Tax repeal: Good idea or no?

Great Debates
21

Baselining makes a lot of sense when you take into account inflation and population increase. That alone would get you a baseline of about 3%.

Furthermore you could also argue for a baseline in line with nominal GDP growth because that is infinitely sustainable without tax increases. In other words if the economy growth at 6% (nominal) every year you can increase spending by that amount infinitely without raising the share of government spending of GDP. Or alternatively you can argue that as the economy becomes richer voters demand a higher quality of government services which has to be paid for.

22

But it’s congress that has to approve any spending cut or any repeal of the tax cut. There is no way that the congress would repeal the entire tax cut. They’d repeal the tax cut on the “wealthy”, perhaps, or raise taxes on dividends or some such action.

Maybe I didn’t phrase my original statement very well. The OP stated that he was in favor of the tax cut only if the entire cut were repealed, not just the portion on the wealthy. He later lamented the fact that no one every really reduces spending. I meant to point out that it would be naiive to think that the congress would eliminate all of the tax cut. It won’t happen, just like real spending cuts seem never to happen.

23

I’ll be willing to give Bush his guns (the $87 billion) but, as a result, no butter (tax cuts) for him.

(Has anyone here seen the Sullivan article on Bush and spending, and, if so, how true is it?)

24

I don’t think could even conceive of the idea that our government would be so ridiculously huge and overbearing as it is now. To put in such a restriction would imply that such spending would be reasonable - which, in their reference frame, wasn’t.

25

Wait a minute here. Aren’t pubbies in control of the WH and both houses of congress? Aren’t they the ones who say the government shouldn’t spend so much? They can’t control their own spending?

Will wonders never cease.

26

“I meant to point out that it would be naiive to think that the congress would eliminate all of the tax cut”
OK I thought you were saying pretty much the opposite. I agree that it’s unlikely that there will be a full repeal. It may happen if Dean or Gephardt are elected President. Even though Congress is ultimately in charge of tax policy the President has a lot of influence as well.

27

I get so tired of this argument.

Personally, I don’t think that the Founders ever conceived that we could build such horrible gas-guzzling death traps as SUVs.

But that doesn’t mean that we wouldn’t have SUVs today if the Founders were still around.

28

You’re right about this, Airman - the $87 billion, on top of the earlier $79 billion, and future tens of billions yet to be known, has to come from somewhere, and it’s damn irresponsible of the controlling party to pass the bill down to the next generations, as seems to be the current plan. Repealing the giveaway of the Treasury wouldn’t fix every problem, but it’s the obvious place to start (the Education Department? Why do the hard-con blog writers have stiffies about that?). A straight repeal, no rate-adjustment gimmicks, may also be the most politically feasible right now.

The predictions of disaster that would come from restoring tax rates to their 1990’s levels are also laughable - the people complaining about the idea the most were doing pretty well then despite it, weren’t they?

The glib idea that a government can cut spending as quickly or as radically as a business is almost as naive. Most of what a business spends is optional, or reschedulable, in accordance with sizing its operations to meet a market. Government spending, though, mostly represents guarantees made to people as part of social welfare programs, or debt payments on instruments whose guaranteed rates are the basis of their attractiveness, or on other long-term non-profit-making programs. It is not optional, not reschedulable, not rescalable in the short or even medium term. What do you guys think, if tax revenues go down, you can just lay off a bunch of Social Security recipients? Get real.

29

You’re right - it’s very hard to cut government spending. This is a very good argument for not creating the entitlements in the first place. They are risky, because they can not be easily downsizes if the economy goes south.

What I’m curious about is how come there has been so much handwringing about the fiscal irresponsibility of a 100 billion dollar a year tax cut, and yet the same people who claim that this is very irresponsible are the same ones pushing for a new 80 billion dollar a year prescription drug entitlement?

If not collecting 100 billion a year from the people is irresponsible, how is it less responsible to take an equivalent amount of money and spend it? At least with the tax cut, if you really need the money later you can still collect the tax. But if you set up a big spending program like a prescription drug entitlement, what are you going to do when a major recession hits?

