Ludicrous, irresponsible spending is why we’re in trouble. As columnist Ron Hart points out, [President] Bill Clinton’s balanced budget spent $1.7 trillion. “Adjusted for inflation,” he writes, “our federal government would (have) a $200 billion surplus. But instead of increasing government spending in line with normal inflation, under [President] Bush and [President] Obama we are spending $3.8 trillion today. Democrats, who believe we have a ‘revenue’ problem instead of a ‘spending’ problem, must also think they have a bartender problem, not a drinking problem.”
The media obsess about tax rates, but spending is more important. As Milton Friedman taught us, spending is a far more accurate gauge of the government burden. If government spends a dollar, that dollar is taxed away from someone. If it’s borrowed, it’s removed from productive use, setting the stage for higher taxes later. If the government prints more dollars to fund spending, our purchasing power falls. Transferring purchasing power from the people to the government via inflation is a form of taxation.
If Republicans and Democrats reach a deal, the tax increases will be real — but spending “cuts” probably illusions. If they actually happen, they will only be reductions in already planned increases.