Thursday, June 23, 2011

Tax Increases and the Debt Limit Debate

For most of my life, I have opposed tax increases on the theory that the government already takes too much of the people's hard earned wealth. During the Bush administration, I started to waiver in that position. I saw the huge deficits as threats to our long term economic health, and thought that tax increases might be the necessary price for past profligacy. We see in the example of Greece today, where the results of excessive government largesse, along with Enron style accounting leads to. From today's Reuters article:
Greeks seething after two years of belt-tightening reacted in anger Thursday against a new round of tax rises and spending cuts worth some 3.8 billion euros which they said would again hit honest taxpayers hardest.

Of course they will. KT at the Scratching Post felt that higher taxes were inevitable because the math for achieving balanced budgets through spending cuts alone seems too daunting. So there I was, wavering on a lifetime political position. But then I stumbled across Hauser's Law, on which I have posted extensively and rediscovered my inner supply-sider.

Which brings me to the debt ceiling debate. Supposedly only Boehner, Obama, and Reid are left to negotiate the conditions under which the debt limit might be raised. Supposedly, John Kyl and Eric Cantor have left the negotiations, frustrated that the Democrats won't budge on the issue of tax increases. Not having followed the issue for a while, I was heartened to see that the Republicans are using the debt ceiling debate to leverage further budget cuts. My concern is that Boehner is now left as the only negotiator on the Republican side.

The principled position on increasing federal revenue is to maintain low marginal tax rates, with few, if any deductions. This has worked consistently in the past. Given the impact of Hauser's law and need for growth in the economy, no tax increase should be considered in this debate. So far, I believe that Boehner has played his weak hand with great skill, but this is his toughest test to date. I hope he hangs tough, the last thing we need are job killing tax increases.

However, nothing in my reading suggests that either party is ready to deal with entitlements. As Tea Partyers, we need to state our plans to deal with entitlements, because that's where most of the federal budget money goes. Some believe that if we just cut taxes and regulation, the economy would grow its way out of our crisis. While growth would ease the pain, it won't erase it completely, unless growth gets to record setting levels. The only way our economy can grow at the rates needed to maintain entitlements would require a massive influx of new immigrants to raise the labor participation rate of our aging work force. Are we in the Tea Party ready to endorse large numbers of engineers, scientists and technicians emigrating from the likes of China and India? I know I am, but I have seen little discussion of this approach elsewhere. Exit question, what should the official Tea Party position on Social Security, Medicare and Medicaid be?


  1. I both love and fear your big picture grasp of the malaise that is our economy. And this story is the quiet headline that could shape so much of our future. As for your final questions...I think the tea party wanted to work on those for some time, but breaking, urgent emergencies have always taken priority. For once, the time may be right to really sink our teeth into it. The question is, will we, the taxpayers, agree on anything?

  2. WRONG! Most of federal spending is on the military. You know the organization that commits more crime than any other group of people on the planet. Shut down all land bases in foreign countries everywhere, Put all generals who carried out war without a Congressional Delcaration on trial war crimes give them the death penalty and fire all the troops who carried out war crimes and give them the death penalty too. Bring the rest of the troops home minus constitutionally authorized naval forces, shutdown homeland security the TSA and the DEA then lets look at the books. I am confident that all of our deficit spending is from the all out tyranny committed by the US military and law enforcement. Shut down the tyranny and move back to debt free US Notes and shut down the federal reserve and we will prosper. You people are stuck in the mindwashing machine called TV and you focus on the same issues programmed into your mind. Slap! Wake up! You want to cut health care before you cut unlawful criminal tyranny. What the hell is wrong with you?? To others out there this guy bdaddy is a bum. If you follow his idiology you are wasting your life. You are so powerful but living in fear is preventing you from experiencing your true power as a human being. Drop the fear embrace awareness and then you can really protect your interests. It is time for total resistance to every single provocation any government agent of destruction does to you. Arrest the bureaucrats when the interfere in your affairs if the courts won't bring them to justice then arrest the officers of the court too. Resist them at every turn they are criminals and it is time stop ALL compliance with them. Fire the tyrannical bureaucrats and POOF the deficit spending will go away. Solved! Next problem please...