Archive for March, 2013

Why Tax When You Can Deficit Spend?

Friday, March 29th, 2013

Originally posted at the Coalition to Reduce Spending

Most voters don’t want their taxes increased. Some are fine with tax increases forothers, but generally speaking, one of the Republican Party’s strong points with the electorate has been their stance against taxes. That’s all well and good, but increasingly less relevant amidst bipartisan deficit spending that has led to a nearly $17 trillion national debt with an exponential growth rate big enough to swallow the nation whole.

This is why it’s puzzling that politicians today who claim to be for limited government seem to think that a strong stance against tax increases is all they need to earn the “fiscal conservative” label. Policy wise, nothing could be further from the truth. As Jonathan Bydlak and I explained in an op-ed that was published at Real Clear Policy last December, Milton Friedman reminded us that spending is, in fact, taxation. As Friedman said:

“Keep your eye on one thing and one thing only: how much government is spending, because that’s the true tax … If you’re not paying for it in the form of explicit taxes, you’re paying for it indirectly in the form of inflation or in the form of borrowing. The thing you should keep your eye on is what government spends, and the real problem is to hold down government spending as a fraction of our income, and if you do that, you can stop worrying about the debt.”

If spending is taxation, it follows that deficit spending is an even more pernicious form. This is the case, because deficit spending pushes the negative economic impact of taxation to the future, causing harm to people who received no benefit from the service rendered.

This is why politicians who tell voters they’re working to limit government and sign only a pledge promising they won’t raise taxes are merely fighting half the battle. Sure, that’s a great commitment to make if you’re running as a fiscal conservative, and it’s something that shouldn’t be overlooked. But the simple fact is that a refusal to raise taxes hasn’t starved the beast – it’s arguably made it fatter. A federal beast that gorges on a diet of deficit spending is given a greater chance to grow than one who subsists on taxes, because the impact of the debt that accrues isn’t immediately felt the way taxation is. This is why deficit spending is far more politically popular – and why Republicans engage in it constantly while using the “but at least I didn’t raise taxes” excuse. Except ultimately, they did.

A perfect example of the contrast between Republican politicians on this issue can be seen in the special election for South Carolina’s 1st congressional district. A runoff between Mark Sanford and Curtis Bostic will be held on April 2nd. Both Mr. Sanford and Mr. Bostic have made a promise to their constituents not to raise taxes by signing the Taxpayer Protection Pledge, which is administered by Americans For Tax Reform. However, only Sanford has signed the Coalition’sReject the Debt pledge, which commits candidates to consider all spending open for reduction and vote only for budgets that present a path to balance; and vote against any appropriations bill that increases total spending and against authorization or funding of new programs without offsetting cuts in other programs.

We still hope that Bostic will sign, although he’s been approached by voters concerned about the spending issue from his district on multiple occasions asking him to make this commitment, but to no avail. At the Coalition to Reduce Spending, we believe that South Carolina voters deserve to rest assured that both Mr. Bostic and Mr. Sanford will be held accountable for their spending related votes in the event that one of them is elected to Congress. So far, they haven’t been given that assurance from Curtis Bostic.