Some lawmakers say it so often, you'd think it was a mantra: We
can't afford to cut taxes, because doing so would increase the
federal deficit.
After a tax-cut measure passed the House of Representatives
recently, Rep. Martin Frost, D-Texas, claimed the bill's sponsors
wanted "to spend $82 billion of the Social Security Trust Fund and
drive America even deeper into debt." Sen. Olympia Snowe, R-Maine,
vowed to fight any tax cut that would increase the deficit.
It's true that we're facing a record budget deficit. That's partly
because of the brief recession that began just as President Bush
was taking office. But the major reason is one that lawmakers don't
want to talk about: Their own out-of-control spending.
My Heritage Foundation colleague Brian Riedl has found that the
federal government will spend more than $21,000 per household this
year-a record amount in peacetime. In fact, Washington will spend
$520 billion more this year than it did in 1999. That's a lot more
money than the recently enacted tax cut so many lawmakers attacked
as being "too expensive."
Where is the money going?
Almost a quarter of the new spending is funding big increases in
federal agriculture subsidies (the farm bill), federal health
programs (other than Medicare and Medicaid), federal directives on
education ("no child left behind") and unemployment
compensation.
Another fifth is being spent on defense. And while that seems
reasonable in the post-September 11 world, relatively little of
that spending is directly linked to the war on terrorism.
Tens of billions more are pouring into a series of small- and
medium-sized programs that already receive more than their fair
share of government dollars.
Yet even as they throw our money around, many lawmakers say they
want to return to a balanced budget. Well, doing so means
establishing priorities.
According to Riedl, all Congress has to do is limit the average
annual growth of mandatory spending programs to 4.6 percent per
year-instead of the 5.6 percent proposed by President Bush-and
freeze non-defense discretionary spending at the 2003 level, and we
could have a balanced budget by 2008.
Some lawmakers will howl: "Cut 1 percent? Impossible." Nonsense.
They've done it before, when self-imposed budget caps forced them
to do so, and they can do it again. (And let's remember that we're
talking about cuts in the rate of growth, not actual cuts.)
The balanced budget that results would include a prescription-drug
benefit for Medicare recipients, would fully fund the President's
defense requests, would pay for the recent war in Iraq and would
still allow Congress to enact a bigger tax cut than the one that
took effect in May.
And further tax relief is critical. Before the government spends a
dollar-whether it's used to help a poor family, buy a new weapon or
build a highway-it must first tax or borrow that dollar from you
and me.
But when the government returns a dollar to taxpayers with the
right kind of tax cut (such as a capital-gains cut), it encourages
true economic growth. That's because as people work, save and
invest, the economy grows. That growth, in turn, boosts tax
revenues.
It's exactly that sort of cycle that gave us the budget surpluses
of the late 1990s. Of course, back then lawmakers held spending
increases to "only" 3.5 percent annually, as opposed to today's 8
percent.
Congress' goal should be to get the economy moving again. Lawmakers
can help do this, and balance the budget, if they're willing to
curb spending and pass sensible tax cuts.
We just have to set priorities. Clearly, we can't afford not
to.
Ed
Feulner is the president of The Heritage Foundation (heritage.org), a
Washington-based public policy research institute.
COMMENTARY Taxes
Balancing the Books
Jun 19, 2003 2 min read
Exclusive Offers
5 Shocking Cases of Election Fraud
Read real stories of fraudulent ballots, harvesting schemes, and more in this new eBook.
The Heritage Guide to the Constitution
Receive a clause-by-clause analysis of the Constitution with input from more than 100 scholars and legal experts.
The Real Costs of America’s Border Crisis
Learn the facts and help others understand just how bad illegal immigration is for America.
More on This Issue
COMMENTARY 2 min read
COMMENTARY 2 min read
COMMENTARY 2 min read