Print Edition: September 13, 2008
WE NEED TAX AND SPEND
No election year phrase is more maligned or misunderstood than "tax and spend." Somehow it has come to mean something bad. How this can be is beyond me. This country needs to tax and spend – immediately! If we do not tax and spend, we do so at our own peril. Tax and spend is the only fiscally responsible and politically defensible philosophy that can save the United States from certain ruin. Here’s why.
Let’s look at the first word of the phrase – tax. This is the way the government raises money; it taxes its citizens. The good news is that this is a process and because of that it’s relatively transparent. A tax must proposed by someone, then debated, then introduced as a legislative bill, then debated some more, then voted upon by Congress, then approved by the executive branch, and sometimes even challenged in a court of law (judicial). All this goes on in full view of the citizens who eventually will have to pay the tax.
Every citizen knows what’s going on because when they get their tax bill it’s right in front of them in black and white. Don’t believe me? Ask someone if they know what their tax bill is and I’ll bet a dollar to a doughnut that they have that number firmly ensconced in their brain. People pay attention to taxes because they pay them – they have "skin in the game."
In terms of "spend," if you think a tax is unfair it’s easy to determine which legislators voted for the tax because it’s in the public record. You can find out how tax money is being spent (in general) through General Accounting Office reports and several watchdog groups like Taxpayers for Common Sense. So, if you disagree with how a given legislator is taxing and spending you can work to get that rascal voted out of office and replaced with a more acceptable representative.
So, tax and spend is a completely logical governmental fiscal philosophy. We know exactly how much revenue we have and therefore we know exactly how much money we have to spend. This is how every successful family and business is run, so it’s easy for all of us to understand.
Back in the olden days, there was no argument about the phrase "tax and spend" because it was the philosophy of both political parties. My first recollection of a presidential election was Dwight D. Eisenhower (R) vs. Adlai Stevenson (D) in 1952 and 1956. I remember the adults discussing politics at our kitchen table and it went something like this. Democrats determined what the government should spend and then enacted enough taxes so that all those programs would have funding. Republicans enacted taxes first and then figured out what those taxes would pay for and if some programs didn’t get funding so be it. Both were tax and spend policies, they just approached tax and spend from different directions.
Either way, that’s completely the opposite of what this country is doing now. The current philosophy, first pioneered by the Reagan administration and developed into an art form by the George W. Bush administration can best be described as "charge and spend." This philosophy asserts that it’s possible to tax less and spend more, that somehow if this country rings up massive deficits and sells our assets to foreign governments like China it’s acceptable stewardship. Current citizens don’t see a tax bill and because they have no skin in the game they don’t pay attention to where the money goes.
I would argue that no family or business can survive by spending more than it takes in. We all, deep down, understand that at some point charge and spend leads to bankruptcy and ruination.
In terms of government taxation, every dollar of debt will have to be paid at some point by some taxpayer. All charge and spend means is that current taxpayers won’t get stuck with the bill, future taxpayers (our children and grandchildren) will. Charge and spend is, therefore, in reality is an insidious, dishonest, and unconscionable tax.
How did we allow ourselves to get in this charge and spend mess? I’m reminded of Roy Rogers, the cowboy star from my youth. (Stay with me here…)
Roy Rogers starred in countless movies and had a television series during the 1950s. To bridge the gap between the frontier days and what was happening in the 50s, Rogers created something called the "Modern West." In the Modern West, Rogers could get on his horse Trigger and chase bad guys in cars. He could pack a six-shooter on a gun belt, put on his spurs and board a plane. He could battle Nazi spies with a lasso while his sidekick, Pat Brady, rushed for help in a 1954 Jeep. He could do this, and more, because the Modern West didn’t really exist and never had. But we all went along with the charade because it was fun and it took no effort to suspend all logic and enjoy a never-never land for a while.
Charge and spend is like the Modern West. It’s fictitious. It makes no sense, when you really think about it. It is, however, a fiscal never-never land.
Getting out of this charge and spend mentality is going to be very tough, but the only real answer is to tax and spend. It’s the only way to achieve a balanced budget – which is when we actually pay for what we do and we don’t spend more than we make.
By the way, don’t think any political party has an strategy for this. According to the bi-partisan Committee For A Responsible Federal Budget, both Obama and McCain would rack up budget deficits of $350 billion during their first terms.
We should take a page out of the playbook of the first president to really invoke a tax and spend philosophy – Abraham Lincoln. Faced with the task of paying for the Civil War, Lincoln instituted the first national income tax, which was really a war tax. The levy was 3 percent on those making between $600 and $10,000 per year and 5 percent for those making more than $10,000. Once the war was paid for, the tax was rescinded in 1872. Lincoln logically reasoned that in order to spend money you first had to have money and that citizens were the final arbiter of what should be raised and spent. What a concept.
Jim Neff is a local columnist. Comments to neffzone@gmail.com. Read Neff Zone columns online at www.neffzone.com/cadillacnews.
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