Please take a moment and let this sink in — it doesn’t matter whether or not Bush’s tax cuts expire. Either way, taxpayers will be on the hook for the trillions in obligations that Washington has incurred and continues to add to at an alarming and ever-accelerating rate.
The “clash” over the Bush-era tax cuts on Capitol Hill is so much fanfare and theater for our benefit, not a serious discussion about any kind of substantive change to the fiscal status quo. Thank goodness for the Tea Parties, as Tea Party leaders have, with some degree of success, been able to steer our national attention and conversation toward Washington’s spending problem, but annoyingly, tax cuts still seem to pervade our discussion of fiscal policy.
The plain reality is that cutting taxes while increasing spending is not really cutting taxes at all. Taxpayers are still on the hook at some future point to pay for every debt Washington incurs, and we pay dearly right now when the Federal Reserve’s printing presses inflate our money supply to buy all that debt. The result is dollar devaluation, and even if Washington eliminated income taxes altogether, we’d still have to suffer for its financial fecklessness every time we paid more money at the gas pump or grocery counter than we did last year and last decade.
Some supply-siders will counter that lowering taxes encourages economic growth, allowing the economy to “outgrow” our government’s piling debt. The increased tax revenues from a growing economy will cover the costs of deficit spending, they would argue. But I challenge them to explain how this is fundamentally any different from Mr. Obama’s stimulus package. Granted that in our own hands the money might be put to more productive uses than at the behest of a bureaucrat, the fundamental Keynesian premise — deficit spending to stimulate economic growth — remains the same.
Conservatives don’t need to throw out the Laffer Curve altogether, they just need to interpret it more carefully. Cutting taxes certainly can increase revenues, but can it increase them by enough to even dent the suicidal level of spending in Washington? No. The real fiscal issue of our era is Washington’s spending, and whether or not Bush’s tax cuts expire is simply a negligible issue in the face of deficits that have now started to measure in the trillions of dollars for the first time in our nation’s history.
It’s time to get serious about cutting spending, not taxes. Republicans should offer the Democrats this compromise: that they’ll let the tax cuts for the wealthy expire if the Democrats will help them to substantially reduce federal spending across the board. Democrats would have to go along, or else show everyone that they don’t care about the poor nearly as much as they care about keeping their budgets nice and big at our expense!
Now that is smart policy and smart politics. Someone tell Boehner for me.
Wes Messamore is the editor in chief at HumbleLibertarian.com.