Saturday, January 30, 2010

Mike Pence calls for tax cuts

At yesterday's question and answer session between President Obama and House Republicans, Rep. Mike Pence asked the President whether he would "consider supporting across-the-board tax relief, as President Kennedy did."

The question frustrates me. First off, there's that whole massive surging deficits thing:

Second, and perhaps most important, the incessant call for tax cuts is intellectually lazy. It's the default Republican response to economic growth. It's become an unthinking knee-jerk reaction.

Last of all, it's a bit gutless. Tax cuts, relative to many other measures which could promote growth, is politically facile. People like tax cuts. They involve no pain to voters and rarely anger any constituency except for liberal Democrats.

If Republicans really want to get serious about growth and promoting economic freedom they also need to look elsewhere, in areas such as regulation. The number of pages in the Federal Register grew by 7,000 pages under George W. Bush's watch -- were all of those necessary? Heck, were any of them necessary? Each rule represents a burden to the economy, many of which probably would not survive a cost-benefit analysis.

Deregulation in the late 1970s and early 80s helped spark the 1980s economic boom. Much more is left to be done. How about repealing the Jones Act or privatization of air traffic control and Amtrak, both of which would marginally improve economic efficiency? Why not allow foreign airlines to offer service between U.S. cities, helping to reduce costs?

On the tax front, instead of looking to the Kennedy tax cuts why don't Republicans push for a repeat of the 1986 Tax Reform Act which lowered rates but also paid for the cuts through the closing of various loopholes? Why not be truly bold and push for a complete overall of the tax code and introduce a revenue-neutral flat tax? If Republicans elect to pursue the path of tax cuts, why not pair them with proposed spending cuts that demonstrate a commitment both to limited government and fiscal responsibility?

None of what I have outlined is easy. Deregulation will provoke an outcry both from self-styled consumer advocates as well as businesses which currently profit from the regulations as barriers to competition. Tax reform will have many entrenched opponents who gain from the current system. Democrats, who can barely stomach a partial spending freeze, will cry bloody murder if spending cuts are proposed.

But then again, Republicans need to choose the hard right over the easy wrong. This is the time for courage. The present situation requires nothing less.

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