I’m inspired by Drew’s last comment to “Mommy, Why Do Revenues Grow?”…
Tax cut proponents love to argue that the longer-term fiscal challenge is a spending problem–due to the aging population and the associated projected rise in entitlement spending (Social Security, Medicare, and Medicaid). And if it’s a spending problem, why should taxes have to be raised? After all, taxes as a share of the economy exceed that magic 40-year historical average and are projected to rise even if the Bush tax cuts were to be permanently extended. (You can refer back to the basic budget math on this.)
But this is a very backward way of budgeting, and a family would never do it that way. Families face new “spending pressures” all the time. As a family faces new priorities and the associated new expenses, they figure out how they’re going to make it work–how to line up those necessary or desired expenses with their income. With every new expense, does the family say “gee, up to now our income has been just fine at covering our ongoing expenses, so why should we have to change anything?…we’ll just have to do whatever we can to avoid those new expenses.” Do families tell their college-bound kids: “Hey, this is a college expense problem, not a problem with anything else in our family budget …If you don’t get into college for free, you’re not going to college”? I don’t think so. Even with a very rational weighing of costs versus benefits (which I will argue later is hard for parents to do), families who recognize the benefits of a college education are willing to do whatever is necessary to make it something they can and will afford.
Budgeting responsibly means first, considering the relative value the family or society places on certain types of spending, and second, figuring out how much of that spending is worth doing, given how easy or hard it is to pay for it. There’s a logical sequencial order: (i) what do you want to do/accomplish, and (ii) how are you going to pay for it? As Drew commented, there’s not a problem if you decide you want to do more, and you’re willing to pay for it. And there’s not a problem if you decide to do less and hence pay less. The problem is doing more (or at least spending more), without paying for it. That’s not responsible budgeting. That’s not even budgeting, period. That’s acting as if there are no constraints and immorally passing the burden–and even tighter constraints–onto our children and grandchildren.
So that’s why we have to pick on taxes, too.