Government spending at both the state and federal levels rises every year, which puts pressure on politicians to find and justify more tax dollars. Mandatory federal spending on entitlement programs alone will soon exceed 60 percent of budget outlays, and Medicaid spending threatens the budgets of nearly every state. If our elected officials continue to chase spending with more taxes instead of decreasing both spending and tax rates, this epidemic will eventually strangle families, communities and the economy.
The spend-and-tax epidemic is like a hound dog chasing a rabbit. A hound dog cannot out-run a rabbit, but once the rabbit is cornered it’s a goner. Legislators at the state and federal levels must decrease government spending, or continuously increasing taxes will eat our proverbial lunch.
Most state governments and the federal government have shown an insatiable appetite for spending. Spending on big projects and favored groups helps ensure reelection. The fact that 20 percent of taxpayers pay 80 percent of federal tax revenues means that a majority of the public is not directly impacted by rising tax rates.
The cure for the spend-and-tax epidemic is to enact Tax Expenditure Limitation Legislation (TELL) or Taxpayer Bills of Rights (TABOR) at the state levels. At the federal level, Congress must revive the Fiscal Responsibility Act, a key provision in the 1995 Contract with America that would have required Congress to formulate balanced budgets. Not surprisingly, this 1995 provision failed to pass in the U.S. Senate. Until the public tells legislators how much they are legally allowed to spend, legislators will continue spending like there is no tomorrow. There might be a tomorrow for many of us, but the epidemic could destroy the tomorrow for our grandchildren.
There have been some successes in the fight against out-of-control spending and taxation. Twenty-six states have either tax or spending limitations. California Governor Schwarzenegger is aggressively fighting the epidemic this year with a ballot initiative to impose new limits on state spending. Ohioans will vote in 2006 on a proposal that requires voter approval of any tax increase and limits spending to the rates of inflation and population growth. This type of responsible leadership must sweep across the nation and into Washington, D.C.
Herman Cain is the National Chairman of the Media Research Center’s Business & Media Institute. He is the former president and CEO of Godfather’s Pizza, Inc., and currently is CEO and president of T.H.E. New Voice, Inc., a business and leadership consulting company.
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