How to End Deficit Spending in Five Minutes and Why It Won’t Happen
Warren Buffett, in a July 7, 2011 interview with Becky Quick of CNBC, offered the following as a way to cure Congress’ out-of-control spending habits:
“I could end the deficit in 5 minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election.”
Sounds good to me, but there are at least two problems with the wisdom from the “Oracle from Omaha”: (1) Congress likes spending money it doesn’t have and doesn’t have to personally pay back, and (2) most Americans like to be on the receiving end of money they don’t have to work to earn. These two issues are what keep Congress spending and the majority of people voting for politicians who keep spending.
Why would 50 percent of the electorate that does not pay any federal income tax agree to put a restraint on deficit spending when they are the recipients of an unequal distribution of the spending?
The great fear of a politician is not being able to go back to his district (congressman) or state (senator) and having to tell voters that he didn’t bring home the bacon. Voters always want to know, “What did you do for me lately?” That is, how much tax money were you able to procure from Washington?
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Government spending is a massive shell game. People are taxed. The money goes to Washington, and then Congress divides up how the money is spent. Spending the money means sending it back to the states with a congressman’s or senator’s name on it. This insures their re-election.
The wild cards in every discussion about fiscal policies are voters. We are in this fiscal mess because a majority of people voted for it. Californians are about to vote on whether taxes should be increased to pay for the state’s huge deficit. Surveys show that 59 percent of the people are for the tax increase. Why? It’s simple: The people voting for the increase won’t be paying the tax. The tax hike plan is viewed as a “Millionaires Tax.” It would
- Increase the personal income tax by one percentage point for individuals who earn $250,000 annually or couples who earn $500,000 annually and by two percentage points for individuals who earn $300,000 annually or couples who earn $600,000 annually.
- Extend the income tax increases on wealthy residents from five to seven years.
As you can see, the majority of people are voting to tax the other guy. Fiscal policies are moral issues. “Thou shalt not steal, even by majority vote.”