[Gee-Man]

An interesting op-ed about the 2003 US budget:

http://www.govexec.com/dailyfed/1203/120303bb.htm

Can you think of another year that saw a tax cut, a significant increase in appropriations, a major new entitlement program, and a substantial appropriation for waging a war and rebuilding the country we fought -- all at the same time?

I consider myself one of those "fiscal conservative/social liberal" types, but I find the current administration and congressional leadership severely lacking on both fronts.

I think the oft-repeated Republican mantra of "cut taxes, and spend less" is fiscally sound - IF actual real-world Republicans followed that philosophy. GOP leaders talk a big game about cutting government while cutting taxes for "hard-working Americans", but when the time comes, they end up doing the politically easy part (tax cuts) while failing utterly at the hard part (balanced budget). And there's no blaming the Democrats this time - Republicans controlled both Congress AND the White House last year, and they still couldn't get their budgetary house in order.

Given the choice between the "tax and spend" Democrat vs. the "tax cut, but spend just as much anyway, then borrow to pay it back" Republican, I'll take the lesser of two evils and go with the "tax-and-spend" crowd, thank you. I would have more respect for the GOP if they just practiced what they've been preachin'. Instead, they'd rather rally behind the president no matter what, even if he's doing things that are totally counter to the budget sanity that Republicans are supposed to be advocating.

Discuss...

[vmarks]

This is going to be fun!

Originally posted by Gee-Man:

SNIP

I think the oft-repeated Republican mantra of "cut taxes, and spend less" is fiscally sound - IF actual real-world Republicans followed that philosophy. GOP leaders talk a big game about cutting government while cutting taxes for "hard-working Americans", but when the time comes, they end up doing the politically easy part (tax cuts) while failing utterly at the hard part (balanced budget).

Goldwater, Milt Friedman, and myself all agree that the 'cut taxes and spend less' is sound. I consider myself in pretty good company.

I don't know that cutting taxes is ever the 'easy' part. First of all, it means un-funding someone's subsidy or entitlement that they've already gotten hooked on, or cutting some highly anticipated program. Someone, somewhere is going to be disappointed.

Furthermore, I don't much like the notion that not raising taxes counts as a cut because it means that taxes weren't raised to the anticipated amount projected.

Sometimes, Republicans raise taxes too, just slower than the pace of Democrats. Whether this is a misguided attempt to get Democrats to like them or corrupt pork, or business as usual (but I repeat myself...)

And there's no blaming the Democrats this time - Republicans controlled both Congress AND the White House last year, and they still couldn't get their budgetary house in order.

That's a bit of a simplification. Freshmen Congressmen rarely get to speak, and convention is that they lay back until they've captured the lay of the land. (There are exceptions to that convention- Huey Long dared to speak when he was first elected. John Edwards opened his yawp once or twice and managed to put together a few syllables. Mrs. Clinton took the opportunity as well.)

And let's remember, big education and big medicare entitlement bills both passed, along with PATRIOT and the campaign finance reform (incumbent protection act / gutting of the first amendment). People from both sides of the aisle voted for these things, sometimes in overwhelming majorities.

Given the choice between the "tax and spend" Democrat vs. the "tax cut, but spend just as much anyway, then borrow to pay it back" Republican, I'll take the lesser of two evils and go with the "tax-and-spend" crowd, thank you. I would have more respect for the GOP if they just practiced what they've been preachin'. Instead, they'd rather rally behind the president no matter what, even if he's doing things that are totally counter to the budget sanity that Republicans are supposed to be advocating.

Discuss...

The President was never a real die-hard conservative. If he had been, steel tariffs would never have crossed his mind, as they're offensive to free trade. The President, if he had been a real die-hard conservative, wouldn't have signed the McCain-Feingold monstrosity into law. The President is the same fellow who believes it's okay for the US to fight a war against terrorists, but asks Israel to exercise restraint when confronting the exact same problem. The President is also The President and has done quite a few things well, despite naysayers (which every President has.)

