On second thought,
maybe it would better if we kept our money
by Barbara Anderson

The Salem News
Wednesday, August 18, 2010

I was planning to write my traditional August column about the sales tax holiday, describing how I spent my Sunday afternoon running around buying cat food, cosmetics, Viva towels and a year's supply of detergent and batteries in order to save $15.33. But instead I must expand on a subject I began last week the Bush tax cuts, because ...

Well, I have it on good authority that the federal government is not going to accept my Oh!Barbara Economics Plan to let the Bush tax cuts expire and apply the money directly to ending annual deficits and paying down the national debt. If you recall, my plan required using zero-based budgeting to draft a new federal spending plan focusing on essential expenditures, and not borrowing any more money until the existing debt was gone. I might have made an exception to fund a war that had something to do with the United States being directly threatened.

But, shocking as it may seem to those who liked my plan, finding it sensible and responsible, the federal government has no inclination to take my advice, except for the part about taking more of our tax dollars when the Bush tax cuts of 2001 and 2003 expire in 2011.

I was thinking that this rejection is because I'm not an economist; but I actually got my idea from none other than Alan Greenspan, who was appointed chairman of the Federal Reserve by President Reagan. Earlier this month he surprised many conservatives by calling for the complete repeal of the 2001 and 2003 tax cuts because he predicts "the most extraordinary financial crisis that I have ever seen or read about," according to the New York Times, if the national debt is not brought under control.

I am sure Greenspan is right, it just didn't occur to me initially that the federal government might not actually use the money to address the debt.

Once I read Greenspan's statement, I jumped on his bandwagon and created the Oh!Barbara Economics Plan described above. But I have not since been able to determine how he means to make the government stop spending and borrowing beyond our means, even if it got the biggest tax increase in history when the Bush cuts expire.

For those who don't know, these cuts decrease marginal income, capital gains and dividend tax rates; increase the threshold for the alternative minimum tax, end the marriage penalty, increase the child care credit and allow us to keep the personal exemption. They also phase out the death tax.

I asked my friends and allies in Washington D.C. about letting these tax breaks expire.

Pete Sepp at the National Taxpayers Union, which has been fighting for a balanced budget constitutional amendment for decades, told me: "Extending many of the tax cuts will probably keep the revenue picture stable and prevent an economic tailspin, while much, much more remains to be done in restraining spending. That's why the place to start is to rebuild public, investor, and business confidence that tax burdens won't rise any further, by making renewal of the 2001 and 2003 tax cuts permanent.

"At the very least, they could be extended by two years. Combine that with repealing TARP authority and the remaining stimulus funds that haven't been obligated, and you've got a powerful pro-growth/anti-deficit policy".

Grover Norquist's Americans for Tax Reform argues that: 1.) the tax hikes will stifle job creation by cutting into small business profits which enable them to hire; and 2.) will lead to more government spending since raising taxes is like pouring gasoline on a campfire.

"Reforming entitlement programs without raising taxes is a better idea than benefit cuts and tax increases," the organization notes.

Both groups have lists of necessary reforms, as well as suggestions for tax simplification, as do many other citizen groups. So, I figure, at least until we elect a new Congress and a new president who can create simple, fair tax policy and control spending, it's better to keep as much of our own money as possible.

My plan includes resisting a VAT (Value Added Tax, a version of a national sales tax) and cap-and-trade taxes that some think are being planned for the lame-duck session after the November election; and stopping the ObamaCare taxes that are already in the loop.

Greenspan is right: we are headed for serious trouble. He's just wrong to expect the present government to prevent it.

So I must change the Oh!Barbara Economic Plan to this: We should take what we save by keeping the Bush tax cuts and instead of spending it, keep it in the safest place we can find, for either our own survival during that "extraordinary financial crisis," or for our grandchildren who will inherit all that debt if voters don't vote for real change in November 2010 and 2012. We should oppose new taxes for big, new, complicated federal spending projects, and those politicians who propose them.

It's time to ask the congressmen who are up for re-election this year, and their challengers: What is your economic plan to save the economy?

The comments made and opinions expressed in her columns are those of Barbara Anderson
and do not necessarily reflect those of Citizens for Limited Taxation.

Barbara Anderson is executive director of Citizens for Limited Taxation. Her column appears weekly in the Salem News and other Eagle Tribune newspapers; bi-weekly in the Tinytown Gazette; and occasionally in the Lowell Sun, Providence (RI) Journal and other newspapers.

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