The Forgotten Fact: It's Easier to Spend Than to Tax
AEI's Peter Wallison on one entirely obvious, but overlooked fact:
[I]t is far easier to spend than to tax. Once this idea is grasped, it becomes clear why it is not a “compromise” when the Republicans agree to tax increases while the Democrats agree to spending cuts. Without a mechanism that ties spending to tax revenues—like the balanced budget requirement in state constitutions—tax increases don’t necessarily decrease or eliminate a deficit.
Even if it were true that tax increases provide more revenue (a proposition that is far from clear) the additional revenue can be immediately spent; there is certainly no shortage of “needs.”
Accordingly, in the budget debates coming up in the next few weeks, the Republicans should make clear that they will not agree to any tax increase until there is a mechanism in place that can credibly and effectively control future spending.
Nothing more is necessary.
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Sep '10
Re: The Forgotten Fact: It's Easier to Spend Than to Tax
Amen to Mr. Wallison.
Feb '11
Re: The Forgotten Fact: It's Easier to Spend Than to Tax
Elections are the only viable "mechanism" to control spending.
Re: The Forgotten Fact: It's Easier to Spend Than to Tax
They're only part of the equation, as we're seeing now. If reining in spending is not a priority for the folks in office, or if they're too conciliatory in their bargaining with the other team, we end up with $300 million and change in temporary cuts. But even if they were able to slash something like $300 billion a year from the budget over the next decade, what's to prevent the Dems from just passing new spending measures that compensate for the cuts? I don't see how we can truly get spending under control without some type of balanced budget amendment that operates in the long term.
Nov '10
Re: The Forgotten Fact: It's Easier to Spend Than to Tax
“...a mechanism in place that can credibly and effectively control future spending.”
There ain’t no such thing as a free lunch (TANSTAAFL) and there ain’t no such thing as a mechanism that can credibly and effectively control future spending.
Only Republicans can do that but they are neither credible nor effective all of the time, or even most of the time.
Edited on Apr 19, 2011 at 12:50pmRe: The Forgotten Fact: It's Easier to Spend Than to Tax
TeeJaw: “...a mechanism in place that can credibly and effectively control future spending.”
There ain’t no such thing as a free lunch (TANSTAAFL) and there ain’t no such thing as a mechanism that can credibly and effectively control future spending.
Only Republicans can do that but they are neither credible nor effective all of the time, or even most of the time.
You're welcome to your pessimism, just NIMBY!
Was just looking for an excuse to use the other fun acronym they taught us back in Econ 1 :)
Mar '11
Re: The Forgotten Fact: It's Easier to Spend Than to Tax
A constitutional amendment will be required, with hard spending limits (the lesser of a)18% GDP or b) lowest annual revenue collected in each of the last 5 years; with no changes to the way either is calculated) and hard bypass rules (bypass only on a) 2/3 vote of both houses AND 2/3 vote of all states, or b) declaration of war with full national mobilization - a draft).
GDP limits the size of govt. and starts paying down debt, the lowest annual revenue prevents massive tax increases (why vote if it will be 5 years before you can spend it, and if the new revenue doesn't show up, no spending increase anyway). I would define a full national mobilization as 10 or 20 times the our highest number of uniformed forces within the last 10 years, to prevent a 1 year reduction, followed by a declaration of war on some "social need".
Make it hard to get around and hard to game the amendment - any other ideas?
Feb '11
Re: The Forgotten Fact: It's Easier to Spend Than to Tax
Diane Ellis, Ed.
They're only part of the equation, as we're seeing now. If reining in spending is not a priority for the folks in office, or if they're too conciliatory in their bargaining with the other team, we end up with $300 million and change in temporary cuts. But even if they were able to slash something like $300 billion a year from the budget over the next decade, what's to prevent the Dems from just passing new spending measures that compensate for the cuts? I don't see how we can truly get spending under control without some type of balanced budget amendment that operates in the long term. · Apr 19 at 11:39am
Anything short of an amendment has no teeth. But an amendment would have "dumb" teeth. I mean "dumb" as in the amendment would have no regard for: 1) whether balance is achieved via controlled spending or out-of-control taxes, or 2) unforseen circumstances where short term borrowing is necessary or advantageous. There's no substitute for the electorate holding politicians accountable.
Sep '10
Re: The Forgotten Fact: It's Easier to Spend Than to Tax
Ed Gorz
Diane Ellis, Ed.
Anything short of an amendment has no teeth. But an amendment would have "dumb" teeth. I mean "dumb" as in the amendment would have no regard for: 1) whether balance is achieved via controlled spending or out-of-control taxes, or 2) unforseen circumstances where short term borrowing is necessary or advantageous. There's no substitute for the electorate holding politicians accountable. · Apr 21 at 12:47pm
It looks like Stu_in_VA (post #6) has your concerns covered. Spending caps and emergency override mechanisms.
Nice work Stu! Can you enter the Republican primary race? Please?
Feb '11
Re: The Forgotten Fact: It's Easier to Spend Than to Tax
Mark Belling Fan
It looks like Stu_in_VA (post #6) has your concerns covered.
· Apr 21 at 1:43pm
I'm not so sure that my concerns are covered. First, I don't think it's a good idea to tie the hands of Congress (unforeseen circumstances and all that), and a 2/3 vote of the feds AND the states is unreasonably tying their hands, IMO. Second, the pressure to continually raise taxes to allow for the maximum amount of spending will not disappear - especially if those dirty rich people are forced to bear an ever increasing burden. Third, the scope of government is the bigger problem - the size and balance of the budget should serve that larger purpose. I agree we're facing a crisis, but that just means we need to convince more voters there is a crisis and that reduced spending is the best way to avert it. Fourth, the day we'd be able to enact such an amendment is the day on which we wouldn't need it anymore. Fifth, setting a hard number just gives cover for spending up to the maximum or disallows vital spending without regard for what needs to be spent.