John Brummett:Cause of deficit is we don’t tax rich enough (Real Cause of Deficit Pt 9)(Famous Arkansan Wayne Jackson)

John Brummett asserts that liberals are right about the cause of the deficit. He asserts in his article “Harry let us down,” Arkansas News Bureau, April 4, 2011:

He is right that the actual deficit is caused by direct government spending exceeding income, an imbalance mostly caused, he will tell you with some justification, by the fact that we don’t tax rich people as much as we did in happier and more prosperous times.

We have heard the liberals like John Brummett say for years that Bush put us into this horrible position of deficits because of his tax cuts of 2001 and 2003. However, if Bush was responsible for taking the 236 billion surplus he inherited in 2000 and turning everything downward because of the tax cuts, then why did we only have a budget deficit of 161 billion in 2007?

Brian Riedl is the author of the article “The Three Biggest Myths About Tax Cuts and the Budget Deficit,” (Heritage Foundation, June 21, 2010), and the next few days I will be sharing portions of his article

Brian Riedl is The Heritage Foundation’s lead budget analyst and has built a solid reputation for interpreting, explaining and reforming the often arcane realm of federal budget policy.

Splitting the Difference or Addressing the Source

Having established that spending is causing the expanding long-term budget deficits, the next question is how to fix that problem. Lawmakers seeking deficit reduction will not find any easy targets. Defenders of each spending program will surely claim some special status that should exempt their program from reforms. Defenders of current tax policies will point out the negative economic consequences of large tax hikes. As the debate proceeds, two competing reform frameworks will likely emerge:

  • A “split the difference” approach that closes half the gap with tax increases and half with spending cuts; and
  • An “address the source” approach that targets the policies that are actually driving the deficit up.

Most people argue that the “split the difference” approach seems moderate and reasonable. By reforming all tax and spending policies equally, Congress would not single out any one policy. Conservatives and liberals could compromise in a bipartisan show of strength. However, politicians should not take the path of least resistance with a problem of this significance. A solution sustainable over the long term must address the budget deficit at the source. After all, when a family purchases a larger home than it can afford, the proper response is not to obtain second jobs, put the kids to work, and drastically cut back on groceries, electricity, and medical care. The proper response is to address the source of financial distress by moving back to a smaller home.

Similarly, the nation’s rising long-term budget deficits are almost exclusively the result of Washington making entitlement commitments that the nation cannot afford. Therefore, the presumption must be to pare back these commitments to an affordable level. Yet “split the difference” essentially lets most of the entitlement spending growth off the hook and passes a significant burden onto taxpayers and onto federal programs that have succeeded without raising costs. With Social Security, Medicare, and Medicaid costs projected to rise by 10 percent of GDP by 2050,[18] splitting the difference would still require by far the largest tax increase in American history, leaving spending and taxes at levels never seen before during peacetime. It would allow expanding entitlement programs to transform the entire federal budget.

This approach is also unsustainable over the long run. Even if lawmakers broadly raise taxes and reduce spending to balance the budget in the short run, their failure to address the problem at its source means that entitlement costs will likely continue to grow quickly. This would in turn require continuous additional spending cuts and tax hikes elsewhere to keep the budget under control.

Finally, splitting the difference sends the wrong message to future lawmakers by rewarding policies that aggressively increase the short-term budget deficit. Liberal lawmakers could enact large new spending bills without paying for them, believing that much of the future deficit reduction will be split across tax hikes and other spending programs, effectively locking in much of the targeted spending increase—the “feed the beast” strategy. Conservative lawmakers could deeply cut taxes without paying for them on the assumption that half of the resulting deficits will eventually be closed by spending cuts—the “starve the beast” strategy. In either case, the “split the difference” approach to deficit reduction would sacrifice other budget priorities to make room for the new, unaffordable policy.

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I am doing a series on famous Arkansans and today is the last part on Wayne Jackson who grew up in West Memphis. He worked with many famous groups such as U2. Below you will see a song he worked on with them “Where the streets have no name.”

Wayne Jackson

Inducted in 2008

(b. 1941) – Wayne Jackson grew up in West Memphis playing the guitar. He found his true passion at age 11 when his mother brought home a trumpet. When he was in the 12th grade his love for music took him across the Mississippi River to Memphis, where he became a legendary backup trumpeter in such groups as the Mar-Keys, and would go on to perform with a who’s who of artists. He has played on recordings by Aretha Franklin, Sting, Elvis Presley, U2, Peter Gabriel, Willie Nelson, Billy Joel, Otis Redding, The Doobie Brothers, Jimmy Buffet and Rod Stewart. Jackson was the co-founder, with Andrew Love of the legendary Memphis backing band, of The Memphis Horns. He has performed on 52 number one hits, 83 Gold & Platinum albums, 115 top-ten records and 15 Grammy award winners. Recently, he recorded the new James Bond theme song for “A Quantum of Solace” with Alicia Keys and Jack White.

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