You'd be hard pressed to find any elected official in either party who really stuck to their declared ideals. Ron Paul is one such person. Russ Feingold is another such person, and I can respect him for it, even though I do not agree with the stance he has chosen for himself. Virgil Goode is one to watch, he's done very well sticking to his ideals thus far.

The author of the article (EDIT:or was that you?) can ditch the Republican party if he chooses, but I doubt he'd be satisfied with the Democrats either. Perhaps he's a Libertarian, being that he described himself as socially liberal and fiscally conservative. The problem with being a Libertarian is that the only candidates they've elected are to local offices in California and North Carolina, so it makes it quite difficult to effect change.

[BRussell]

Originally posted by vmarks:
I don't know that cutting taxes is ever the 'easy' part. First of all, it means un-funding someone's subsidy or entitlement that they've already gotten hooked on, or cutting some highly anticipated program. Someone, somewhere is going to be disappointed.

What you're saying is that cutting spending is hard. Of course. Cutting taxes = easy. Cutting spending = hard. So then what do conservatives do? They cut taxes, and they don't cut spending. It's a pretty straightforward political equation.

See, cutting taxes is always the easy part in conservativenomics, because you can not only keep spending at the same level, you can increase spending with conservativenomics! This has been the conservative philosophy since Reagan. You're wrong when you say "it means un-funding someone's subsidy." It doesn't mean that all! Isn't that cool! It's the beauty of conservativenomics! It's just purely coincidence that's it's politically expedient! It really is sound economics!

Furthermore, I don't much like the notion that not raising taxes counts as a cut because it means that taxes weren't raised to the anticipated amount projected.

What are you talking about? Tax rates weren't cut?

That's a bit of a simplification. Freshmen Congressmen rarely get to speak, and convention is that they lay back until they've captured the lay of the land.

It's not a simplification, it is simple. Republicans control everything. What does "Freshman congressmen" have to do with anything?

[vmarks]

Originally posted by BRussell:
What you're saying is that cutting spending is hard. Of course. Cutting taxes = easy. Cutting spending = hard. So then what do conservatives do? They cut taxes, and they don't cut spending. It's a pretty straightforward political equation.

See, cutting taxes is always the easy part in conservativenomics, because you can not only keep spending at the same level, you can increase spending with conservativenomics! This has been the conservative philosophy since Reagan. You're wrong when you say "it means un-funding someone's subsidy." It doesn't mean that all! Isn't that cool! It's the beauty of conservativenomics! It's just purely coincidence that's it's politically expedient! It really is sound economics!

What are you talking about? Tax rates weren't cut?

It's not a simplification, it is simple. Republicans control everything. What does "Freshman congressmen" have to do with anything?

Cutting taxes isn't easy. It's the right thing to do on levels from property rights on up to avoiding fulfilling Jefferson's quote - a government big enough to give you everything you want is big enough to take away all that you have - Your babbling on about conservativenomics is just that. But enjoy it, do.

When taxes are held even or raised but raised less than projections for what they might be raised, they have not been cut. Saying they have is nonsense, but politicians on both sides of the aisle have said so in the past, and now you're saying so. It's still wrong-headed and counterproductive. A tax cut is a reduction in the taxes taken from people's pockets. Holding even or raising by less than expected is not a reduction.

Freshman Congressmen have everything to do with this topic since many of the Republicans recently elected to Congress are Freshman members. What, you didn't see the off-year election results that led to the face of
Congress as it stands today?

EDIT: adding an explanation of tax cuts and what conservative economics is really like:

Quoting Walter Williams, former chair of the Economics department at George Mason University:

One of the key things we can do for economic growth in our country, even if we're not just coming out of a mild recession, is to do things that reduce the cost of capital formation and give people incentive to take risk. One of the things that the Bush administration called for is the elimination of the tax on dividends. Dividends represent return from people taking risks. If you raise the return from people taking risks, then people will take more risks. If you lower the cost of capital formation, more capital will be formed and it benefits the ordinary person.

