For some reason the Bush tax cuts of 2001 and
2003 were passed with an expiration date of Dec. 31, 2010, as if
they were a carton of milk or a bottle of aspirin.
If the federal government tries to use them after
this date, either they'll be sour, or they'll no longer cure a
headache. This is how the government does tax policy, minus the
legitimate need of grocers to guaranteed freshness.
If you don't understand why certain income tax
rates were a good idea this year, but not next year; or why grandpa
would be doing the family a huge favor by dying on New Year's Eve;
you have apparently never studied economics.
I myself never got around to it during my two
years at college. I've read some books, but often was confused by
the terms they seemed to think I'd understand, like supply-side,
demand-side.
Could never figure out what good it did to have
supply if there was no demand, and vice versa. Seemed to me you
needed both.
So I became a taxpayer activist with only the
basic economics my father taught me when he sent me off to college
with a checkbook: When you've spent it all, it's gone.
By way of example, my parents taught me never to
borrow money for anything but a very big essential that I couldn't
save up for, like a house; and even then, not to borrow more than I
figured I could pay back.
Over the years I picked up a few other things
like the Libertarian TANSTAAFL ("there ain't no such thing as a free
lunch") and the conservatives' "what you tax you get less of, what
you subsidize you get more of." Through experience, I discovered
that both these things are true.
I was told that supply-side economics simply
focuses on the productive sector of the economy, figuring that if
that sector creates supply, demand will follow. Well, maybe. If they
have a good advertising budget. But if the demanders borrow to buy
the supplied items, this is not a good thing, unless the items are
very big essentials like homes. Many individuals, like government,
get caught up in the addictive "more."
So I also never really "got" the economic
policies that urged "growth." I always wondered: Where exactly are
we growing to?
Though lost in the economic assumptions, often
contradictory, that so many "experts" and politicians reference,
I'll still address the Bush tax cuts.
The big questions are: Should taxes stay lower to
help the private sector create jobs, or be increased to give the
government more money to create jobs? Do tax cuts increase the
deficit or create economic activity to reduce the deficit? What time
shall we meet for lunch?
Not-economists like me ask: Where did the jobs we
had go? Did they disappear because taxes were too high, or too low,
or despite either? And shouldn't we know the answer to that question
before we do more job-related tax policy?
Since I'm not an economist, my solution on the
deficit issue will probably not be taken seriously. But here it is:
Let the tax cuts expire, all of them, on both rich and middle-class
taxpayers, and apply the money directly to reducing the deficit and
then the national debt.
Here is how that would work. If the expiration
date is honored, those who make roughly a little over $34,000 a year
will see their marginal rate increase from 25 percent to 28 percent
next year. Take the 3 percent in extra taxes, send them directly to
whomever the government owes, and the debt drops by that amount.
Then do the same with the new higher taxes on "the rich" and their
heirs. Keep doing this until the $13-trillion national debt is paid
off, then have a mortgage-on-our-children's-future burning.
Of course, this only works if the government
isn't at the same time borrowing even more money to increase its
spending, which is what it usually does after it gets a tax hike.
Government is like an addict: give it the addictive substance, and
it will use it and then want more.
Someone told me once that for every $1 in new
taxes the government raises, it spends $1.38. That makes sense to me
because I've watched government in action; it gets all excited about
the new taxes and goes looking for new things to spend them on.
So the second part of my plan: No new federal
spending. In fact, no federal spending at all until those economists
sit down for lunch with some accountants, visualize a zero-based
budget, then determine what actually must be spent next year. The
list should include protection of citizens from foreign and local
criminals, preferably on our own soil; infrastructure maintenance
(no ribbon-cutting for new things); contractual obligations (no new
ones added); and care for some seriously disadvantaged American
citizens.
Flaw in my plan: There's no place in it for
politicians who need to buy votes from people who want a free lunch,
and the special-interest groups that service them.
Regardless of what happens with the Bush tax
cuts, voters must elect some new politicians who grasp common sense
economic principles like TANSTAAFL.