March 12, 2007
A lever, or a wand
By Perry Willis
Today's Downsizer-Dispatch . . . Quote of the day: "How did I go bankrupt? Two ways. Slowly, and then all of a sudden." -- spoken by a character from "The Sun Also Rises" by Ernest Hemingway Subject: A lever, or a wand? You have a choice. You can buy a lever to move a big object in the direction you want it to go, or a magic wand that will do it for you, with no muss or fuss. Which will you buy? It may depend on your perception of reality, but the outcome won't. The outcome will be decided by reality alone, without regard to human perceptions. The reality is, levers work; wands don't. Metaphorically speaking, gets contacted by lots of people peddling magic wands. We hear it all the time . . . "If only you would do what I'm proposing, it would change everything." You can tell they're selling a magic wand because of the words "it would change everything." Correspondingly, we receive a fair number of complaints from people because is not a re-seller of magic wands. We hear it all the time . . . "What you're proposing will never work, because it doesn't go far enough." You can tell they would prefer a magic wand because of the words "it doesn't go far enough." Well, we don't buy it, and we won't try to sell it either. We don't believe in magic wands. But we do believe in levers. No magic wands were used to grow Cancerous Government. Only levers were used. And we will make government smaller in the same way, using levers of our own. Proposals like the "Read the Bills Act," and the "Write the Laws Act," and the upcoming "One Subject at a Time Act," are not magic wands that will fix everything. They are powerful levers to move things in the right direction. We prefer real levers to fake wands. This is why we like the proposal to cut Congressional pay when the federal government runs a deficit. It is not a magic wand, but it is a powerful lever to move things in the right direction. Some say this lever was broken when we took it out of the box. They site two defects. It will give Congress an incentive to raise taxes, and Congress will use the "foreign conflict" exception to avoid the pay cut penalty. It should come as no surprise to you that these are the first things we looked at when we considered this bill. Here's what we concluded . . . Spending on "foreign conflicts" does not account for the deficit. You could subtract it entirely and there would still be a deficit and the Congressional pay cut would still be triggered. If this bill helps cut deficit spending unrelated to "foreign conflicts," then we have made progress, and that is all we expect from a lever. Second, Congress cannot easily eliminate the deficit by raising taxes. Taxation is not a magic wand Congress can wave whenever it wants to. Tax increases tend to retard economic growth and decrease tax revenues. Congress knows this, so they have to strike a balance on tax rates in order to maximize federal income. Partisan rhetoric aside, if Congress really thought it could raise a lot more money by increasing tax rates, we would already be paying those higher rates -- and Congress would STILL be borrowing on top of that. Please take note: The Democrats are saying they want to raise taxes, but only on the "rich." If that happens . . . In the absence of the Congressional pay cut law any increased revenue from these increased taxes would simply result in increased spending, with no effect on the deficit. Congress would tend to spend the extra tax revenue and still keep borrowing on top of that. How do we know that? Because that's what Congress has usually done in response to increased tax revenues. That's how the incentives are structured. No member of Congress pays a personal price for deficit spending, so the inventive is to do as much of it as possible. The Congressional pay cut bill would change the incentives by making members of Congress pay a personal price for deficit spending. In addition, we believe it is more important to cut borrowing than it is to cut taxes, because borrowing carries interest payments that eat future tax revenues. Endless government borrowing threatens America's future. How will the United States go bankrupt? Two ways. Slowly, and then all of a sudden. Borrowing is also bad because it tends to hide the true cost of cancerous government. People should feel the pain by paying taxes, so they will have an incentive to get off their butts and start fighting cancerous government spending. We are convinced that taxes are merely a symptom. The disease is cancerous spending. Make no mistake, you pay for this spending, even the part funded by borrowing, but the borrowing is more expensive, and far more dangerous. The Congressional pay cut bill is a good lever because it provides an incentive to reduce borrowing, while tending to reduce spending far more than it would increase taxes (if it increases taxes at all). The "Congressional pay cut" lever isn't broken. It's a good lever. We should use it. And this legislation already has sponsors in Congress. We should take advantage of that. YOU, should take advantage of it. How will we Downsize DC? Two ways. Slowly, and then all of a sudden. Make the "sudden" come sooner by sending Congress a message requesting passage of the Congressional pay cut bill. And please make a contribution to further our work. Thank you for being a DC Downsizer. Perry Willis Communications Director, Inc.
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