Do tax cuts justify debt?
By: Chuck Colson|Published: January 5, 2011 12:00 AM
From Chuck Colson:
Sometimes in politics, decisions aren’t easy. Very often, lawmakers find themselves faced with two options: the greater evil and the lesser evil. In such a case, voting either way will make a lot of people angry. Needless to say, prudence and the ability to hold your nose both come in very handy.
But there’s one thing that no responsible legislator should ever do: sacrifice the future well-being of the country to win political points. That, I believe, is exactly what Republicans did last month when they compromised with the outgoing Democratic majority to extend the Bush-era tax cuts.
Now, don’t get me wrong. I can’t afford higher taxes; I already dip into retirement savings to make my gifts to Prison Fellowship. So I approve wholeheartedly of the idea of tax cuts. Americans already send too much of their hard-earned income to the government, and our ailing economy desperately needs a shot in the arm. But the ends don’t justify the means.
The fact that Republicans managed to eke a two-year extension on lower taxes out of this deal doesn’t begin to excuse the rest of the wasteful spending that the bill includes: extended unemployment benefits which de-incentivize people from entering the work force, a re-instatement of the infamous death tax, and dozens of stimulus items and handouts for the special interests—all while the state and federal governments run higher and higher budget deficits.
In total, the so-called “tax cut” package will add nearly $1 trillion to our national debt! And what kind of benefits can we expect from the deal? Few, if any, argues Charles Krauthammer in his recent op-ed, which I referred to in my December 14th edition of BreakPoint.
Krauthammer points out that even the tax cuts themselves are unlikely to have the desired effects. Why? Because investors—precisely the people we need to revitalize the American economy—want long-term certainty. In other words, what we really need is permanently lower taxes. A mere two-year extension will have little, if any benefit.
It wasn’t necessary, either. Had the Republicans blocked the bill, taxes would have gone up—but only for a few months. The New Congress, with its fresh conservative majority, could have easily extended the tax cuts without caving in to higher spending.
But the problem runs deeper than that. Even if the new Congress passes legislation to make the Bush tax cuts permanent, we’re still going to have to deal with the bigger issue: spending. As a Christian—and as a father and grandfather—I refuse to endorse the kind of reckless fiscal policy that leaves our children buried in unpaid bills.
The national debt currently stands at just under $14 trillion. To put it in perspective, that’s about $126,000 for every taxpayer in the nation. If the federal government shut down today (and the burden was equally distributed), each of us would have the equivalent of a home mortgage to pay off before the country was out of debt. The Office of Management and Budget forecasts that by the end of fiscal year 2012, the United States federal government will owe a staggering $16.3 trillion—a figure which will likely exceed gross domestic product (GDP) for the first time in American history. On this course, runaway inflation or bankruptcy becomes inevitable!
That’s why the idea of adding to our debt—whether through stimulus bills, entitlements, or even tax cuts—makes me ill. In effect, this latest deal will increase, rather than decrease, the long-term burden on taxpayers.
Last month, I likened Congress’s inability to defer gratification with the famous experiment by psychologist Walter Mischel, in which children were challenged to wait a short period of time before eating a marshmallow. Those who held out received a second marshmallow for their effort. Needless to say, many didn’t succeed. But those who did enjoyed greater success later in life.
Well, judging by the behavior of our legislators, I’m afraid some people never really grow up. Congress has been acting like an irresponsible teenager with a credit card for years now, treating foreign loans like free money. But we’ve got to understand that sooner or later, the bill is going to arrive. And if we keep this up, we won’t be able to pay it.
Our government needs a refresher course on deferred gratification—a value deeply rooted in Christian ethics. We all understand it. If you have ever saved, invested, or even shopped around for good prices, you have practiced deferred gratification.
Applying this principle to the government will mean reining in pet projects and earmarks, cutting many government services, and most importantly, refusing to spend money we don’t have.
I’m a huge fan of lower taxes. But combining a tax cut with billions of dollars in new spending is a recipe for disaster—both for us, and for generations to come.