Monday, January 18, 2010

The Deficit Commission: Another Hare-Brained Scheme

Just when you thought that Congress couldn't come up with a dumber idea for taxing the public in the name of fiscal responsibility, they're going to try to fool you again. Now who among us wouldn't want to create a watchdog agency which will monitor the mountainous deficits created by the Bush and Obama administrations and propose solutions?

Just such a commission is being proposed by two Republicans (one of whom, Judd Gregg, is retiring) and two blue dog Democrats. The proposed commission, called the Deficit Commission, would allegedly study the budget deficits while proposing ways of decreasing those deficits. Now what could be wrong with that? Answer: plenty!

Fortunately, the ever-vigilant guardians at the Wall Street Journal, The American Spectator, and several taxpayer organizations have actually read the proposal. The commission would use a deceptive title to plan some of the largest tax-increases of the past three decades. How so? Most of us would look at the name of the commission and assume that the worst it would do is create another useless level of government. Some would look at the title and say "at last, a body designed to cut wasteful government spending." In reality, its mission would be to determine just how far in the hole we've gone, then come up with new visible and invisible methods of taxation to fill the hole.

The Obama administration, by far a greater creator of unsustainable budget deficits than the profligate Bush administration, supports the creation of such a commission. Although Bush actually cut taxes, he was complicit in massive increases in government spending. And Obama has only one solution for the deficits arising from the drunken-sailor spending of both administrations--tax, tax, tax.

Absent Obamacare and Cap 'n Tax, the current Euro-socialist spending of the Obama administration will already increase the national debt by double over the next ten years. The Bush years increased the deficit with discretionary spending by 54% in eight years. The Obama administration has expanded that spending by 57% in a bare one year. As for the overall budget, Obama has increased all spending by one-third in just one year. Factor in the unfunded mandates for the states, and total government spending, state and federal, within ten years will account for 60% of our gross domestic product. That level of spending is quite literally impossible to sustain without impoverishing the nation and ending free enterprise once and for all.

The Gregg-Wolf (the other Republican being Frank Wolf, D-VA) Commission has no plans to address spending, so if it is going to decrease the deficit, there is only one avenue left--taxation. Apparently the authors of the bill (along with Kent Conrad, D-ND, and Jim Cooper, D-TN) have never heard of simple household accounting, let alone the Laffer curve. Their plan is to increase taxation in proportion to the deficit without giving any consideration to cutting a penny of spending.

These supposedly moderate Republicans and blue dog Democrats are proposing that Republicans accept what will amount to a top income tax rate of 49% (sure to go up almost immediately after passage), a new energy tax, a stock transaction tax, and/or a value-added tax. As Peter Ferrara, formerly of Reagan's White House Office of Policy Development and Associate Deputy Attorney General under Bush I put it in The Journal: "The Indians got a better deal for selling Manhattan."

Ferrara is very blunt about what he sees as the future of a Republican Party which would support such a bill. He sees no future for it at all. There is already a growing and powerful movement in America which wants to stop taxes in their tracks and roll back most of the taxes which have already been imposed. A Republican Party which would make the mistake of supporting a bill which directly opposes the movement is as good as dead.

Ferrara would scrap the Deficit Commission concept entirely and replace it with "The New Revolution." He instead looks to making a determination of what taxes should be, consistent with long-term economic growth. He then proposes that we should finance that growth from current revenues rather than funding spending from taxes (phony revenue). While Europe has come to its senses and reduced corporate taxes to about 24% overall, America's currently stands at 35%, which he would reduce to 15%. He also wants to have a commission which will propose complete elimination of the capital gains tax, taxes on dividends and the estate (death) tax. Add phased-out payroll taxes and elimination of state income taxes which are funding the federal un-funded mandates, and he has proposed a commission I can get behind.

The New Revolution Commission could then slash Obama's spending programs to the nub. Any unspent stimulus money should be terminated and returned to the Treasury and ultimately to the taxpayers. TARP and remaining corporate bailout authority should be terminated immediately. Ferrara also proposes changing the bankruptcy law providing for rapid dissolution of corporations which are not succeeding. There is simply no such thing as a corporation that is "too big to fail."

But make no mistake. The Gregg-Wolf Deficit Commission would have no such goals. It is a study in Keynesian failed economics. It would ultimately propose taxation and government control that even the Euro-socialists have recoiled from. Ferrara's own proposal that I referenced above addresses those items which are both the most obvious and most recent economic disasters foisted on the taxpayers. His entire proposed recommendations address spending which has become entrenched in our national psyche for decades. I would have some problems with many of the remaining recommendations he has made, in form if not in substance. But they are well worth considering, and I include his entire article on the subject here: Down With Obamunism.

