August 14, 2006
Following-Up the Projo's Debate Follow-Up on Taxing and Spending
There are a few gaps that need to be filled in Mark Arsenault's Republican Senate debate follow-up article appearing in today's Projo. The article contrasts the positions of Senator Lincoln Chafee and Mayor Steve Laffey on the issues of taxes and spending.
1. Though Arsenault's description of the PAYGO rule supported by Senator Chafee regarding deficits is correct in a technical sense,
Chafee is a believer in "pay as you go," a philosophy from the 1990s that requires spending cuts or a new source of revenue to balance each tax cut or new spending program....Arsenault doesn't discuss PAYGO's ultimate ramification. The key word in Arsenault's description is "new". The authors of PAYGO were certain to exempt the growth of "old" spending -- spending on already existing entitlement programs that increases according to pre-determined formulas -- from any limitation. Here's how the exception appears in the text of the legislation...
(1) IN GENERAL -- It shall not be in order in the Senate to consider any direct spending or revenue legislation that would increase the on-budget deficit or cause an on-budget deficit for any 1 of the 3 applicable time periods as measured in paragraphs (5) and (6)...Since Congress' concurrent resolution on the budget is that the only place where spending on existing entitlements needs an annual approval, exempting the budget resolution from the PAYGO rule exempts entitlement growth from the PAYGO rule. And, as Isabel Sawhill of the Brookings Institution explains, entitlement programs are where our country's biggest spending problems are...(4) EXCLUSION.--For purposes of this subsection, the terms "direct-spending legislation'' and "revenue legislation'' do not include --
(A) any concurrent resolution on the budget
In efforts to restore fiscal balance, it's important to focus on entitlements for a number of reasons:Ultimately, the entitlements-exempt PAYGO rule favored by the Democrats and Senator Chafee becomes a way of forcing automatic tax-increases on the public. Here's Brian Riedl of the Heritage Foundation explaining how...
- Entitlements are where the big dollars are.
- They are growing rapidly.
- Given the unsustainable deficits that this growth implies, there are only three possible options: restructure entitlements, eliminate most of the rest of government, or raise taxes to unprecedented levels.
While PAYGO allows current entitlement programs to grow on autopilot, it would likely lead to the expiration of the current tax cuts. Merely retaining the tax relief that Americans now enjoy would, under PAYGO, require 60 votes in the Senate and a waiver in the House. To avoid this supermajority requirement, lawmakers seeking to prevent tax increases would have to either: A) raise other taxes; or B) reduce mandatory spending by a larger amount than has ever been enacted. Option A is still a net tax increase (raising one tax to avoid raising another), and Option B is probably politically unrealistic.Senator Chafee tries to define his position on taxes and spending, which presumably includes PAYGO, as that of a traditional conservative Republican...
Chafee says that, while opposing the big tax cuts, he also voted against major spending items, such as the Medicare prescription drug benefit, which he says is too expensive. "I'm a very traditional conservative Republican on taxes and spending," he said.But it is difficult to accept this statement as meaningful when the Senator supports a program that seeks to turn the Federal Government into an entitlement machine paid for through automatic yearly tax-increases.
2. Arsenault devotes only a single to line Mayor Laffey's proposal for tax simplification...
He also proposes rewriting and simplifying the tax code,...presenting tax-simplification as if it were an add-on to the the Mayor's fiscal proposals, when it is actually a starting point. Mayor Laffey argues that simplifiying the tax code will reduce the power of lobbyists and the associated corruption they can bring. He is far from alone in arguing this (Mickey Kaus provided one of the best explanations I can remember seeing, but I can't locate the exact quote). The essential argument is that the influence of K-Street lobbyists in Washington is rooted in their knowledge of and their ability to manipulate an arcane tax code; simplify the tax-code, and corporate and industrial-sector lobbyists will become no more or less influential than Sierra Club-type lobbyists.
Unfortunately, since Arsenault relegates tax-simplification to a sidebar, we never learn Senator Chafee's position on tax simplification, nor any arguments for or against the idea. Do politicians unwilling to pursue tax-simplification take that position because they believe that tax-simplification does not matter, because they believe a complex tax-code is an inherently good thing, or because they are simply unwilling to challenge the existing network of lobbyists on this issue?
What flavor Kool-aid are they drinking at the Projo? When a Senator like Chafee has an ACU rating in the low teens, how could anyone take seriously his remark about being a traditional conservative on taxation and spending? And then to devote a half a whisper to Laffey's tax simplification plan! I mean, please, give me a break.
Posted by: Chuck at August 14, 2006 12:38 PMPAYGO is nothing but a tax-and-spend program disguised to make socialists like Russ Feingold and Linc Chafee appear to be fiscally conservative. It is a joke! Neither Chafee, nor Feingold, nor the Concord coalition have championed any effort to reduce goverment spending.
What liberals either do not understand (or deliberately ignore) is the impact of high taxes and big government on economic freedom.
They point to deficits as an excuse to keep taxes high, but ignore the undisputed evidence that lower taxes stimulate the economy. What they also ignore is that fact that when tax cuts make their way through the economy and back into the U.S. Treasury, the largest portion of the increase in revenue comes from wealthy individuals and businesses!
Unfortunately, most MSM reporters have the same myopia when it comes to taxes and government spending. They ingnore the compelling evidence that would explain the economics...if only they cared to learn it!
Posted by: Stretch Cunningham at August 14, 2006 3:25 PMWho is Leonard Lardaro?
Why are his guesses better than Laffey's facts?
J Mahn
Posted by: Joe Mahn at August 14, 2006 4:24 PMMay I ask a question?
How is "tax and spend" profligate, while "borrow and spend" isn't? Why are you consistently harping on t&s when this hasn't been happening almost for a generation? Reagan borrowed and spent. George I maybe some of both, Clinton balanced the budget. George II has been spending money like a drunken sailor. His b&s is arguably worse, since it adds interest payments.
And the other thing is that a Rep congress will never cut spending in any meaningful way? Know why? Because, by & large, the net recipients of fed $ are the Red states. It's not a perfect correlation, but 8 or 9 of the top ten contributing states are blue states in the northeast, including NY & NJ. They pay in more tax $ than they receive back.
Conversely, most of the states that pay in less than they receive are places like AL, MS, AR. So, the Reps are going to cut spending on their own constituents? See: Bridge to Nowhere, earmarked for the REPUBLICAN senator in AK.
So let's see some vitriol for borrow-and-spend, because, frankly, tax & spend is fiscally responsible.
And what do you mean by 'entitilement'? I hope that doesn't include Soc Sec. It is the only gov't program running a surplus. You going to cut the benefits without cutting the payroll contribution working stiffs have to pay? Good luck with that. And given even average growth, the program will remain solvent for a lot longer than 2018. So let's lay off the scare-mongering.
And the other thing, there is no way to balance the budget on spending cuts alone unless you take a huge whack at the military. War in Iraq, anyone?
And, btw, according to the latest CBO estimate, the budget would be balanced without the 2001, 2002, and 2003 tax cuts.
Can we get serious here? T&S went out with Welcome Back Kotter. The problem is irresponsible Republicans who cut taxes and increase spending.
Posted by: klaus at August 14, 2006 7:12 PMAh, some insight into the liberal mindset.
Posted by: Chuck at August 14, 2006 7:35 PMYes, Chuck, even in their most blustering rebuttals, they validate our principles without even realizing it!
Posted by: Stretch Cunningham at August 15, 2006 4:11 PM