Thursday, April 16, 2009

 

Political Mayhem Thursday: Taxing and Spending

As many of you know, I'm not strictly a conservative or liberal. I will admit that on the bedrock conservative principle of favoring a small, less costly government, I am very conservative, largely owing to my own experiences within the federal government as an employee. I am also a federalist-- I think that the federal government should allow states to exercise their own policies in nearly all areas.

What I don't care about so much is lower taxes. That's because I don't believe lower taxes on the rich help the economy much, and I also don't believe the ridiculous notion that lowering taxes will reduce the size of government so long as we allow deficit spending-- the Bush years should have exploded both those myths. Rather, I think the reverse. First, you shrink government and then (once the debt is paid down) you can lower taxes. You have to have the horse come before the cart-- that is, expenses must come down before taxes come down.

I think Bush and Obama have made a terrible decision in spending so much money on "stimulus." Sadly, it is money that largely will be spent on things that have little role in the recovery, and won't hit the pipeline until after a recovery has begun.

Now, if you'll excuse me, I have a meeting with the ACLU.

Comments:
I think most people agree that cutting taxes has to come first, because then we get the money.
 
you meet with the ACLU @ midnight?
 
What's interesting to me is that we tend to accompany deficit spending with tax cuts. I understand that it's aimed at boosting economic output or jumpstarting a slumped economy, but it just irritates me that we hold homebuyers culpable for overspending yet don't seem to hold our federal spending to the same standard.

Another observation I have is, especially in light of the "tea parties" we saw yesterday, is that it seems that those opposed to our tax rates don't see a return in value from the federal government. What I mean is that a lot of these protesters don't see tangible benefits coming back to help them in particular. What troubles me about this is the "me-first" attitude this may indicate. I for one don't have a problem knowing that my 28% or 35% go to helping my grandparents with Medicaid or Social Security. I also may not like how much we spend in our two foreign wars, but I am fine with my tax dollars supporting our soldiers' families while they're away. I may not see my tax dollars directly and tangibly improve my life in a visceral way, but I know that's the cost of living in our society.

With that said, I agree with Professor Osler on cutting back spending before cutting taxes. It doesn't make much sense to assume that our debt can continue to build and reduce the national level of income to pay it down. A common refrain you'd hear from the tea party protesters was that they were angry with President Obama passing our debt onto our future generations. My question to them is how tax cuts now will help them later. Regardless of our stimulus spending, the Bush tax cuts and his enormous post-9/11 spending alone nearly doubled our national debt. How is President Obama, even without the economic meltdown, supposed to reduce that debt without at least maintaining current tax rates, or increasing them?
 
The problem with cutting spending is that, well, a lot of that stuff needs to be done. I think things like funding health care and education should come before costly and expensive wars, but we're stuck with those for the time being (yay preemptive strikes against non-threatening targets!). I think that there's a lot of value to be had, but we've been operating under this crazy assumption that abstracta like "credit" or "futures" or the market-driven economy is actually good for the people and the nation in the long-term, that's what we need to shift away from.

I'm not sure that cutting spending across-the-board is feasible. Government layoffs would be the first problem: all those administrative offices that don't have any funding any more can't carry professionals on staff, so you glut the professional job market (which is always kept smaller and competitive than the general market by design).

Everything is too bound up right now. We need to shake things loose, ameliorate the fallout where possible, and try to get things running again at a competent level. Then, we need serious economic restructuring to prevent this type of thing from happening again. We need to return value to something concrete (like, say, labor-time) and do away with this idea that markets serve the interests of anyone but those at the top.
 
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