Tuesday, August 10, 2010

Why economic conservatives need to start voting for Libertarians

Here's wannabe House Speaker John Boehner (Daddy Party - Ohio) from last Sunday's edition of Meet The Press.
Lord have mercy, what an empty suit.  At least when Pelosi is wrong, she's entertaining.  She's displays a vibrant, colorful ignorance.  Ignorance that I can have fun with.   All Boehner can do is pull the string in the back of his neck and stumble through his talking points with his calm, soothing, mid-1970's disc jockey baritone fog of a voice. 

David Gregory, the host, in this segment and the later ones, keeps harping that THE BUSH TAX CUTS AREN'T PAID FOR.  And they aren't.  They don't have to be. 

Here's how Boehner should have responded:

Boehner:  David, thank you for that interesting perspective.  I would like to agree with you, but that would make both of us wrong, wouldn't it? 
You see, when you cut taxes, you allow people to make better choices with their money, instead of letting Washington pour the money into the gaping maw of the government beast.  The economy is more likely to expand when this is the case.  People can make rational investments in rational projects.  Raising taxes also makes people less likely to take risks with their investments - you see, David, starting a business is a risky proposition.  Would YOU take that risk if government munchkins were allowed to confiscate 50% of your potential profits?  (long pause....)

David Gregory:  I was speaking more about the hypothetical.....

Boehner:  No, David, I'm not speaking of hypotheticals.  I'm talking about reality, and how people act.  Do you have a tax attorney or accountant who tries to guarantee that you pay as little as possible in taxes?

David Gregory:  Well, yes.  But how are the Bush Tax Cuts going to be paid for? 

Boehner:  I'll get there, David.  Give me time.  You see, the super-wealthy have tax accountants also.  The super-wealthy, like John Kerry, Bill Clinton, John Edwards, Nancy Pelosi, Warren Buffett, Bill Gates, and every other member of the megabucks earning circle, they all have tax accountants.  If you raise their taxes, they're simply going to put their money into shelters instead of into more productive investments.  Increasing their taxes will change their behavior.  It will not guarantee that a higher percentage of money will pour into Tiny Timmy Geithner's piggy bank.
Look at what happened when Reagan cut the tax rate.  The amount coming into the treasury increased !

David Gregory:  But the deficit increased under Reagan !

Boehner (embarrassed):  Well, yes, the deficit increased because we also increased spending at the same time.  We are, after all, Republicans, and that's what we do with money. 
Ok, let's go back to hypotheticals: say you are playing roulette.  You can either bet on red or black, and there's a $100.00 minimum wager.  If you lose, you lose everything.  If you win, you could win another $100.00 or possibly $200.00 or maybe even $300.00    Would you play? 

David Gregory:  Possibly.....

Boehner:  But what if the Nutcase-In-Chief declares that nobody should be able to win more than $75.00, and that all winnings above that rate will be given to the government.  Would you play?

David Gregory:  No.....But how would the Bush Tax Cuts be paid for? 

Boehner:  David, please listen to me.....when the pie is expanding, which is what happens when you lower tax rates, the amount the government collects increases also.  Investor behavior will....

David Gregory:  Thank you for being with us, Congressman Boehner !   Please stay with us after this break, when I will be joined by presidential historian Doris Kearns Goodwin, New York Times columnist David Brooks, Tennessee congressman Harold Ford, and Democrat campaign consultant Bob Shrum, as we discuss "How Are We Going To Pay For The Bush Tax Cuts?" 

1 comment:

Nick Rowe said...

Except for lump sum taxes and taxes on things with negative externalities, ALL taxes destroy social welfare.

Tax administration imposes additional costs on society.

So taxes cost money, not tax cuts. In fact, as the tax rate increases, the excess burden of the tax grows at an increasing rate.

What they really mean by "paying for itself" is maintaining the same level of government services or deficit. Just like the debate over the Laffer Curve, this assumes that government is irretractible and money belongs, by default, to government. Revenue maximization is NOT the objective of taxation. The sole legitimate purpose of taxation is to pay for public goods and amelioration of genuine market failures. These can be done with much smaller levels of government.