30

I’m glad you said “almost” naive. Yeah, there’s lots of funding that is mandated. But we’re talking about a few percent here. Surely you are not saying that 98% of the fed budget is mandated, are you?

31

Well gee, other than phasing out farm/tobacco/orange juice/corporate etc etc etc subisidies, other than completely overhauling the defense appropriations system, other than combining all the umpteen bazzilion federal social programs into one or a few basic encompassing ones, other than telling the public employees unions where to shove it (which would be necessary to achieve the previous), other than completely overhauling the rediculously labarynthian and resource-intensive tax code, I can think of no way whatsoever for our government to do the same as it does with less money.

This whole thing about tax cuts hurting this or that; its a scam.

Sure, if every single tax dollar was spent to its utmost effectiveness, tax cuts would undoubtedly be harmful and cut into what we are used to.

But thats a joke.

The exact same people telling us that the tax cuts are going to hurt services etc are the exact same people with the authority to change how our tax money is spent. Its a scam, its all it is. As far as Im concerned, to think otherwise is borderline religous in nature.

32

**That’s the ideal, adaher. Too bad it never works. They set the spending limits, they control the cash flow, and hell, if we try to force them to control spending, well then, they just change the rules so they can spend more.

Wish I could do that.

**

The only way to make them stop is to quit sending them more money.

If the message is clear that Americans won’t tolerate any more tax increases the government will have to cut spending. No way around it.

And thus you get politicians telling us they need more money for “needs”, never mentioning that they already have the money.

33

Sam, are you going to answer the question from two different posters in this thread regarding your (and apparently others) willingness to gut the DOE’s budget ? And also BrainGlutton’s first question as well? Thanks.

34

**

Really? What argument am I making that you’re getting tired of?

Not that this is particular relevant to what I said, but are you trying to say that because the founding fathers didn’t foresee a technological advancement then they couldn’t possibly forsee a large government either, in the same way?

Has there been some sort of technology developed after their time that they couldn’t have forseen that makes it logically impossible for them to conceive of a large government?

No. They didn’t think of limiting government spending as a percentage of GDP (or whatever was equivelant in economic terms) at the time because the way our government was designed was to prevent us from even getting remotely close to the point where we’d have to make such decisions.

From their perspective, there’s no way in hell that government spending would ever become such a huge part of the economy that they’d have to specifically limit the government in that way.

Anyway, I didn’t really make an argument - so if you’re “so tired of it” you’re probably reading into something that isn’t there. Someone had said it was unfortunate that they didn’t include a certain Constitutional requirement regarding the subject at hand, and I responded by saying that there was really no way in hell, from their reference frame, that they should have to even consider such a requirement.

35

On second thought, chuck away my reply if you want. As far as I can see, you were responding to some vague phantom argument I never made. A non-sequitor. I wasn’t saying anything to the extent of “we shouldn’t have this because they had no way of knowing what would come into existance in the future”, which is what you seemed to be responding to.

36

Correct me if I’m wrong, but from what I’ve read, the federal Department of Education has nothing to do with actually teaching anyone anything. They don’t fund schools, or that sort of thing - rather, at best, they just create BS politically correct guidelines to shove down the throats of (locally controlled and funded) schools.

I’m not absolutely sure about that, but as far as I know, the Department of Education is completely superfluous to actually running schools and such. Unnecesary. Everything is done locally. So to be against funding that department doesn’t mean you’re anti-education, as people often seem to imply.

37

Squeegie: Sorry about that. Missed those. Here you go:

Brainglutton said:

Because if you cap spending to grow at less than the growth of GDP, the government’s tax revenue grows faster than its ability to spend it. Thus, growing yourself out of a deficit. Even if you just hold the deficit in inflated dollars to be the same, its real value both as a percentage of GDP and in constant dollars begins to decline. The deficit today is 450 billion, out of a 10 trillion dollar economy. Ronald Reagan’s deficits hit about 300 billion, but the economy at that time was something like 2 trillion.

