As the year draws to an end, America faces yet another congressionally-manufactured crisis which will likely end in yet another 11th hour compromise, resulting in more government growth touted as "saving" the economy. While cutting taxes is always a good idea, setting up a ticking time bomb with a sunset provision, as the Bush tax cuts did, is terrible policy. Congress should have just cut taxes. But instead, we have a crisis that is sure not to go to waste.
The hysteria surrounding the January 1 deadline for the Budget Control Act's spending cuts and expiration of the Bush tax cuts seems all too familiar. Even the language is predictably hysterical: if government reduces planned spending increases by even a tiny amount, the economy will go over a "fiscal cliff." This is nonsense.
This rhetoric is based on the belief that government spending sustains the economy, when in fact the opposite is true. Every dollar the government spends is a dollar taken from consumers, businessmen, or investors. Reducing spending can only help the economy by putting money back in the hands of ordinary Americans. Politicians who claim to support the free market and the lower- and middle-class should take this to heart.
The reality is, however, that neither Republicans nor Democrats are serious about cutting spending. Even though US military spending is exponentially larger than any other country and is notorious for its inefficiency and cost overruns, Republicans cannot seem to stomach even one penny of cuts to the Pentagon's budget. This is unfortunate because this is the easiest, most obvious place to start getting spending under control. The military-industrial complex and unconstitutional overseas military interventions should be the first place we look for budget cuts.
Similarly, Democrats are digging in their heels on not cutting any welfare or entitlement spending and instead propose to fix the deficit by raising taxes on the rich, even though the US Government already has a progressive tax code and the rich already pay more than their fair share. Furthermore, these higher taxes would fall on small business owners, investors and entrepreneurs − in other words, the source of economic growth and new jobs!
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