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Correct! Sort Of…

January 3, 2010

Matt Yglesias says that the budget will never be balanced because:

We have in this country one political party that doesn’t care at all about the budget deficit. And we have another political party that gets crapped on by the establishment every time it attempts to deal with deficits. Under the circumstances, how long can it possibly be until we have two parties that evince Bush/Reagan-esque levels of concern for the deficit?

The party that “doesn’t care at all about the budget deficit” is, of course, the Republicans, in Matt’s view.  I’m no defender of the GOP when it comes to spending (see Medicare Part D), but this view of the deficit is more one-dimensional than the character development in Avatar.  The problem is not that we are unwilling to submit to increased taxes, but rather that the inability of government officials to budget their spending appropriately is a much bigger problem than anyone realizes.

A good example of this is the Estate Tax.  The last argument I saw in favor of an Estate Tax based on principle came out sounding Luca Brasi’s speech to Vito at the beginning of The Godfather.  Surely there’s no sane people out there who really believe in the idea behind this tax, are there?  That’s not the point, though.  The Estate Tax brings in around $58 billion a year, or roughly enough to pay for the war in Afghanistan for two years.  With the ever-increasing budget deficit that we face as a nation, it’s not hard to regard as foolhardy any attempt to repeal something that brings in such a large amount of moolah.  It’s just not something we can cut out of the income side of the budget right now given the nature of our spending guarantees.

Point being, it’s really hard for the government, particularly the federal one, to shore up a budget.  As Frum illustrates very well in this piece, it’s exceedingly difficult for a state like New Jersey, which has zero responsibility for national defense, much less a war, to shore up its own meager deficit (by today’s standards, that is).  Governmental bureaucracies are simply too over-leveraged with entitlement payments and the like to produce a surplus on an annual basis.

So we go back to the age-old question: what do we do about this?  Well, folks like Matt believe that the reason we can’t ever balance the budget is that Republicans won’t permit the tax increases that will raise the revenue to fix our balance sheets.  Or (and this is where it gets tricky) we could just cut the spending necessary to equate the income side with the expense side.  Sounds reasonable, right?  Well, if you actually consider the problems with physically cutting bureaucratic spending, it becomes less and less reasonable by the second.  That said, it’s not the Republicans’ fault that they are against tax increases.  They are also against Democrats making it rain like Pacman Jones with taxpayer dollars.  The reality is that liberals are opposed to any budget fix that doesn’t include tax increases, and conservatives simply want the feds to quit spending like there’s no tomorrow.  Although we have to recognize that halting spending is beyond politicians in general, we need to also realize that long-term budget deficits are a result of spending, not lack of taxation.  It would be helpful if some liberals would at least acknowledge this, especially since their proposed taxes would under no circumstances be inflicted upon the lower 50% of the population with respect to income, even though they pay only 1% of the income tax in this country.  We have to force politicians to decrease their irresponsible spending habits, or we will, as Matt says, never have a balanced budget.  And that’s not the fault of one single party.

Decreasing the size of government is proportional to decreasing the budget deficit of said government.  This concept is beyond most people.  A sad truth.

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