Republicans Forget The Cost of Government is What it Spends, Not What it Taxes

Last week the House passed a continuing resolution that increased spending by as much as $106 billion according to some estimates. This week, there are almost daily media reports of Democrats and Republicans in Congress wringing their hands about the impending disaster of the year-end “fiscal cliff” of tax increases and spending cuts.

Of course this is a disaster that Congress created, and if it does create an economic crisis, that will be the most predictable crisis in history.

However, let’s set aside who is to blame if the fiscal cliff actually does create an economic crisis and ask the deeper question:

Aren’t spending cuts and tax increases what Democrats and the establishment media have touted for years as the “compromise” that could restore fiscal sanity to Washington?

The answer is yes. What’s more, there are plenty of Republicans who said -- some privately, some publicly -- that they would go along with a tax increase to solve the federal government's budget problems if it was accompanied by real spending cuts.

Well, here it is, coming like a freight train at the end of the year: The low tax rates enacted in 2001 and 2003 are set to expire on December 31, and $100 billion in automatic spending cuts are scheduled for early January.

Only now the so-called "compromise" of tax increases and spending cuts is being portrayed as a complete disaster.

Federal Reserve Board Chairman Ben Bernanke has now gotten into the act, saying according to Yahoo! News, “If the fiscal cliff isn't addressed, as I've said, I don't think our tools are strong enough to offset the effects of a major fiscal shock, so we'd have to think about what to do in that contingency… It's really important for the fiscal policymakers to, you know, work together to try and find a solution for that.”

If the “compromise” of tax increases and spending cuts long advocated by Democrats and the establishment media isn’t a solution to our budget crisis, what is?

Democrats will, of course, argue for tax increases, for redistributionary “fairness” if for nothing else.

However, as President Ronald Reagan noted ruefully after agreeing to a tax increase -- and as Stephen Moore and Richard Vedder demonstrated in a landmark study of federal spending -- no matter what party is in power or how you configure the data or what variables you use, higher tax collections never result in less spending.

As conservatives, we think the solution to the federal budget crisis is to cut federal spending and for Congress to enact pro-growth policies, such as those advocated by Paul Ryan and Mitt Romney.

However, we can’t just grow our way out of the hole Congress has dug for taxpayers. Former Comptroller of the Currency David Walker once estimated it would take 75 years of double digit economic growth in order for us to close our fiscal gap – and that was before the national debt grew to $16 trillion under President Obama.

If Republicans elect a majority in the Senate and maintain the majority in the House the problem of passing pro-growth legislation will be largely solved. But if the House passage of the recent Continuing Resolution is any indication, the problem of cutting spending will remain.

While Capitol Hill's establishment Republicans have been good at opposing tax increases, they conveniently forget that the cost of government is not what it taxes, it is what it spends. 

To solve our budget crisis, we need to scrutinize every penny the federal government is spending – including money spent at the Pentagon – to make sure it is justified by both need and the Constitution. With big spending, big government Republicans, such as John Mica of Florida, in positions of leadership, this is going to be a real problem even if Republicans obtain a majority in both Houses of Congress.

The only way to end our deficit and debt crisis -- and get the federal government’s fiscal house in order -- is to impose spending discipline, and the only way to impose spending discipline is to elect not just a Republican majority Congress, but a conservative majority in Congress that will just say “NO” to more taxes AND more spending.