I think Grover accomplished a lot. But I wish he'd convinced politicians to pledge not to increase spending.
President Obama says raising taxes to cut the deficit is a "balanced" approach.
But what's "balanced" about raising taxes after vast increases in spending? Trillions for war, Medicare, "stimulus" and solar panels. Tax receipts rose -- after tax-rate cuts -- from $1.9 billion in 2003 to $2.3 billion in 2008, the year the recession started. That increase couldn't keep up with the spending. The deficit doubled -- actually, more than doubled -- as politicians increased spending to nearly $4 trillion! Our debt, at more than $16 trillion, now exceeds our gross domestic product.
Ludicrous, irresponsible spending is why we're in trouble. As columnist Ron Hart points out, Bill Clinton's balanced budget spent $1.7 trillion. "Adjusted for inflation," he writes, "our federal government would (have) a $200 billion surplus. But instead of increasing government spending in line with normal inflation, under Bush and Obama we are spending $3.8 trillion today. Democrats, who believe we have a 'revenue' problem instead of a 'spending' problem, must also think they have a bartender problem, not a drinking problem."
The media obsess about tax rates, but spending is more important. As Milton Friedman taught us, spending is a far more accurate gauge of the government burden. If government spends a dollar, that dollar is taxed away from someone. If it's borrowed, it's removed from productive use, setting the stage for higher taxes later. If the government prints more dollars to fund spending, our purchasing power falls. Transferring purchasing power from the people to the government via inflation is a form of taxation.
If Republicans and Democrats reach a deal, the tax increases will be real -- but spending "cuts" probably illusions. If they actually happen, they will only be reductions in already planned increases. The Wall Street Journal notes that when the two parties talk about cutting spending by $4 trillion over a decade, "those numbers have no real meaning because they are conjured in the wilderness of mirrors that is the federal budget process. Since 1974, Capitol Hill's 'baseline' has automatically increased spending every year according to Congressional Budget Office projections ... . Tax and spending changes are then measured off that inflated baseline."
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