Fiscal Commission -- Are Spending Cuts Being Overstated?
Heritage Budgetary guru Brian Riedl, in his email blast today, disputes the claim that "the Fiscal Commission recommendations rely overwhelmingly on spending cuts, and only slightly on tax increases." The Commission, he says, "hid trillions in tax increase in its budget baseline." He says using a current-policy budget baseline, $8 trillion is saved in the first decade through a nearly equal ratio of tax hikes ($3.3 trillion) and spending cuts ($3.5 trillion).
But here's the kicker: "The long-term rise in deficits is nearly 100% the result of rising entitlement costs." Yet "nearly all first-decade spending cuts are discretionary" -- and half of those in defense.
His disturbing punchline: "So, in return for massive tax hikes, there is almost no movement in entitlement trends in the first decade."
Riedl says the report has some good ideas, "but we can clearly do better." Here's his WebMemo, which goes into much greater detail explaining how spending is the problem, not revenues, and that we should place on focus on spending cuts rather than tax increases. (The Commission's proposal "includes a tax hike trigger that would automatically raise taxes if Congress does not enact what they call tax reform.")
Riedl affirms a point made in another post by Professor Rahe, i.e, "Spending, not revenues is the problem, and we've been down this road before: immediate tax hikes accompanied by promises of spending cuts in the future. This is unacceptable."
- Comment (9)
- · Quote
- · UnfollowFollow (1)
Comments :
Jun '10
Re: Fiscal Commission -- Are Spending Cuts Being Overstated?
The President who presided over a fast recovery from recession: "Collecting more taxes than is absolutely necessary is legalized robbery." --Calvin Coolidge
The President who extended a recession by eight years: "Taxes, after all, are dues that we pay for the privileges of membership in an organized society." --Franklin D. Roosevelt
-----------
Well "organized" poverty is still poverty.
Re: Fiscal Commission -- Are Spending Cuts Being Overstated?
Given past experience, our position should be. First, cuts in spending across the board (except with regard to defense -- where foolish cuts could be fatal to the country). Second, the elimination of all subsidies (mohair, ethanol, you name it). Third, the elimination of all programs that fall outside the proper prerogatives of the federal government (e.g., the Department of Education, the Department of Health and Human Services). Fourth, a reform of the surviving entitlements (e.g., Social Security and Medicare). We should raise the age of eligibility and provide for their gradual privatization. Fifth -- and only after these other measures have been actually implemented -- a reform of the tax code.
Sep '10
Re: Fiscal Commission -- Are Spending Cuts Being Overstated?
This chart shows that tax rates as high as 80% and as low as 28% have not moved the governments actual take as a percent of GDP much away from 19%. Given that fact, the discussion on taxes should be what rates produce the most economic growth since making GDP larger is the only hope. Entitlement spending is the big problem and the longer it takes to convince the electorate the harder it is to detox them.
Sep '10
Re: Fiscal Commission -- Are Spending Cuts Being Overstated?
http://scottgrannis.blogspot.com/search?q=tax+revenue+and+tax+rates
The chart mentioned above can be viewed here even though, apparently, it cannot be pasted here.
Re: Fiscal Commission -- Are Spending Cuts Being Overstated?
The WSJ editorial page editors weigh in on the subject, opposing the commission's final report, though suggesting that Republicans should "take the commission's better ideas and make them part of their own budget proposals next year."
While the editors rightly recognize entitlement reform as critical and spending cuts overall as extremely important, they also place a great deal of emphasis on taxes and economic growth, to wit: "The key variable here (concerning the deficit problem) is economic growth, which is why a tax increase would be especially counterproductive. ... Republicans won the recent election by opposing tax increases, and the fastest way to lose that majority would be to break that promise."
Re: Fiscal Commission -- Are Spending Cuts Being Overstated?
David -- this is terrific. Thanks for posting. Riedl's memo should be required reading for anyone who presumes to have an opinion on this subject. The problem is not the Commission's proposals per se -- it is the baseline, the baseline, the baseline. The Commission just accepts the past two years -- Obamacare and everything else -- as a fait accompli. But if November 2 boiled down to anything it was an emphatic rejection of "the baseline." This proposal is a massive snub of all those millions who voted a month ago to say, "No; we don't like this new baseline."
It's all oddly reminiscent of the foreign policy debates of the late 1970s, when almost all the establisment types, right and left, accepted the perpetual existence of the Soviet Union and the necessity of detente as the "baseline." But Ronald Reagan, Jeane Kirkpatrick, and a few other lonely voices stood up and said, "No; we don't need that to be the baseline. We can win, and they can lose."
Unfortunately, the Commission is not going to redefine the baseline. It is the voters who are going to have to do that.
Jul '10
Re: Fiscal Commission -- Are Spending Cuts Being Overstated?
I'm with Professor Rahe and Steve Manacek.
Unfortunately, I fear Congressional Republicans lack the requisite vision, insight and boldness to seize the moment as the situation requires.
Time for more Tea Parties. Tomorrow is too late.
Aug '10
Re: Fiscal Commission -- Are Spending Cuts Being Overstated?
"Are Spending Cuts Being Overstated?"
It's always a good bet that the answer to this question is yes.
Edited on Dec 3, 2010 at 9:40amRe: Fiscal Commission -- Are Spending Cuts Being Overstated?
Steve Manacek: David -- this is terrific . . . The problem is not the Commission's proposals per se -- it is the baseline, the baseline, the baseline. The Commission just accepts the past two years -- Obamacare and everything else -- as a fait accompli. But if November 2 boiled down to anything it was an emphatic rejection of "the baseline." This proposal is a massive snub of all those millions who voted a month ago to say, "No; we don't like this new baseline."
It's all oddly reminiscent of the foreign policy debates of the late 1970s, when almost all the establisment types, right and left, accepted the perpetual existence of the Soviet Union and the necessity of detente as the "baseline." But Ronald Reagan, Jeane Kirkpatrick, and a few other lonely voices stood up and said, "No; we don't need that to be the baseline. We can win, and they can lose."
Unfortunately, the Commission is not going to redefine the baseline. It is the voters who are going to have to do that. · Dec 3 at 8:45am
Steve, you are 100% right.