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It's all about the Benjamins

Mon, Jan 21st, 2008
Posted in Commentary

With a possible economic recession in our near future some in government think that a tax cut is the way to prevent this from happening. This theory is if we pay less in taxes we will have more money to spend and thus boost the economy.

I guess this makes some kind of economic sense on paper. The question is, will a tax cut of any kind really encourage people to spend as much or more than they normally would to prevent a recession. And, won't the government continue to spend money. And, if so, where will that money come from if we the people are paying less in taxes?

I certainly don't have an answer to how to respond to a threat of recession, but I do know that spending more than you have increases your debt.

This same theory of less is more is the heart in many of the proposals being put forth by the Presidential hopefuls. Take a quick ride through the websites of Mrs. Clinton, Mr. Obama, Mr. Huckabee, Mr. Romney and Mr. McCain and what do you find? You would be treated to lofty, easily read, well presented proposals to make things better for us average folks.

There are plans to deliver better health care to all, plans to give tax credits to middle class people for health care expenditures, plans to keep those less fortunate from having to pay taxes at all and still have affordable health care. There are tax credits for college tuition. On some websites we would also learn about how to build a fence to prevent the "aliens" from coming into our country. On another we would learn about job training for those whose jobs have sailed to other shores. On most websites we would hear about tax cuts for the middle class. And, yet, on others we would hear about preserving the tax cuts now in place for those individuals making extremely large amounts of money.

Depending on your inclinations several of these initiatives sound good. Who wouldn't want better health care at a lower cost? Who among us would pass up a legal opportunity to pay less in federal taxes? What right minded person would begrudge a tax break to those who are truly poor? All well and good. But, what we don't hear is where all the money will come from to pay for these initiatives. Sure, in some of these proposals a dollar amount of cost savings is presented, but the true bottom line, the true cost of the program is not. How can we get more and pay less? This doesn't seem to make sense.

It's probably safe to say that few of us wish to pay more in taxes. Yet, how will we get what we want from government, at all levels, if we don't wish to pay for it? Simple budgetary principles that we are all familiar with state that at the very least outflow should not exceed inflow.

To be fair, the websites of each of the Presidential candidates give examples of federal government programs that could be reduced or eliminated thus producing some cost savings. However, the candidates like to talk about what new or improved programs they propose to give us, rather than what programs they suggest be eliminated.

It would be in our best interests if we pay as much attention to which programs they wish to eliminate as we do to those programs we wish to have.

Alan Lipowitz of Peterson is a regular Journal commentator.

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