary, but still elected by districts. I think the UK operates this way. Gosh, where is my comparative politics textbook when I need it...

The same issue, but not as extreme, occurs with the base closures. What elected representative would be willing to stand out and say "Go ahead! Close my base!"? Not many, so they have a comittee that comes up with a list. If bases within your district aren't on the list, you'll vote for it because you're safe this time around. But if you're base is on the list, you fight like mad. You win if you're powerful, but most of the time if your base is on the list, you lose.

But that is subtractive, not additive. Pork spending is additive. Suppose a secret independent comittee came up with the spending for the transportation bill (or the President). If your pet projects aren't on that bill, what's the incentive to vote for it? So you get a very large group of Congressmen who were similarly sleighted and convince them to withold support from the bill until their pet projects are funded as well. That's the only way to get legislation passed.

If Congressional delegations were elected by state, say on a proportional representation basis, instead of district, then you'd see the same type of pork, but not nearly as dramatic because representatives of states aren't as vulnerable to the ire of local constituents. Your senator will catch much less flak for the failure to secure funding for public art on a bridge than the local Congressman.

Also, the most extremely conservative and liberal members of each state would have much larger representation in Congress, which would certainly lead to some fireworks!

BTW - this is my whole argument against cities and counties. The inefficiencies and inequity involved in factional local decisionmaking hurts our nation tremendously as we compete in this globalized market. Our regions provide our economic muscle, but in regions where there are dozens upon dozens of "factions" (in the Madisonian sense) cause a tyranny of the local majority over the regional majority, our regions aren't able to compete with other regions in the world where things are more efficiently organized.

Not to mention ecological and social benefits of thinking regionally. Okay, back to reality.

Posted by: Rick at September 16, 2005 04:33 PM

I have no problem with going into debt for capital expeditures.

Posted by: Fran at September 16, 2005 08:41 PM