Accounting 101 for the governmentPublished 9:23am Tuesday, December 25, 2012
By Michael Thaxton, guest columnist
That big splash you hear will be me doing a Peter Pan off of Kowaliga Bridge the next time I hear one of our elected officials try to explain to trusting constituents the plusses and minuses of tax policy.
How many times have you heard this throughout the presidential campaign and now as we barrel our way in The Partridge Family school bus towards this so called ‘fiscal cliff’:
“Increasing the tax rates of the wealthiest 2% of Americans will save $X billion dollars annually.”
“Extending the Bush-era tax cuts will cost $X trillion dollars over the next ten years.”
Where did these people go to school? They don’t appear to know the basic difference between ‘revenue vs. expense’ or ‘debits vs. credits’ or ‘cost vs. savings.’ It’s no wonder we face a financial crisis in this country.
For the government, taxes represent revenues. Increasing taxes will increase revenue (in the short term). Decreased taxes will decrease revenue (in the short term). The debate rages on concerning the long-term unintended consequences of tax policy like another recession.
Cost, on the other hand, is the dollar value of something you buy or, in the case of the government, fund.
Here is a simple for instance.
The government decides for all of us that they will build a ‘bridge to nowhere’ that costs $100,000,000.
Now, increase taxes on the wealthiest top 2%. How much did you save? The amount collected from the increased tax revenue? Wrong. The bridge still cost $100,000,000.
No good? OK.
Now, let’s keep the Bush-era tax cuts in place. Now, how much does the bridge cost? The same $100,000,000 dollars. The bridge didn’t cost any more or less due to the tax code. If you build a ‘bridge to nowhere,’ you still have the same bridge with a dirt road at each end.
That’s not what we we’re being sold.
The only exception to this would be if you increased taxes or ended the tax cuts, didn’t build the bridge and used the increased revenue towards reducing the $16 trillion and growing national debt. Then we save a couple of million dollars annually in interest expense only. That’s it. And have we heard any specifics about the necessary spending cuts to go along with tax increases in any conversation to right this ship? No. Spending cuts and entitlement reforms seem to have faded to the background as if that’s not even on the table for consideration.
To fix this, how about a balanced budget amendment for the federal government like many states have? Force our elected officials into the same budgets that each one of us manage in our own households. Or a line item veto for our president? Too risky for the House and Senate, I suppose. These children in Washington can’t even play in the same sandbox without arguing over who has the prettiest bucket or who has the biggest shovel.
Revenue, cost, budgets? It sounds like we are talking about a business.
Government is a business and, in the case of our federal government, a big one. With the exception of the military, about the only thing the federal government does well are take and give away other people’s money. Poorly run, bloated, wasteful, embarrassing. Since government truly is a business it should be run like one and stay within its means. That includes an appropriate amount of debt, priorities on spending and living within a budget. Just like you and I.
We re-elected our ‘Re-distributor-in-Chief’ on just that promise: to redistribute, and by a small margin; hardly a mandate. And the other guy who does know about the economy and could have led us out of this mess has the same problem I have. He couldn’t go two minutes without saying something stupid like the notion of a ‘self-deporting’ immigrant or that 47 percent comment. You can’t make it up.
I realize most of our elected officials have law degrees, but it sure would be nice if they all were required to take survey course in Accounting 101 out at CACC before they report to Washington to get behind the wheel headed for the steep side of Chimney Rock. It’s quite a drop, and they are taking us all with them. The fall is not so bad but oooh, that stop.
The sad thing is that we continue to serve up the same old ‘next in line’ candidates to Washington that don’t know the basics of how economy works only the politics around it, can’t add two plus two without a calculator and, to quote Dennis Miller, won’t be satisfied until the Taliban qualifies for food stamps.
Thaxton is a guest columnist for The Outlook.