Wednesday, November 21, 2012

Steve Daines has it right on spending cuts

Do the hard things first -- good advice for almost any job, but certainly for those who would presume to balance budgets at the federal level.

Montana's newly elected Congressman had some thoughts that were reported on in a Lee Newspaper article. They boil down to this:

“President Obama’s proposal of raising taxes brings in revenue that will be about 8 percent of the deficit, so that leaves us 92 percent to chew on,” he said in an interview. “We need to start the discussion on where we can find ways not only to slow the growth in federal spending, but actually see some decreases.”

Indeed. And politically, raising taxes on 1-2% of Americans, as President Obama proposes to do, is relatively painless. In the last election, President Obama demonstrated that the very wealthy are at least as likely to vote Democratic as Republican (the states, counties, and Congressional districts with the wealthiest residents actually are more like to vote Democratic -- even when you are promising to take more of their money away from them.) Those who benefit from government spending, on the other hand -- those who work for the government or who receive government payments of some sort -- tend to be very punishing to anyone who presumes to take their goodies away.

Ergo, it is always politically easier to raise taxes (especially on the dastardly rich) than to cut spending. So, when 92% of what needs to be accomplished has to come from spending cuts, and those cuts are politically hazardous, it is the spending cuts that need to be given priority.

Past political experience has shown that politicians consider reductions in the rate of increase of spending to be spending cuts, when they really aren't cuts at all. Past political experience has shown that any cuts (or decreases in the rate of rise) that actually materialize only occur when politicians are forced to make them. Tax increases, furthermore, are always real, whereas spending cuts often prove to be ephemeral. Much ado was made about "austerity" in Great Britain, where what was promised was a ratio of 3 to 1 -- 3 pounds in spending cuts for every pound in tax increases. Subsequent experience has shown that most of the spending cuts were fake, whereas the tax increases were real. And this is with a "Conservative" government in charge.

We can expect the same here in America, where the tax increases that President Obama and the Democrats have been promising us will be very much real. Spending cuts? Without vigilance, they will be no more real than were the spending "cuts" that House Speaker John Boehner extracted from the Democrats in exchange for Republicans voting for an increase in the debt ceiling. (What Boehner obtained as "concessions" were a joke and an insult to any right-thinking American's intelligence.)

In light of all of this, Congressman Daines is exactly right to stand with those who refuse to vote for tax increases, and who insist on seeing real spending cuts (and not just reductions in the rate of increase of spending) before considering any moves that increase revenue.

If President Obama and the Democrats in Washington were serious about reducing the annual deficit (let alone reducing the national debt), they would long ago have been furiously looking for places to cut spending -- but they aren't and never have been. Trust us, if Republicans in Washington were to allow them to raise taxes without insisting on spending cuts, that is exactly what would happen.

Republicans in Washington have often been rightly accused of not being serious about cutting spending. What they have to commend them is that the alternative is so much worse, as we discovered between 2008 and 2010. Many of us rhetorically asked ourselves prior to the 2006 and 2008 elections, "could the Democrats really be any worse than the Republicans when it comes to spending too much?" Alas, we found that the answer to that question is a simple one: "oh yes... and how..."

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