Thursday, January 10, 2013

The Fiscal Cliff Deal Was Another Anti-Liberty Deal

All the hoopla and confusion known as the “fiscal cliff” and the so called deal that averted was the latest battle the cause of liberty lost. Bob Murphy summarizes the math in a recent article for the Institute for Energy Research.

What Was the Fiscal Cliff?

Taxes were going to soar by $478 billion but spending would remain nearly unchanged, falling by just $9 billion. Compare these to the 2012 federal budget of $3,563 billion and tax receipts of $2,435 billion.

Despite the wild imbalance between spending cuts and tax increases, both were treated as equally draconian. In Washington’s eyes, cutting spending by a quarter of a percent is terrifying, even though they typically will increase spending by many times that amount every year.

For those who want liberty and prosperity, this is completely backwards. Increasing taxes is increasing waste, while reducing government spending is cutting waste.

A Deal for Us or Them?

Now taxes will go up $198 billion and spending will increase by $41 billion. And the deficit will still be $971 billion.

This is what Democrats call a “balanced” deal. I guess this does look balanced when you start with such an imbalanced perspective. As far as Republicans, they once again proved their worthlessness, as Murphy writes on his blog:

[T]hink back, everybody, to when those fiscally conservative Republicans OH SO RELUCTANTLY gave in on the debt ceiling hike, back in 2011. Remember all that drama, everyone? When the credit rating got reduced? Here’s Boehner back then:

“An increase in the debt limit without major spending cuts will hurt our economy and destroy jobs,” Boehner said in a statement. “A credible agreement means the spending cuts must exceed the debt-limit increase.”

As I pointed out at the time, the Republicans clamoring for a constitutional amendment requiring a balanced budget, etc. are just putting on a show. All they had to do was not raise the debt ceiling and we would have automatically had a balanced budget requirement.

Instead, they went along with raising the ceiling, but put in place a committee–why, a super committee–to give all sorts of expert recommendations, and if those wily Democrats didn’t listen, why, there would be massive, draconian, across-the-board spending cuts…

…which they just avoided, by simply voting not to implement them. (And remember, the cuts would have meant a $9 billion reduction in federal spending in 2013.)

Yet I expect the Tea Party to keep voting Republican, and keep being ineffective towards their alleged goals of shrinking government.

David Henderson points out, however, that the deal prevented some tax issues from getting even worse. While I appreciate this reminder, it’s quite a leap for him to conclude the anti-tax side won. Remember, taxes went up. The other side just didn't win everything they wanted.

A number of special interest groups got special tax breaks, too. The tax code is now more complex, and the rates went up. Just the opposite of the “lower rates for less loopholes” talk we heard early on.

So, in short, this was a deal for them, the government and some special interests; but for us, we were screwed again. And we would have been screwed either way, because that’s what statism is all about.

It would be very difficult to have any optimism at all if it were not for the Ron Paul movement. Even so, there is no reason for optimism in the short run. We need to double down and invest all the more in education of ourselves and others so that we someday have the numbers to put a stop to the insanity that no one else is stopping. 

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