Thursday, March 10, 2011

Is the Tea Party's approach to debt flawed?

At first I assumed that this article was just another hit piece against the Tea Party. But I think it's more subtle, and on reading it, I think it does bring up some interesting points:

National debt: Where the Tea Party is wrong
NEW YORK (CNNMoney) -- First, let's give the Tea Party props for thinking critically about how much money the government should spend -- energizing the debate about the national debt.

Now for the fact check: Some of the Tea Party arguments for how to address deficits are just plain misguided.

Here are four assertions Tea Partiers make that don't pass the sniff test.

1. To kill debt, cut spending but don't raise taxes: A staple Tea Party promise is to cut spending and keep taxes low.

"[Americans] want spending cuts now, not in ten years. They don't want more job-killing tax increases," Rep. Joe Walsh of Illinois said in a recent statement.

Walsh went on to say that the $100 billion in spending cuts that many in the House GOP wanted to make over the next seven months "is what tackling the deficit looks like."

Not quite.

For starters, the cuts proposed by the House GOP primarily hit non-defense discretionary programs, which make up less than 15% of the total budget

Budget experts on the left and right say successful debt reduction can only occur when spending is cut across all areas of the budget.

And excluding revenue increases from the mix is the equivalent of one hand clapping: ineffective given the size of the country's debt.

Ronald Reagan, often revered as the king of small government and low taxes, signed into law some of the biggest tax cuts in modern history. But Reagan also approved some of the biggest tax increases, too. And he did so to help reduce swelling deficits.

Reagan raised more revenue not by raising tax rates but by making it harder to evade taxes and by reducing the number of tax breaks on the books. [...]

Read the whole thing, which contains embedded links and a video too.

I could nit-pik some things, but there are some relevant points made. Because we already are in debt, we have to manage the existing debt, while simultaneously trying to reduce it. So many things are interconnected, if you suddenly cut off some things, there will be chain reactions in other areas. It's almost like we have to back our way out of some things, before we can start cutting them.

Just as it took time to get this messed up, it's going to take some time to get out. But thrashing about wildly could be just as bad as paralysis. We need to find that middle path that works, with minimal time wasted and optimal damage control. It may mean some compromises for an interim period. I pray that Congress is up to the task. They must be.

I think this would be the best approach for Congress to follow:

Budget cutting, the REASONable way

It's workable, and makes sense in so many ways.

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