Spending through the tax code
This is an old point that鈥檚 been made many times over, so I won鈥檛 belabor it, but reading this AMs paper and reflecting on our fiscal debate, I was reminded of one particularly irrational aspect of the thing.
Those who pledge not to raise taxes yet are comfortable with spending cuts make an artificial distinction between spending and tax cuts which look and smell no different from spending.
Here鈥檚 a good from my CBPP colleague Bob Greenstein:
A parent with low or moderate income may be able to obtain a subsidy to help her defray child care costs, with the subsidy being provided through a government spending program. A parent higher on the income scale also can receive a government subsidy that reduces her child care costs, but this parent鈥檚 subsidy is delivered through the tax code, via a tax credit.
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It does not make much sense to make the tax-code subsidies sacrosanct and the program subsidies a target for deficit reduction merely because one type of subsidy is delivered through a 鈥渟pending鈥� program and the other is delivered through the tax code.
This also relates to a point Milton Friedman used to make, as Tyler Cowan reminded me in this AMs : to spend is to tax. (It鈥檚 also another reminded of how yesterday鈥檚 conservative saints, like Friedman and Reagan, the latter of whom presided over , would be kicked out of today鈥檚 party.)
I鈥檓 as dovish as they come on the deficit, but over the long run, you have to live within your means. So if you鈥檙e unwilling to raise the revenue we need to cover our spending, you either cut that spending to the point where government is disabled, or you postpone the payments to be made by later generations.
At the end of the day, the spending/taxing dichotomy is a false one.