One way you can explain this is if you see highway construction and you see one employee using a big earth mover and another employee using a shovel, then you say, "who gets the higher pay?" Well, the guy with the earth mover. Why? Not because contractors like earth mover drivers or because they're unionized, but because they're more productive. He just produces more in an hour's worth of work. Why does he produce more? Because he has more capital working with him. The big earth mover is a piece of capital. So anything that reduces the cost of capital will give firms incentive to buy more of it and it benefits not only firms, but workers as well in terms of higher wages. So, the elimination of the tax on dividends, speeding up the depreciation allowances, they are things that will lower the cost of capital. I would also like to see President Bush lead Congress in getting rid of the corporate income tax because the corporate income tax is just a devious tax on the American people. Corporations don't pay any taxes, only people pay taxes. Corporations are legal fictions, as such they're tax collectors.

[The Ayatollah]

Spending more sucks.
Cutting taxes is good; raising them is bad.

[BRussell]

Originally posted by vmarks:
Cutting taxes isn't easy.

Cutting taxes, according to conservatives, doesn't mean you have to cut spending. This is what you posted:

I don't know that cutting taxes is ever the 'easy' part. First of all, it means un-funding someone's subsidy or entitlement that they've already gotten hooked on, or cutting some highly anticipated program. Someone, somewhere is going to be disappointed.

This is false. Reagan and now Bush proved it. You cut taxes and increase spending. No one is unhappy. Nothing is hard. All that happens is the deficit increases and we increase the debt. It's the easiest thing to do, politically. Of course, it's awful long-term policy, but who cares about that in the short-term?

When taxes are held even or raised but raised less than projections for what they might be raised, they have not been cut. Saying they have is nonsense, but politicians on both sides of the aisle have said so in the past, and now you're saying so. It's still wrong-headed and counterproductive. A tax cut is a reduction in the taxes taken from people's pockets. Holding even or raising by less than expected is not a reduction.

Again, what in the world are you talking about? Were the tax rates not reduced (e.g., 15 to 10, 40 to 35, 36 to 33, etc.)? Was the child tax credit not doubled? Was the tax on dividends and capital gains not decreased? Are we not now taking in less revenue as a % of GDP than we have since the 50s? Taxes weren't simply held or raised less than projections. They were cut, in absolute terms, no matter how you try to spin it.

Freshman Congressmen have everything to do with this topic since many of the Republicans recently elected to Congress are Freshman members. What, you didn't see the off-year election results that led to the face of Congress as it stands today?

Hmm, I had thought the Republicans took control of congress almost 10 years ago now. But here you are saying it just happened last year. I guess I'll have to go spend the afternoon on google to find out who is right.

EDIT: adding an explanation of tax cuts and what conservative economics is really like:

We all know exactly what conservativenomics is. There's a very clear and consistent record. Cut taxes, increase spending, and explode the deficit and debt. Applying conservativenomics to my life, I'd go take out a bunch of credit cards, buy a bunch of new gifts for my family, and say "hey honey, isn't our economic situation great!" Then I'd hope she's too dumb to realize what's really going on and divorce me.

[vmarks]

Your impressions of what Conservative economics is are wrong. What Republicans do in office may or may not be Conservatism in action. This is the very thing that the start of the thread is decrying. I hope that you understand that.

Here, for your benefit, is an article on the topic from the CATO institute.

http://www.cato.org/dailys/08-06-03.html

August 6, 2003



Bush Tax Cut Takes Conservatives to the Cleaners


by Jerry Taylor & Peter VanDoren


Jerry Taylor is director of natural resource studies at the Cato Institute, and Peter VanDoren is editor ofRegulation, the Cato Review of Business and Government.


The passage of President Bush's 10-year, $350 billion tax cut has put a bounce in the step of conservatives while casting a pall of gloom upon their liberal brethren. Yet it's unclear to us exactly why devotees of limited government are cheering while advocates of activist government are booing. The Left should be popping the champagne bottles and the Right should be wondering how they ended up being taken to the cleaners.


