Good news from Congress: we no longer need think that pressure from constituents or logic might influence them into some notion of sanity. Hooray! Just think of all the time we’ll save that would normally be spent bitching about how irresponsible they are. Again, hooray!
The House passed three separate tax cuts yesterday and plans to approve a fourth today, trimming the federal revenue by $94.5 billion over five years — nearly double the budget savings that Republicans muscled through the House last month.
GOP leaders portray the tax bills — for the hurricane-ravaged Gulf Coast, affluent investors, U.S. troops serving in Iraq and taxpayers who otherwise would be hit by the alternative minimum tax — as vital to keeping the economy rolling.
“Our economic policies have done the trick,” said Rep. Deborah Pryce (R-Ohio). “We are in the middle of one of the strongest economies this country has ever seen.”
In order: qualified yes, qualified yes, qualified yes, and absolutely. It might be surprising that I’d offer a qualified yes or absolutely to all proposals, yet still insist that it’s bad news. Allow me to explain.
Hurricane Katrina ravaged the Gulf Coast. A friend who visited New Orleans recently on business returned with a clear understanding that the devastation is far worse than it appears on television. Something must be done. But I don’t trust Congress to do it correctly, especially when its idiocy got us into the situation where only the Federal government could fix the problem. Destroy market forces (insurance, flood walls, etc.) that would make population and business decisions more in line with the inherent risk in the Gulf Coast and a federal response is all that’s left. My reservation stems from that. Congress doesn’t get to take credit for fixing a problem it created. Also, handing out gifts tax breaks to businesses, only to exclude less-favored, “sinful” businesses, is an awful form of central planning. Let the people of New Orleans decide. But I understand that goes against every belief Congress currently holds. In the end, a qualified yes because we have little choice.
Next, concerning affluent investors. I’ve already addressed this, so I won’t go much further with the issue. Congress needs to stop thinking in terms of poor vs. rich and start thinking in terms of smart economic policy and stupid economic policy. We’re nowhere close to smart policy, but this is a small step. I don’t pretend that this is being done for the right reasons, though, so it gets a qualified yes.
Next, U.S. troops serving in Iraq. I don’t have much information on this tax break, but it “would extend a provision allowing members of the military to use their combat pay to claim the earned income credit.” Fine. At a cost of $153 million, it’s a blip in our fiscal health. It’s qualified because it’s probably more to promote a warm fuzzy feeling of helping our troops. If I gave it a no, I’d probably be unpatriotic. I wouldn’t want that. Merry Christmas!
Finally, the Alternative Minimum Tax is a travesty. Anything that reduces its impact is a bonus. Congress should abolish it immediately. No member has the brains to that, so I’ll settle for this. It doesn’t change the reality that an indiscriminate tax on taxpayers who have no intention of evading taxes (illegally), without any sense behind it, is wrong. And the rich paying their fair share is obscene. Just one more soak the rich policy, which is not soaking the not-really-rich. Get rid of it. This is a small positive step.
None of that changes my original idea that this is bad news from Congress. Cutting taxes by almost $100 billion is wonderful, but without an equal or greater reduction in spending, the deficit will grow. It’s insanity and this doesn’t make me think differently:
“By cutting taxes, you grow the economy, and you generate an enhanced flow of revenues to the Treasury,” said Rep. David Dreier (R-Calif.), chairman of the House Rules Committee.
I like that argument as much as anyone, but it’s not generating an enhanced flow of revenues to the Treasury I’m interested in. I want more money left with the people who earn it. The government should get what it needs, not what it wants. Does anyone believe that Rep. Dreier intends to use that enhanced revenue only on necessary, appropriate expenditures? Our tax policies should be adjusted to meet that criteria, while spending according to the revenue we’re generating, not what we hope to generate through more targeted central planning. Congress doesn’t understand that, even though it’s simple. Cut taxes. Cut spending. Reduce the government’s size and reach.