Monday, March 10, 2008

Ben Stein Surprise

No, it's not a recipe for some kind of Hollywood quiz-show food.

...The problem, and it’s a killer, is that over the years we have obligated ourselves as a nation to spend truly staggering sums. These sums are growing rapidly. They consist mostly of entitlements, like Social Security and Medicare; fixed obligations like interest on the national debt, pensions for federal and military employees and various subsidies that have already been enacted; and morally mandatory expenses like those for national security.

All politicians campaign on the promise to cut federal spending by identifying hitherto unfound waste, fraud and corruption. None of them ever do so in a meaningful way. Total federal spending has not once fallen noticeably since 1954, no matter the party or the promises of the incoming chief executive.


That is the first thing you need to know. The next thing is that the Republican Party (my party and yours) has for the last 30 years or so been operating under a demonstrably false and misleading premise: that tax cuts pay for themselves by generating so much economic growth that they replace the sums lost by tax cutting.

This would be a lovely thing if true, and the best of all ideas, the “something for nothing” idea. In fact, tax cuts lower federal revenue and generate federal deficits. It is also true that they do stimulate the economy and after a long period of years, federal tax receipts go back to where they were before the tax cuts.

IOW, the Laffer Curve should have a longer "Y" axis. Longer by a lot.

And Stein then puts it in terms that some people can actually understand:

But basically, they shift the tax burden from us to our progeny and add immense amounts of interest expense to the federal budget. At this point, taxpayers shell out about $1 billion a day just for that item.

Stein assumes that Fed spending will not decrease, no matter what. It's a valid assumption if you're a betting man--the history is on his side.

Read the rest.


James Wigderson said...

I don't know why Stein would say a "long period of years". For example, the Reagan tax cuts resulted in a boost in government revenue in less than two years. The increased debt was the result of congress spending $1.25 for every $1 of new revenue.

Dad29 said...

He said it because it is true.

Spending counts--except in Government, where nobody counts it.

By the way, refresh my memory: did RR VETO those spending bills?