Steve Forbes recently urged incoming President Trump to make tax cuts a priority for the first week or so of his administration. While I also would like to reduce the burden of government on the Private, Productive sector of our Economy, I think that Mr Forbes desire shows more sympathy for Keynesianism than for Free Market / Conservative Economics.
For those of you who may have forgotten, Keynesians champion the idea that government actions – such as putting more cash into the hands of consumers – can stimulate the Economy. Forbes is using the same tried and failed arguments as previous pols.
OK, so here’s the money quote: “There is no such thing as a Tax Cut without a Spending Cut!!!!”
Every penny that our government spends MUST be paid for. Every penny spent is a burden on the people. The only question then becomes, “Which people must pay for the spending?”
If 100% of spending were covered by taxes, then it would be obvious that taxpayers had to shoulder the burden.
How about if taxes only accounted for 10%, with borrowing supplying the other 90%? Would that be any better situation? Of course not!
Individuals and Businesses in the Private, Productive sector of the Economy would be crowded out of the credit markets. We’ve seen a lot of this under Obama… and under Bush… and….
Many of the same Americans would pay for all the government spending, but still it all has to be paid for. And, if you remember that eventually, all that borrowing – all that debt – needs to be paid back, then much of the spending will be paid for by reducing the inheritance we’d like to give our descendants.
But instead of borrowing, what if the other 90% were paid for by printing the Dollars? Well then we’d pay by having the value of the Dollar – the value of our life savings – be reduced.
Since 1913, when the FED was created, they have printed so may new Paper Dollars that each one can buy only around 2% today with each Dollar compared to what a 1913 Dollar could buy.
And that amount of price increase is only if you believe the lying official numbers. www.ShadowStats.com shows that the numbers have been adjusted for many years – always to show the price results are not as bad as they actually have been.
Using the way of calculating the CPI, the way they used to do it in 1980, they have hidden 2½ times price increases. Official CPI numbers should show a price level that is 2½ times what we’re being told.
So, paying for government spending by printing Dollars also is an awful choice. There is no such thing as a Tax Cut without a Spending Cut!
An incoming President has a certain amount of good will available. I would suggest that the new President Trump should cut federal spending in HALF during his first year. Yes, a lot of federal employees will need to find employment in the Private, Productive sector.
Yes, a lot of people on the Dole will need to be weened away from the government trough during that first year. Yes, every state government will take a hit by having less of what used to be called Revenue Sharing.
That huge reduction in the Great Sucking Sound, removing money from the Private, Productive sector of the Economy, and sending it to Washington, would provide a massive stimulus to the Economy.
Then, we can tinker with tax rates a little bit, to see which Americans will wind up paying for the much lower spending.