As for why I’m picking on the Dept. of Education: Because it’s the ripest target on the block. There are lots of wasteful government programs, such as the REA, the NEA, the Wool and Mohair Subsidy, the Strategic Helium Reserve, etc. ad nauseum. But they’re small potatos as a percentage of government spending.

If you remove entitlements from consideration (social security, medicare, veterans benefits, etc), and means-tested entitlements (welfare, medicaid, etc), you find that there are not that many big ticket items left that can easily be cut. The Dept. of Education is low-hanging fruit on that list. Since its inception, schools have gotten worse. I have seen no evidence that it has improved the quality of education one iota. And it’s a big ticket item. With Bush’s increases, it’s what, 80 billion a year? That’s five times the budget of NASA.

In the early 1990’s, many Republicans actually wanted to abolish the Dept. of Education. On many grounds. Inefficient, costly, and there is no federal mandate to educate kids in the first place. Schools are best run at the local and state level. You just don’t need the feds in the mix mucking things up.

Agriculture subsidies are also on my chopping block. Get rid of them, and you’ll actually improve the economy. Plus, you’ll improve the economies of the third world, which is not only good for those people but helps clean up places that are becoming breeding grounds for terrorists. So its a security win as well. That’s another 80-100 billion, I think.

So there you go. Two programs right off the bat. Axe 'em tomorrow, and the country won’t even notice they’re gone. Hell, schools will probably improve, and after a short correction agriculture will be even stronger (look to New Zealand for an example of how getting rid of subsidies actually improved the health of the farm industry). That’s 160-200 billion dollars, gone. almost 1/10 of the federal budget, and over half of the deficit.

With deficits of 200 billion along with the newer low tax regime, the U.S. would be at a major competitive advantage. Once the economy recovers, that deficit would vanish pronto. And after that, the newer, leaner government would have bigger surpluses to pay down the debt. In the meantime, you can chop away at the other useless programs and save another 30 or 40 billion. Then, get rid of baselining and make government agencies fight for funding like businesses do. Rather than getting automatic funding increases each year, force them to justify what they do. Set up performance targets.

In the private sector, if a business unit under-performs, its funding is cut. In government, if a department doesn’t meet its commitments, it gets a funding boost. We reward the worst, and punish the best. It’s crazy.

So here’s my final reform: New government programs have mandated spending caps, with mandatory reviews for renewal of funding. If they can’t do what they claim they’ll do, the program is scrapped and its back to the drawing board. One of the worst things about new government programs is that once they are in place, they are impossible to kill. That makes them extremely high risk. If you build a lemon, you’re stuck with it forever. The Dept. of Education is one such lemon.

38

Well, removing the Department of Education saves $50 billion. That’s a pretty nice chunk.

CAGW also lists their “prime cuts”, and not one of their prime cuts can be defended as essential spending, although some could be considered desirable if we didn’t already have a budget that was 19% of GDP. Check it out at cagw.org

The budget can be balanced without tax increases. We just have to make them do it. But I guarantee that it will never happen as long as we keep sending them ever greater amounts of money.

You don’t give money to a crack addict for the fifth time just because he promises that THIS time he’ll feed his kids.

39

You guys can’t just make vague statements about eliminating the DOE or whatever and expect us to buy that this will have no effect. Tell us precisely which programs you will eliminate.

The conclusion that education hasn’t improved under DOE (whether true or not) does not imply you can just eliminate it. For example, it is likely true that local school districts would have to have raised property taxes more to get the current funding for schools that they have if the federal contribution did not exist.

It is easy to make vague statements about cutting programs that you know nothing about besides what you’ve read in conservative op-ed pieces. That doesn’t mean it is actually easy to cut the programs without consequences.

40

The sources I’ve seen in the past (and I’m sure the cites will come along) are that the US budget is about a third entitlement payments and a third interest payments.