Washington is celebrating what Clinton calls “a new era of balanced
budgets and surpluses.” The fiscal year ended with $70 billion in
taxpayers’ money left over, a sum that is now burning a hole in
Leviathan’s pocket. The government, sad to say, is not planning to
return the money from whence it came.
For decades, the dispute about tax policy has centered on whether taxes
should be cut so long as the feds were running a deficit. Some people
said cutting taxes would be fiscally irresponsible, and, by the way, the
same people liked big government. Others said taxes should be cut to
spur economic growth, but those people typically didn’t have the stomach
for requisite spending cuts.
Tax cuts were put on hold, even after the end of the Cold War when the
public was promised a “peace dividend.” Instead, the government got a
dividend in the form of soaring and unexpected tax revenue.
At least the budget surpluses held out the chance of breaking this
gridlock. The solution would seem obvious: if the government collects
more in taxes than it spends even by Washington’s profligate standards,
a tax cut should be the mandatory response.
Alas, such common sense overlooks a key point of government: its
relentless greed for other people’s money. Since it has been able to
plunder millions of people under the pretense that it is for their own
good, it is not about to reverse course and do the right thing.
The Republican House passed a perfunctory tax cut bill, one so small
that it wouldn’t be noticed by the average taxpayer. In fact, it is
appalling that a one percent decline is all this Congress could dream up
four years after the self-proclaimed revolutionary tax cutters gained
control. But the House looks positively fearless in comparison to the
Senate, which is sure to strike down even this minuscule cut.
The picture is further complicated by Clinton’s now-legendary abuse of
the English language. In a ceremony celebrating surpluses, Clinton
warned Congress not to “squander this surplus and start spending a
little here, a little there, a little yonder on the tax cuts.” Catch
that? He calls returning our own money to us a form of spending.
What’s more, this speech is the fiscal equivalent of his finger-wagging
proclamation about “that woman.” For on that very day, he and the
Republicans were planning a $17 billion “emergency” spending bill for
military adventures in Bosnia, pork on the Gulf Coast, and yet another
study of the Year 2000 computer problem. That Americans are more
despoiled by taxes today than at any time in history doesn’t qualify as
Clinton’s official rationale for opposing tax cuts is that the surplus
should be used to “save Social Security.” He has no stated plan on
precisely how this would work, but one supposes he has in mind the
traditional tactic of keeping the rip-off going by dumping ever more
money into it, to fund the liabilities that mount on a daily basis.
Sadly, the Republicans have been no help in countering this ploy. In a
remarkable display of bad timing, many are calling for the
“privatization” of Social Security, meaning that it should be converted
into a mandatory savings program with a greater degree of portfolio
But look at the details. The plan to privatize would continue to meet
the massive liabilities at the same time it imposes a new mandate on
young workers. The transition would last up to 70 years and cost as much
as $10 trillion.
Where is that money going to come from? When pressed, the privatizers
suggest it can come from, you guessed it, budget surpluses. The bottom
line, then, is that the plans to privatize Social Security and the
demand for tax cuts are at cross-purposes. Sensing this, some
Republicans have softened their support of tax cuts, as Paul Gigot
pointed out in the Wall Street Journal.
In the end, the excuses don’t matter much to the American people, who
pay more in taxes than they do for meals, clothes, housing, and
automobiles combined. Apparently, the U.S. political system, as
currently structured, is incapable of doing anything about this. And
pundits wonder why people don’t trust the government.