by David Asman at Fox Business:
The phrase used to be “tax and spend.” But now it's "spend and tax" -- spend money before you raise it, and then tax later to pay off the bills. That's not only irresponsible; it doesn't work.
The phrase used to be “tax and spend.” But now it's "spend and tax" -- spend money before you raise it, and then tax later to pay off the bills. That's not only irresponsible; it doesn't work. But still we have a lot of Democrats and some Republicans saying that we have to raise tax rates to pay off the deficit.
They usually cite Bill Clinton as an example of a president who balanced the budget by raising tax rates. But they never mention that Bill Clinton's surplus wasn't created by taxing more, but by spending less.
First off, he saved hundreds of billions of dollars by spending less on defense thanks to the end of the Cold War. The defense budget went from 4.4% of GDP when he took office down to 3% of the GDP when he left. That meant a savings of $145 billion dollars in 1997 alone!
He also saved billions by going along with a Republican plan to fundamentally restructure welfare, a genuine bipartisan reform that we're now in danger of undoing.
There were also the billions that came into the Treasury because of the dot com bubble that peaked just before Clinton left office. And ironically, a lot of this money flowed into the Treasury because of a tax rate cut in the capital gains tax.
In other words, Clinton didn't leave office with a surplus because of higher tax rates, but because of much less spending and a critical tax cut!
Democrats or Republicans who cite Bill Clinton to back up this phony idea that we need to raise tax rates to pay off the irresponsible spending of the past couple of years don't know their history.
They're giving big-government spenders an excuse not to cut back. And cutting back big government is the only way to cut the deficit.
