John McCain
The Associated Press

Deficit hawk John McCain is making the case for the stimulating effect of tax cuts.

Featured Topic | Posted 3 weeks 4 days ago

What's more important: Cutting taxes or balancing the budget?

Republican John McCain said Sunday that cutting taxes and stimulating the economy are more important than balancing the budget, and accused both Hillary Clinton and Barack Obama of supporting tax hikes that would worsen the impact of a recession.

''The goal right now is to get the economy going again,'' the GOP presidential nominee-in-waiting said on ABC's ''This Week,'' adding that he would put the country ''on a path to a balanced budget'' by attacking wasteful spending.

Is McCain right? Should Congress extend or make permanent the Bush tax cuts? Or does a balanced budget require tax increases? Would the economy suffer from tax increases or ultimately benefit from a more fiscally responsible government?

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Ben likes: The coming tax bomb

John F. Cogan and R. Glenn Hubbard/Wall Street Journal

The proper way to prepare to meet the entitlement challenge consists of three essential elements: Change entitlements to slow their cost growth; eliminate all nonessential spending in the remainder of the budget; and, most important but often overlooked, adopt policies that promote economic growth. The greater the economic growth, the larger the economic pie, and the greater the public and private resources available to finance entitlement obligations and other national priorities.

Last year's federal budget illustrates the importance of economic growth to the federal budget's overall health. The federal budget deficit was recorded as 1.2% of GDP, half its average level over the past four decades. This modest deficit occurred despite the fact that Congress has been on a decade-long spending binge; despite the fact that not a single entitlement program has been significantly reduced since the late 1990s and two entitlements, Medicare and farm support payments, have been significantly increased; and despite the fact that we are in the midst of costly but necessary wars in Iraq and Afghanistan.

The consensus that tax increases are needed for fiscal balance is wrong. The next president can fund our defense priorities, maintain tax cuts, and balance the budget. A tax-increase consensus blurs the basic debates over our budget priorities in 2008 -- and severely limits our choices in 2028. 

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Joel likes: It's our fault, too

Andrew Yarrow/Washington Post

The federal deficit halfway through this budget year is at an all-time high, the Treasury Department announced Thursday, and the national debt is growing as well. But before we blame Washington politicians for their irresponsibility, stupidity and cowardice -- and we should -- we may want to look at another culprit: the American people. We, too, bear some responsibility for our $9 trillion federal debt and $50 trillion in governmental promises of future benefits.

Yes, cutting taxes and increasing spending is irresponsible, as is allowing Medicare and Medicaid costs to rise so quickly, as is failing to achieve a long-term fix for Social Security and retirement security, as is developing (and protecting) a Byzantine tax code and dysfunctional budget process, as is pork. Yada yada yada. Washington deserves a lot of blame for the growing national debt, despite some genuinely thoughtful and courageous leaders, and must take the lead in solving the nation's fiscal problems.

But we share the blame. We want lower taxes but more government services. We go to great and morally questionable lengths to avoid paying the taxes that we now owe. We want to stop working as early as possible and draw retirement benefits for as long as possible. 

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Thoughts

Balanced budget

Submitted on April 21st, 2008 by Golfferdie

Ferdy, from Jensen Beach ,FL.

you are right, that money will go to morgage comps and other dept. This crap in IRAQ needs to stop and they need to start paying for the protection and lives we have given. The rcession is caused by the housing crap and the bad loans given out and all the money people have taken against there homes. Now it time to pay the pipper and they run. Fault goes to morgage companies and they shoul be held accountabl. Yeh spelling sux, Just a thought Thank You.

The Republicans Just Don't Learn

Submitted on April 21st, 2008 by Anonymous

Entitlements and spending.

First of all the Laffer curve, which the Republicans are always so fond of citing only applies when taxes are excessive. It is certainly debatable whether that condition exists in the US or not.

EVERY time this issue comes up, the Republicans conveniently forget that the other part of this is cutting spending. Their solution is to always point at entitlements, specifically welfare. David Stockton, Reagan's financial guru, readily admitted that the welfare queen driving a Cadillac was a fantasy made up to sell their program.

What gets the Republicans every time, however, is defense spending. Talk about discretionary spending. Until they can get off of that addiction, I don't think the Republicans will ever be able to balance a budget.

A recession and a balanced budget is no good.

Submitted on April 20th, 2008 by Anonymous

Sometimes you need to spend money to make money. We need to dig ourselves out of this recession as quickly as possible. But we need to spend money wisely. $1300 tax rebates are not going to accomplish anything significant.

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