Obama is a born again deficit cutter. He wants, according to his speech at George Washington University this week, to slim down nation's deficit by a whopping four trillion dollars in the next 12 years. To achieve this miraculous goal he has a top secret weapon. It is called the "tax expenditure."
Now tax expenditures are not new, they have been around for many years, only we knew them by a different name. The old- fashioned name which is heretofore banned from the lexicon is: tax increase.
But everyone knows tax increases are bad, so Obama and his team must be thinking that if they changed the name the voters wouldn't notice. There is a deeper philosophical reason for the changing language, and it has to do with the fundamental difference between his vision and the Republicans' vision for the future.
If you assume that all money belongs to the government and the people are privileged to get back some of the product of their labor, then the money doled out to the pockets of Americans must be expenditures.
It works like this. You buy a home and pay lots of interest to the bank in the form of a mortgage. When at the end of the year we add up your income, you are allowed to deduct the interest you paid to the bank from that income. This lowers your overall income tax bill.
Republicans believe that the lower tax bill is your total tax bill. Obama believes that your tax bill was actually higher, and the government was giving you money to help pay the mortgage. Hence, when he takes away your mortgage deduction, he is actually cutting government "tax expenditure."
So Obama is actually cutting government spending by increasing your taxes. You must credit the Obama team for this genius marketing of tax increases.
The budget is spinning out of control. We can thank President Bush for budget deficits averaging $300 billion annually. Ironically, after harshly criticizing Bush's budget deficits, Obama proposes budgets which at best with an economic recovery will average $600 billion,and more likely, will average nearly one trillion in red ink.
If your eyes have glazed over from this budget talk, imagine this is your family budget. We all wish for more revenue each year, but we instead have to deal with the reality that our wages cannot be wished higher.
Same is true of government. Obama will find that if his plans to aggressively raise taxes "tax expenditures" passes, then the economic recovery will likely slow and the still anemic job creations will shrivel up.
Government can only grow with the rate of economic growth. Tax revenue naturally heads up with a robust recovery.
Instead of spending time thinking about how they can grind more money out of the hinterlands, the elite in Washington should focus on helping the engine of free enterprise get revved up.
Economists are clear; money in private hands benefits the recovery much more than that of government spending. They call this the multiplier of the spending. Because government spending is allocated based on political decisions more than economic justification, it is often spent on unproductive uses.
Private businesses and families that misuse money pay a consequence for their behavior and hence they make better decisions in the allocation of funds.
The only solution to the deficit crisis is spending restraint coupled with government reform, modernization of the regulatory process, and a realization that Washington spending isn't the solution to all life's ills.
©2011 Floyd and Mary Beth Brown. The Browns are bestselling authors and speakers. To comment on this column, e-mail browns@caglecartoons.com. Together they write a national weekly column distributed exclusively by Cagle Cartoons newspaper syndicate. Floyd is also president of the Western Center for Journalism. For more info call Cari Dawson Bartley at 800 696 7561 or e-mail cari@cagle.com.
Floyd's latest book (with Lee Troxler) is "Killing Wealth, Freeing Wealth," from WND Books. Time magazine wrote of Floyd: "Brown has stature among devoted conservatives that almost matches his physical heft (6 ft. 6 in. and 240 lbs.)" See more at Floyd's blog at www.floydreports.com.
This column has been edited by the author. Representations of fact and opinions are solely those of the author.
Dale Whiting posted at 11:03 am on Sun, Apr 17, 2011.
Once again sockratties socks it to 'em. Good going!
Now the question would be "Did the president use this terminology correctly?
sockratties posted at 12:21 pm on Sat, Apr 16, 2011.
The following excerpts are from Wikipedia... There is a lot more information available that debunks your slimy implications Brown and Brown, including information about your personal characters, but I'll leave that to those who wish to wallow in your sty:
In 1967, the tax expenditure concept was created by Stanley Surrey, former Assistant Secretary of the Treasury, as a way to represent the political use of tax breaks for means that were usually accomplished through budget spending.
Tax expenditures are considered "off-budget" spending by most economists and budget experts (Howard 1997). Tax expenditures are considered easier to pass through Congress than increases in appropriations spending. Contrary to direct spending, tax spending has to only pass through two committees the House Ways and Means and Senate FInance. Next, tax expenditure programs, once in the tax code, do not come up for annual review and can only be removed through tax legislation. Tax expenditure programs are a form of entitlement spending in that every tax payer that qualifies can claim government money.
Faricy (2011) demonstrated that when tax expenditures are counted as a type of government spending, Democratic and Republican parties are indistinguishable in annual changes to federal government spending. This study also finds that Republicans are more likely to increase tax expenditures when in control of government thereby subsidizing the activities of businesses and the wealthy (Faricy 2011).
Jacob Hacker (2002) shows that the federal subsidization of private health insurance has grown over the years and has made efforts for nationalized health care more difficult. Finally, tax expenditures are viewed by the voters as "conservative" policy since it accrues financial benefits mainly to wealthier Americans and promotes private-sector activities. Ellis and Faricy (2011) find that when tax expenditures rise, public opinion adjusts and becomes more liberal to counteract the conservative policies.
Dale Whiting posted at 7:09 am on Sat, Apr 16, 2011.
Floyd and Mary Beth,
There is a middle ground, one based on consideration of factors you ignor.
You say "But everyone knows tax increases are bad." Are you two Reaganomics "cut taxes on the rich and the cuts to the rich will be invested in new jobs at home" sort of philosophers? The rising tied coming from tax cuts to the wealthy does cause a rising tide to float more boats. But in today's new Global Economy, an economy Reagan helped create by making peace with the USSR, the tide rises where the biggest bangs for the buck may be found, in India, in China, but not here. When we were fighting a war of Mutual Assured Destruction waged by dividing up third world countries, no one dared invest overseas for fear that those investments would be nationalized. So the only place a tide could rise on domestic tax cuts were here in the good old USA! Not so today.
We need to insure that our tide rises, too. Either we start competing for jobs which pay less than a dollar per hour, or we make sure we are in the forefront of those new high tech jobs which still provide a decent living for a broadly based middle class. This sort of investment in our future takes money, money invested in educating our youth, in research and development of new higher technologies, in less expensive yet less harmful energy sources. And the money for these investments come from "Tax Expenditures" aimed at a future for our children!
I'm all for tax expenditures aimed at creating a future for our children, their children and the Blessed Country in which they will live! Why aren't you?
Accuracy posted at 5:54 pm on Fri, Apr 15, 2011.
Good column about Obama’s “double talk” in his budget address Wednesday. Tax Hikes are Now “Tax Expenditures”.
For now, any time the words “tax expenditures” are spoken, Americans should hear “tax hikes,” and little will be lost in translation.
manini posted at 3:45 pm on Fri, Apr 15, 2011.
Hmmm, the Barack "GECKO" OBAMANATION strikes again with a new "gobbledygook" phrase. Try "Tax_Expenditure_Investment_Charitable_Donation" for OBAMANATION$ 2012 Prez Re-election campaign...not a chance for me to contribute to this LO$er...LOL!!!