Wednesday, August 22, 2001
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Wednesday, August 22, 2001 |
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Triggers for tax cuts? Good strategy By DAVE HAMRICK The Bush tax cut is in trouble. Democrats in Washington are pushing hard to amend the tax cut bill by installing so-called "triggers," so that future installments of the ten-year cuts don't go into effect unless budget surpluses remain at targeted levels. Like so many of the national Democratic Party's proposals, the logic of it sounds almost Vulcan, and the benefits to the country seem obvious. We should be cutting taxes only if we have surpluses, because we want to avoid that most horrid of maladies ... budget deficits. Ask a Democrat why budget deficits are to be avoided at all costs and you'll get a quick, glib, logical answer about the need to pay down our debts and not borrow from future generations in order to pay today's bills. And if you're a conservative, you'll be agreeing with that, and wondering why you don't quite trust what you're hearing. Something nagging at the recesses of your memory tells you to be wary ... what could it be? Could it be that Democrats vigorously defended budget deficits, and just as vigorously added to them, for the last 50 years while they were in control of Congress, and the deficits were caused by their uncontrolled spending? Could it be that you're wondering why deficits are good when they're caused by filling the pork barrel but if there's a chance they might be caused by letting you keep more of your income, suddenly they're the essence of all that's evil? Could it be that you remember the Reagan tax cuts, what really happened, not the rewritten version that Democrats are trying to foist? What really happened was that Reagan pushed through his tax cuts, 25 percent in three years, and the amount of income tax revenue available to the federal government increased every year. It doubled during the '80s. Inflation slowed down, interest rates improved, people started buying and people started finding jobs again. What happens if people are spending and earning more money? Lower tax rates produce more revenue. Now let's reexamine the impeccable logic of attaching revenue surplus triggers to the tax cuts in the light of that information. If revenue went up when taxes were cut, then what should we do if surpluses aren't as high as we want them? Right. Cut taxes. But during the Reagan years deficits went up too, did they not? In spite of the increases in revenue, Democrats were still in charge of Congress, and Congress writes the budget. Revenues almost doubled, while spending more than doubled, so there was some increase in the deficit, though as a percentage of the overall economy they remained roughly the same. As soon as Reagan left office, though, deficits shot through the roof. And what was it that also happened soon after Reagan left office? Correct again. A big tax increase. So what do you suppose is the strategy being employed by Gephardt, Daschle et al? It's as easy as one, two, three. One: You convince people you're truly concerned about keeping the budget balanced by publicly worrying over what tax cuts will do to that balance, and you get a few Republicans to go along with you so you can install triggers for the tax cuts. Two: You use that fake conservative image to retake control of the House of Representatives. Three: You spend money like a drunken sister of Emelda Marcos and, when the surplus starts disappearing, you go to the American people with a sad look on your face and say, "Sorry, folks, we want to give you the rest of the tax cuts, but we can't because there are no surpluses." Et voila! You've reestablished your favorite pattern of taxing and spending. But if Republicans do manage to keep control of the House, they had jolly well better make sure they keep spending under control. Tax cuts without spending restraints will cause the budget to slip out of balance, and this country is one empty promise away from throwing both parties out. I can't think of anybody off the top of my head, but I bet there's a leader lurking out there somewhere who could take the Libertarian Party or some new independent party all the way. Maybe it's time.
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