14 comments:

Joel Farnham said...

LawHawk,

Another doofus idea from people who should know better.

Do IQ's take a sharp dive when people become a legislator? I think they do.

I personally have never seen a tax cut that I didn't like.

ArmChairGeneral said...

Oh if only the cutting taxes commission in the New Revolution would come to pass. Anytime I bring up anything like this to some liberals I know they call me names and say I do not 'understand history' arguing that I do not know what communism was about. I know what it was about - government control. I happen to be a fairly intuitive young man who is very interested in the history of this and other countries. It is my hope we do not repeat some mistakes made by others. I hope to God that Brown wins in Mass.

LawHawkSF said...

Joel: I think you've figured out the secret. They put something in the Capitol drinking fountains that lowers the legislators' IQs by five points each time they drink.

LawHawkSF said...

ACG: Remember that one very smart political type once accurately described communism as "socialism in a hurry." We're currently just being fed death in small doses by the Obamists and their fellow travelers in Congress.

I'm with you on Brown. I have moments where I think he could actually win, begin to doubt my sanity, then see reasonable polls that show him ahead or in a dead heat. Pray for bad weather (it's been forecast). Liberals are not known for taking their principles very seriously if the temperature is too low. The welfare class won't come out in a light rain.

StanH said...

One of the reasons that seemingly bright people turn into dimwits once they arrive in Washington, the moment they are sworn in, their most important mission is to get reelected. Many of the things that we see as lunacy, they see as self preservation. There is 55 to 105 Trillion in un-funded mandates, pending on who you ask, and every two years they promise to do more-more-more, and who is going to be the fearless politician that going to tell millions of people that the government cheese is coming to an end? “W” tried to privatize a small portion of Social Security, and he was burnt at the stake, politically for it, even though he was right. Until we flip Washington spending will never be a choice I fear.

AndrewPrice said...

Comissions are an age old political trick. They let you look like you're doing something when you aren't. If you're lucky, they never actually finish their task and you never have to deal with it. And even when they come up with solutions, you never have to follow through with them because you can pick and choose. Total sham!

ArmChairGeneral said...

Perhaps a vote for one term for each politician regardless then they might focus on making good instead of campaigning?

LawHawkSF said...

Andrew: Great one-word description. Sham! In the case of a "deficit commission," it would be a matter of very faux serious politicians, reviewing a budget that is hopelessly drowning in red ink, tsk-tsking, and then concluding, "well, we guess we'll have to raise taxes." No valid economics involved, and a solution which has proven wrong for decades. But it would serve its purpose--giving phony validity to the tax-and-spend policies that the left has already decided on.

One of the mandates in the proposed bill creating the commission is that it will have "independent authority" to gather information and draw conclusions. I suppose that's partially true, since it was two alleged Republicans that proposed it.

LawHawkSF said...

StanH: The deficit numbers are truly staggering and the perpetual "get re-elected and worry about the consequences later" mindset never seems to change. The past three years have only brought that mindset into sharp focus, and also awakened a major sector of the American populace to the stupidity of it all. I've fought term limits most of the time since they first became a popular idea. I'm having serious second-thoughts about my opposition.

LawHawkSF said...

ACG: See my comment to StanH. If we are going to have term limits (which I'm increasingly having positive thoughts about), the House should be the real focus. It might be a wise idea to increase terms from two to four years, then limit the number of re-elections available. I want to be able to throw the bums out, but I also want to know that we will always have a few experienced legislators in order to avoid "newbie chaos."

The problem is that in order to limit federal terms, we're going to have to amend the Constitution, and that's no easy task. Still, the public mood seems to favor it.

HamiltonsGhost said...

Lawhawk--I'm reminded of the old adage that "a camel is a horse put together by a committee."

LawHawkSF said...

HamiltonsGhost: So true. And the only thing that's worse than the commission that does nothing (as Andrew pointed out) is the commission that actually does something. Fortunately, the proposal so far is for a commission which then recommends to a committee, the latter having the actual power. Still, it's often a distinction without a difference.

Writer X said...

And they were even dumb enough to name the commission after themselves! Geniuses.

LawHawkSF said...

WriterX: Since I can't think of anything else Gregg has done, I guess he figured he needed something with his name on it as he skedaddles out of D.C.

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