In response to years of calls to control “spending” and “smaller government,” Congress and presidents have… — David Wessel
In response to years of calls to control “spending” and “smaller government,” Congress and presidents have discovered something simple: giving people a tax break—a credit, a loophole, a deduction—makes them happy without increasing government “spending” and can accomplish the same objective. Practically and economically, there’s no difference between getting $1,000 in cash from the government and getting a $1,000 voucher that you can use to reduce your taxes. Either results in a federal budget deficit that’s $1,000 bigger than it would have been had a tax break not been created. But the first is called “spending” (boos, hisses) and the second is called “a tax cut” (applause, cheers). The first is formally recorded on the budget books as an outflow of money. The second doesn’t show up in the outflow and inflow accounting. It is revenue that wasn’t collected.
p. 122Source: Wikiquote · CC BY-SA 4.0
More from this book
No one really knows how much the U.S. government can borrow before global investors get uneasy and begin to demand higher interest rates. The national debt exceeded 100 percent of GDP during World War II and then came down as the economy sprinted. But history suggests debt of that level is in the danger zone. Think Argentina, circa 2001. Think Greece, circa 2012.
p. 143
Ultimately, what matters is where Congress and the president end up, not where they start. But defining the starting point and crafting the baseline are important to the politics and public perceptions of the budget—they are used by one side to magnify the size of the spending cuts or tax changes proposed by the other side—and politics and perceptions have a lot to do with what actually happens.
p. 142
“From the mid-1930s to the 1970s, the government made a set of commitments that led to expectations on the part of the American people about what their government owes them,” says Robert Reischauer, a former director of the Congressional Budget Office. “And they are totally unprepared to go back to a different world.”
p. 41
