|
It was on this day in 1790 that the Residence Act became law and a site along the Potomac River was determined to be the future capital of the United States of America. Current lawmakers who inhabit the area are marking the day with some swamp-level legislating. In Washington, budget reconciliation allows a party that holds the White House and slim majorities in each chamber of Congress to enact its own agenda without any support from the minority party. Using this tool, Democrats in the Biden era advanced their party’s big-government priorities by enacting spending increases without any pro-growth tax reform. Republicans, on the other hand, represent a different
constituency and so they now plan to enact spending increases without any pro-growth tax reform. If you’re stumbling over that last sentence it’s not only because of the compositional limitations of your humble correspondent. After using reconciliation last year to prevent scheduled tax hikes while also taking a promising first step to restrain spending, Republicans this year seem to see the tool merely as a way to spend on their priorities. And by all means they should fund an adequate defense. But if Republicans are forgoing Democratic votes, why leave Democratic tax and spending priorities untouched? Cut! Cut! Cut! As a reminder, Republican voters are the ones who prefer government to be smaller. Some of these voters have noticed that each year the federal government spends more than $7 trillion—and not always wisely. A few taxpayers have even been able to gather that there is significant fraud among those lining up to feed at the federal trough. In theory, the bar to justify further spending on even the most worthy government programs should be at an all-time high, given that total federal debt is approaching $40 trillion. Is there any hope for America to avoid a fiscal calamity in the future if even an all-Republican drafting committee cannot bring itself to craft a bill with significant spending reductions? Start by matching last year’s
excellent reduction in the federal workforce. Expand last year’s sensible effort to deny government assistance to able-bodied people who will not work. Along with spending restraint, avoiding a fiscal calamity will require a thriving economy capable of generating huge tax revenue in the future. What better way to encourage growth and also encourage a surge in tax revenue than to kill the inflation tax on investments? Right now investors pay taxes on their nominal gains, so depending on when people buy and sell, all of the taxable “gain” can be due to inflation. In a 2013 Tax Foundation paper John Aldridge and Kyle Pomerleau noted:
|
