Voters Seem to Favor the Third Option

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Kevin D. Williamson lists the fiscal possibilities: Cut Spending, Raise Taxes, or Wait for Economic Collapse.

Republicans don’t want a tax increase—but a tax increase is exactly what they are arguing for, without quite meaning to. 

Put another way: Republicans are gearing up for a fight over raising the debt ceiling—and they say they want spending cuts, except for entitlements, defense, and veterans’ care. 

What that takes off the table is Social Security and Medicare, at least, while some Republicans, notably Rep. Jim Jordan, also say Medicaid cuts are not on the table. Together with defense spending and interest on the debt already accrued (the only federal bill that really has to be paid) that represents the great majority of federal spending.

Specifically, as KDW shows, last year's spending on the stuff Republicans want to shield from cuts (plus interest on the debt) represented about $6.8 trillion out of a total $9 trillion. Bottom line:

Everybody likes to talk about taxes, spending, and debt as though this were a moral problem—and, of course, there are moral aspects to these issues. But this is a moral problem inside of a math problem, and the real limits on our options and range of action are economic, not metaphysical. You can cut spending, raise taxes, do both, or do nothing, allowing the debt to pile up until the economy collapses under the weight of it. 

Swimming in his Money Bin Of course, Democrats have their own math-illiterate recipe: We'll raise taxes on the rich and corporations, and that won't have any effect at all on you peons. One of the proposals is to go after all that stuff in Scrooge McDuck's money bin (pictured at your right): taxing wealth. David R. Henderson points out: Taxing Wealth Is Taxing Work.

In his State of the Union address on Tuesday night, President Biden stated:

We have to reward work, not just wealth. Pass my proposal for the billionaire minimum tax. You know, there’s [sic] a thousand billionaires in America. It’s up from about 600 at the beginning of my term.

But no billionaire should be paying a lower tax rate than a schoolteacher or a firefighter. I mean it. Think about it.

I have thought about it. I have four thoughts.

First, if there are 1,000 billionaires now, up from 600 just two years ago, that’s good, not bad. Biden, to his credit, didn’t say it was bad. But it’s good because it means that consumers are still rewarding producers for being very productive.

Second, to allow people to become wealthy is to reward work. How does Biden think people got to be wealthy? By sitting on the couch eating bon bons? Joe Biden seems to have a “tooth fairy” view of how people get wealthy, but the vast majority of people who get wealthy in a free market do so by producing something that a lot of consumers value highly.

You might argue that we don’t have a completely free market and you would be right. Governments at all levels in the United States give special privileges to lots of groups. That means that not all billionaires earned their wealth in a free market. Occasionally, for example, governments heavily subsidize consumers to buy particular products. Tesla and Elon Musk, anyone? But the solution is not to tax those businesses more; it’s to end the subsidies.

Check out David's third and fourth thoughts too.

Meanwhile, George F. Will looks at a barely-serious GOP CongressCritter's proposals: Quadrillion-dollar national debt? Chew, don’t nibble, on this math.

When agitated, which he often is, Rep. Chip Roy, 50, large and fit, with a bald head and a goatee, resembles an Easter Island statue with an attitude. Arithmetic explains this Texas Republican’s seriousness about the need to restrain federal spending by restructuring entitlement programs. Someday. His realism, a product of experience on Capitol Hill and in presidential campaigns, tells him this task is not for today.

Meanwhile, he envisions saving $3 trillion over 10 years by cutting the “woke, weaponized and wasteful” bureaucracy to fiscal 2019 levels, while maintaining defense spending at current levels. But pruning annual spending by $300 billion from unspecified and presumptively unpopular (“wasteful”) programs will not banish this arithmetic:

The American Main Street Initiative, a think tank, says the Obama, Trump and Biden administrations compiled more debt held by the public, adjusted for inflation, than did all previous presidents combined. And if the national debt rises for 60 years at the rate it has risen during the previous 30, it will then exceed $1.5 quadrillion. (A quadrillion is a thousand trillions.)

Finally, a guy I like, Jeff Maurer takes the GOP to task: Debt Ceiling Idiocy Shows the Dangers of Living in a Fantasyland. He makes a number of unexceptional (but correct) points. However, my eyes rolled at this:

Our goal should be to keep the debt manageable, and our definition of “manageable” should change depending on economic conditions.

The problem being (as I said in a comment on his site): And we'll know it's become unmanageable how? Well, see KDW's third option above.

Briefly noted:

  • An inconvenient truth from Ron Bailey about an undeservedly popular proposal: Biden's Drug Price Controls Will Kill More Patients in the Long Run.

    Federal government interference has massively distorted American health care costs for decades. In his State of the Union address on Tuesday, President Joe Biden touted how the misnamed Inflation Adjustment Act (IRA) will further warp medical care costs by "finally giving Medicare the power to negotiate drug prices." The result is essentially putting price controls on prescription drugs. And price controls will do for prescription drugs what they do for all other products upon which they are imposed: create shortages, queues, black markets, and rationing.

    Even worse, drug price controls will have the additional baleful effect of increasing disease, disability, and deaths while simultaneously raising the total costs of health care. How? Because price controls substantially reduce the incentives for pharmaceutical and biotechnology companies to research, develop, and deploy innovative new medicines that would prevent and cure illnesses and cut overall costs.

    It's that venerable Bastiat observation about the seen and unseen.

  • The Foundation for Economic Education presents 33 of the Best Robert Heinlein Quotes on Liberty, Politics, and Culture. What, just 33? Well, here are the first three:

    1. “There is no worse tyranny than to force a man to pay for what he does not want merely because you think it would be good for him.”
    2. “The correct way to punctuate a sentence that states: ‘Of course it is none of my business, but—’ is to place a period after the word ‘but.’”
    3. “Do this. Don't do that. Stay back in line. Where's tax receipt? Fill out form. Let's see license. Submit six copies. Exit only. No left turn. No right turn. Queue up and pay fine. Take back and get stamped. Drop dead—but first get permit.”

    You won't want to miss the remainder.

Last Modified 2024-01-14 4:39 AM EDT