Up & Coming Weekly

December 14, 2021

Up and Coming Weekly is a weekly publication in Fayetteville, NC and Fort Bragg, NC area offering local news, views, arts, entertainment and community event and business information.

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WWW.UPANDCOMINGWEEKLY.COM DECEMBER 15-21, 2021 UCW 5 Can I let you in on a not-so-little secret? e Democrats in Washing- ton don't really mean it. e Repub- licans don't, either. To be more specific, they don't really mean what they say about debt and deficits. Democrats, fully cognizant of how tenuously they control Congress, are trying to shove through trillions of dollars in new federal spending before the 2022 election cycle begins. ey claim either that tax hikes on the wealthy can pay for it or that adding trillions more to the federal debt will have no significant downsides. ey know — or, at least, the staffers who feed them their talking points know — that neither of their claims is true. Back when Republicans held their congressional majorities, they ran up massive deficits, too, in part by enacting tax cuts without offset- ting budget savings. ey claimed either that the tax cuts would be so economically stimulative they'd pay for themselves in future revenue gains or that the resulting deficits could be managed simply by cutting out waste, fraud, abuse and bureau- cracy. ey knew — or, at least, the staffers who fed them their talking points knew — that neither of their claims was true. e facts are as follows. e Democrats couldn't pay for all their spending promises even if they es- sentially confiscated all the wealth of today's billionaires and shot income-tax rates into the strato- sphere. e math doesn't work. As for borrowing, publicly held federal debt already exceeds 100% of our GDP. Based on the prepon- derance of empirical researchin- cluding the findings of 36 of 40 scholarly studies published on the topic since 2010, more federal borrowing will significantly harm future economic growth. On the Republican side, reduc- ing tax rates on work, savings and investment does, indeed, boost long-term growth. e Tax Cuts and Jobs Act of 2017 was, on balance, a good plan. But its stimulative effects were never going to be large enough and fast enough to replenish federal coffers. e fiscally conservative thing to do, then, was to offset the budgetary impact of the tax cuts with spending restraint. Why didn't Republicans do that? Because it was hard work. Nips and tucks wouldn't suffice. e vast majority of federal spending consists of Social Se- curity, Medicare, Medicaid and other entitlements received by large swaths of the population. If presidents and lawmakers aren't willing to make substantial changes to these programs, they aren't truly willing to make substantial reduc- tions in federal spending. In a moment of Yogi Berra-like insight, the economist Herbert Stein once observed that "if something cannot go on forever, it will stop." Federal spending is not a perpetual- motion machine. At some point in the not-too-distant future, and especially when interest rates rise from their historic lows, it will no longer be feasible to finance federal deficits with borrowed money. en, one of two things will happen. One possibility is that the then- president and Congress will enact a very large and essentially perma- nent increase in federal taxation. While the resulting package will push the top income-tax rate well north of 50%, most of the revenue will have to come from middle- income taxpayers, likely in the form of a national sales or value-added tax. at will make us look more like European countries, where the tax burden on the wealthy isn't much different from ours, but the tax burden on everyone else is much heavier. e other possibility is to rein in Social Security payments, Medicare and other entitlement spending — but primarily for upper-income recipients. In a recent Manhattan Institute paper, economist Brian Riedl made a compelling case that this response might draw bipartisan support. "Before lawmakers en- danger the economy and limit their future policy flexibility by drasti- cally raising taxes on upper-income families," he wrote, "they can promote their redistributive goals simply by cutting federal spending on the rich." Neither of these options is opti- mal. Both will be unpopular. e politicians in Washington know that, too, which is why they aren't telling you about them — yet. OPINION How the spending spree will end by JOHN HOOD JOHN HOOD, Chairman, John Locke Foundation. Contributing Writer. COMMENTS? Editor@upandcomin- gweekly.com. 910-484-6200 SHIP GIFTS EARLY! Westwood & Fort Bragg • Signs • Banners • Business Cards • Digital & Wide Format Printing • Graphic Design • Copies/Prints • Plaques & Engraving Services • Binding/Laminating • Notary Services • Direct Mail Solutions • UPS/USPS • Packaging Material/Supplies • Document Shredding • Mailbox Solutions • Freight Services • AARP • MILITARY • AAA DISCOUNTS AVAILABLE Get ready for the Holidays! Print/Sign Shop Thank You for 25 Years of Support! 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