Thursday, February 18, 2010

Don't Do It!

If we're lucky, President Obama's creation of a commission to advise on deficit reduction will turn out to be nothing more than the usual waste of time that typifies these extra-governmental bi-partisan efforts. But unfortunately, if it's taken seriously, it could do real harm to the economy and increase the deficit even more.

First, if the commission is charged with finding otherwise politically difficult ways to both cut spending and raise taxes there is already a problem in the two men he's chosen to co-chair the endeavor, former Clinton White House Chief of Staff Erskine Bowles and former GOP Senator from Wyoming, Alan Simpson. Bowles is an unapologetic big-government liberal. While he will eagerly embrace raising taxes, he will never seriously contemplate non-defense spending cuts of any kind. Simpson, however, is not his mirror opposite. A decent man, to be sure, but when serving he was one of those reach across the aisle quasi-conservatives who would consider both tax increases and spending cuts. If compromise they must, where is the one place they agree? Tax increases. So what do you think will be the likely thrust of their commision's final recommendations?

Second, even if we concede that tax increases will not further hobble an already lame economy and actually increase revenue to the government (which I don't!), is there any evidence to suggest that the increased revenue will ever be used to reduce the deficit? Or, will it be treated as it has always been treated? That is, will it be seen as a windfall that can be immediately spent on this or that pet project?

Ronald Reagan used to tell a parable of his own about an overspending child demanding from his parents an increase in allowance in order to cover his debts. Reagan would ask his audience rhetorically, what would they do? Bargain with the kid by offering to increase his allowance if he, in turn, would better discipline his spending habits in the future. Or, would they cease funding of his bad habit altogether by withdrawing the allowance? Could the answer to this be any more common-sense?

The ONLY way to reduce the deficit is to reduce spending. Now, I will allow that the political reality is such that actually cutting spending on anything other than defense (and it's hard there too) is difficult, if not impossible. Therefore, a freeze on spending is the best way to go. (Liberals, in good Orwellian fashion, already call a freeze a cut anyway.) As the economy sputters to recovery, if not hindered by tax increases, the revenues to government will increase and the ratio of revenue to spending will improve.

And then the politicians, all of'em, will feel the political noose loosen, and feel as well a return of the urge to spend and we'll have this to do all over again.

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