Recently, as I sat in a booth at my favorite luncheonette — Mr. G’s at 12th and Callowhill — waiting for my lunch to arrive, I did something I actually don’t do very often: I read the City Paper.
The big piece seemed to be one written by someone named Jeffrey C. Billman suggesting that we get serious about the national debt. One of the sub-heads caught my eye: “Spending cuts are not the answer.”
To be fair, the article itself does say that “spending cuts may be part of the equation.” That still didn’t strike me as being especially serious. After all, one sure way to cut down on debt is to stop spending so much. It’s not just part of the equation; it’s the essential part.
But the sentence that really arrested my attention was this: “The 2001 tax cuts cost $1.35 trillion over 10 years; that dwarfs Obama’s $787 billion stimulus.” The tax cuts cost? Cost whom? Certainly not the people who didn’t have to pay them. What Billman means, of course, is that the cuts cost the government revenue.
His source for this is something called CBPR. I wondered what that was, so I Googled it, and found that it is something called Community-Based Participatory Research.
Maybe Billman should have used something a little more official, such as the Congressional Budget Office. Had he done so, he would have found that in January the estimate for the stimulus package had been upped $75 billion to $862 billion.
As for the cost of those tax cuts, CBO figures indicate that while a $325 billion surplus for fiscal year 2006 had been projected in 2000, the actual figures for 2006 registered a $247 billion deficit. Add those figures together and you get a whopping $572 million net drop.
Only it had little to do with tax cuts. Historical averages of federal tax revenues range between 17. 9 percent and 18.3 percent of GDP. Federal tax revenues in 2006 were 18.4 percent of GDP. The reason for the deficit was that government spent $237 billion more than had been projected. The CBO had, by the way, projected that the tax cuts would result in a $188 billion drop in revenue; the actual drop was $58 billion.
I have no interest in engaging in a statistical pissing contest over this, however. You can find the whole story by reading this CBO report: The Budget and Economic Outlook: Fiscal Years 2001-2010 [1].
What interests me is the thinking that underlies that phrase “tax cuts cost.” The presumption seems to be that the primary function of citizens is to underwrite the government. Actually, that is not the function of citizens. That is the function of subjects.
Another presumption underlying the thought that tax cuts “cost” is that government ought to be doing all sorts of things for which it is manifestly unsuited. If you think education in this country has improved since the establishment of a federal Department of Education, then you need to read Diane Ravitch’s The Death and Life of the Great American School System. Ravitch is a former Assistant Secretary of Education.
You can visit the Gulf to see what a great job the Department of Energy has been doing.
On the whole, the government neither makes anything nor sells anything. It is largely unproductive. And when it tries to be otherwise, the results are not pretty. In April, for instance, the Government Accountability Office issued a report declaring that the United States Postal Service was no longer economically viable. And those of us who live in Pennsylvania already know what a fine job our state does when it comes to selling wine and spirits.
State stores start by tacking on a uniform 30 percent markup on the price of every bottle. Next, they add a $1.40 handling charge. Then, there’s the 18 percent Johnstown Flood Tax. The flood referred to isn’t the legendary 1889 one. The PLCB didn’t exist then. No, this was the 1936 Johnstown flood. No matter that the town has since recovered. None of the tax collected goes to Johnstown anyway. It goes to the state’s general fund. Oh, and originally it was 10 percent. There’s also something called “the round-up.” But I’ll let this video [2] explain that. On top of all of which there is the 6 percent state sales tax. Together, these practically double the price of a $10 bottle of wine. If any private seller tried this sort of thing they’d be prosecuted.
In a strange way, though, Mr. Billman is right. Spending and taxes aren’t really the problem. They’re just symptoms. The problem is that we now have a political class that has come to think of itself as a ruling class. According to Rasmussen Reports, 58 percent of those polled favor repeal of the recently enacted healthcare legislation. That’s four points higher than the number who opposed the legislation before it was passed. Polls also indicate that Americans overwhelmingly approve of Arizona’s immigration law. Yet the political class — including the President, Justice Department and, so far, one federal judge — beg to differ.
This column usually focuses on a famous quotation. Today I end with one. What Talleyrand said of the thick-headed Bourbons applies perfectly to today’s political class: “They have learned nothing, and they have forgotten nothing.” It’s time the citizenry got around to teaching them a thing or two.
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Latest posts by Frank Wilson (Posts [7])
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