海角大神

For some reason there鈥檚 a recurring 鈥渆quine鈥� theme in the recent talk about how to achieve fiscal responsibility鈥�

Apparently the President鈥檚 fiscal commission is a clever trick of sorts to force (and sneak) tax increases onto unwitting Americans (uh, NO, Larry鈥� should be to get all the issues and policy options 鈥渙n the (open) table鈥� with the American public)鈥揻or he鈥檚 suggesting we swap the 鈥渕agic pony鈥� of supply-side tax cuts for the 鈥淭rojan horse鈥� of the commission:

Take, for example, Obama鈥檚 new deficit commission. It鈥檚 a bad idea. This commission is a fig leaf to cover up President Obama鈥檚 out-of-control budget. It鈥檚 a Trojan horse for tax hikes, especially a value-added tax that would engulf the middle class with up to a 15 percent tax rate on the sale of goods and services. Obama is getting ready to move his lips on the pledge not to raise middle-class taxes. Congressional Republicans must not let him do this鈥�

Rather than tax hikes, I say stop the spending鈥�

Why not stop the multiple taxes on all forms of saving and investing, including capital gains, dividends and inheritances? And why not eliminate the business tax on profits in favor of a sales tax on net revenues that would deduct all investment expenses? That would leave us with a single-rate consumption-based income tax that would grow this economy by 7 percent to 8 percent in the years ahead, just as the economy should grow after a deep recession.

Going back to the debt-to-GDP ratio, I want to grow the denominator (the economy) and reduce the demand for the numerator (spending and borrowing). That means a combination of supply-side tax cuts and firm spending limits.

(Never mind Larry鈥檚 odd self-contradiction of first criticizing the idea of a broad-based consumption tax (as an add on) and then coming back to recommend a broad-based consumption tax (as a replacement); yes, the key difference is whether it would actually raise enough revenue and reduce the deficit, or not鈥�)

And by the way, exactly who will ride Larry鈥檚 magic pony in his fantastic vision of how to get things right? Larry gleefully explains:

let鈥檚 especially use this Tea Party power to stop Democratic plans for another round of broad-based tax increases.

Thanks to Bruce Bartlett for directing me to Larry鈥檚 magic pony story, and for for an alternative to the fiscal commission鈥揼oing ahead and defaulting on the debt. I think I鈥檒l label that the option, because only someone as eccentric and naive as a 鈥淲ilbur鈥� would listen to (even 鈥渉ear鈥�) such crazy ideas as those of Ed.

A horse is a horse, of course, of course. And no one can talk to a horse of course鈥� Unless鈥�

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