“This is clearly a shift in budget accounting that will clear the path to ballooning the debt now, but will also create a precedent that will be used over and over and over again in the future.” Those are the words of Maya MacGuineas, president of the Committee for a Responsible Federal Budget. MacGuineas is a debt and deficit scold in good standing with deficit and debt scolds.
Her quote comes from a Washington Post analysis of the Republican tax bill. MacGuineas was critiquing what the Post describes as “an unusual accounting maneuver" used by the GOP to pass its tax bill. Both happy talking Republicans and the perpetually dour MacGuineas miss the point. Though MacGuineas and the GOP approach deficits and debt differently, they're alike in not understanding that market forces will always trump accounting maneuvers when it comes to telling individuals, corporations and governments when they’ve hit their borrowing limit.
What you’re reading here isn’t a defense of government spending or the debt. Government spending is the biggest tax on freedom and progress of all. While most of us will work productively at all manner of tax rates, there’s no production and innovation without capital. What government consumes comes at the expense of production and innovation, while expanding the present and future cost of government. Which is the crisis. Not to MacGuineas or the GOP.
MacGuineas has been promising a crisis of the “future” variety for seemingly as long as she’s been opining on what a responsible budget is. Republican happy talkers have been naively and laughably promising voters for longer than MacGuineas has been scolding them that the path to limited and debt-free government is paved with exponentially more federal tax revenue. Both are talking past the real problem, which is unseen.
That’s because we’ll never know how much richer, advanced and healthier we would be if government hadn’t been consuming so much in the way of precious resources all these years. Which is the real burden that the “grandchildren” will inherit, along with a staggeringly large government that will continue to demand feeding.
MacGuineas heads an organization that seeks a “responsible budget,” but it’s apparently never occurred to her that there’s nothing responsible about a budget in "balance" when the source of the funds is the overtaxation of the most productive, enterprising and entrepreneurial individuals on earth. MacGuineas would be wise to recognize the latter, along with happy talking Republicans who believe their fiddling with tax rates is what drives the productivity. What a laugh. Without defending the horrifying overtaxation of the richest Americans for even a second, the progress they author isn’t preceded by a tax-rate check to make sure they have the “incentive” to produce.
Back to the deficits and debt, they’re an effect of the sad fact that the rich in the U.S. are wildly overtaxed such that tax revenues continue to soar. It’s something MacGuineas and the GOP would both profit from understanding. Contra MacGuineas, the “path to ballooning debt” isn’t accounting gimmicky, rather it’s too much tax revenue now ahead of exponentially more in the future. Which is a message to the Republicans that their tax cuts are anything but, as all the debt indicates. Get it?
Markets are wise and see past all the scolding and happy talking. If there comes a day when Treasury can no longer borrow, markets will convey this to us well ahead of time. For now, the happy talkers and MacGuineas would do well to recognize the flashing market signal in the $37 trillion national debt that the latter is not an effect of too little tax revenue, but in reality too much.
