On the Soapbox

The Economist posted an article (subscriber-only) a few days ago about the United States budget. Here are some excerpts:

George Bush's state-of-the-union address last week may have set a new standard for involuted meaning when he urged Congress to "act responsibly, and make the tax cuts permanent". At that time, the official White House projection of the budget deficit for the 2006 fiscal year was $341 billion, a substantial portion of which could have been erased by rolling back the tax cuts so dear to Mr Bush's heart. On Monday February 6th, the use of the word "responsibly" suddenly looked even more idiosyncratic, as the administration released a $2.7 trillion proposed budget, and announced that the 2006 deficit projection had grown to $423 billion, or 3.2% of America's GDP.

If a Republican Congress and president can only manage to cut their least favourite programmes by a paltry amount when faced with a budget deficit soaring towards the half-trillion mark, then it is time to concede defeat and raise taxes.

Bringing the budget back to balance will require a politically unpalatable combination of tax increases and spending cuts.

Here is a fairly libertarian news magazine advocating tax increases, but I think that it was being realistic about the issue. It concedes that if there is going to be a high level of spending (and it duly notes that the lion's share of the budget is taken up by military spending, debt interest, and health care, which are areas that cannot realistically be cut in the short-term), then it would be the responsible thing to do to raise taxes to cover this spending. This makes sense; taxes are born out of spending, not the other way around.

I was a bit surprised, however, at how negative some of the reactions that I read on the web were towards this notion of raising taxes. I guess this pretty much sums up what I mean when I tell people that I am a "moderate" libertarian and that I do not subscribe to everything that the Libertarian Party would subscribe to (one pet peeve of mine in regards to libertarian politics: cutting education spending; education is a public good in that it is necessary for democracy and, ironically, better education would bolster the the number of people who would subscribe to the aloof libertarian cause). Of course it would be great if the government does not spend so much money, but one has to be realistic: if the government is going to spend this money, then you had better raise taxes sooner or later. I guess "realistic" is the operative word; many of the hard-line libertarians that I have met are simply not that realistic.

Anyway, here is a great blog post (pretty humorous, too!) that I came across that discusses this issue.