The Right's total abandonment of balanced budgeting is stunning. Sure, taxes are unpleasant to pay. But someone, someday has to pay for the government we're buying every year. Deficit spending just puts off the day of reckoning, but with interest. Trading off smaller taxes today for larger taxes tomorrow is a curious position for anti-tax conservatives to take.


The standard conservative reply is that the only way to restrain the growth of government in the long run is to starve it of revenues. But where's the beef? Government this year will be about $450 billion in the red but spending will increase nonetheless by at least 7.4 percent. Republicans control the House, Senate, and presidency and we're in a non-election year. If political planets aren't properly aligned now for an attack on government spending, then when will they ever be?


Moreover, the Friedman Hypothesis is testable. If one checks the data and controls for the business cycle, no relationship can be found between the growth of federal spending and the size of the federal deficit since World War II.


Conservatives may well be right to argue that the Bush tax cut will enhance long-term economic efficiency by reducing the double taxation of dividends and reducing the marginal income tax rate applied to high wage earners. But such reforms do not require deficit spending. Whether the modest gains in economic efficiency will offset the long-term damage done by exploding deficits and new distortions introduced to the tax code is anyone's guess.


So this is the tax debate in a nutshell. Both liberals and conservatives happily and without great argument sign off on the purchase of a $2.3 trillion dollar government with more spending surely to come. But liberals argue that we should put 11 percent of this year's tab on the national credit card while conservatives argue that we should put 17 percent of it on the national credit card. All for a "historic" tax cut that will reduce government's take on the private sector by all of 0.2 percent over 10 years.


Once we clear away the political smoke, it is clear that conservatives in Washington have completely abandoned their campaign against big government. Rather than tackle spending head-on, Republican politicians trot out tax cuts as a symbolic surrogate and Republicans respond with ideological gusto, forgetting the fact that tax cuts have nothing to do with the size of government. They have to do with how we pay for government.


Conservatives who are ambivalent about how we pay for government should be reminded that deficit spending invites more spending than would likely be the case if Republicans actually had to swallow hard and raise taxes to pay for the spending bills they're busily whooping through the Congress. After all, you'll usually buy more of something when you think you're getting it at 20 percent off with payments due ... probably not in your tax-paying or vote-getting lifetime (that's the next generation's problem).


The fact is that domestic spending increases under President Bush are among the largest in post-war history. And, all the while, conservatives happily cheer the administration on, apparently oblivious to the fact that political success is being achieved at the expense of the one thing -- limited government -- that supposedly divides the two parties. Annual tax cutting campaigns, the White House hopes, will distract fiscal conservatives from the reality of what's going on here.


Liberals should revel in this little-noticed turn of events. If deficits no longer matter and fights over the size of government are off the table, how bad can things be? Conservatives who care about limited government, on the other hand, should despair over developments within the Republican Party and the conservative movement as a whole. As long as fiscal conservatism is defined as taking a "no new tax" pledge as opposed to a "no new spending" pledge, the limited government crowd will find themselves increasingly irrelevant to American politics.

[BRussell]

Originally posted by vmarks:
Your impressions of what Conservative economics is are wrong. What Republicans do in office may or may not be Conservatism in action. This is the very thing that the start of the thread is decrying. I hope that you understand that.

Here, for your benefit, is an article on the topic from the CATO institute.

But at some point you have to hold conservatives accountable for what they do. The "well that's not really conservatism" argument can only go so far, given that:

1. Republicans are generally considered the conservative party.
2. Bush calls himself a conservative.
3. Reagan had the same economic/fiscal policies, and is also generally considered a conservative.
4. Conservatives in the country support Bush and the Republicans.

And I'm not sure CATO would consider themselves to be conservative. Liberal or libertarian perhaps, but not conservative. And if you read the article, the author seems to me to set up a dichotomy between what it is arguing and what conservatives argue. For example:

The standard conservative reply is that the only way to restrain the growth of government in the long run is to starve it of revenues.

That seems to imply that the conservative position is the Bush position, and the CATO position differs from it.