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?