Getting Our Fiscal House in Order Part 2: The Republican Tax Plan

Nearly five years ago, I wrote about the need for us to get our fiscal house in order. This was in the midst of calls by then-President Obama to raise taxes on the wealthiest Americans in order to trim federal deficits and tame the runaway national debt. The vast wealth inequality in our country, as well as the disparity between the taxes often paid by businesses and the wealthiest Americans compared to lower-income taxpayers, certainly helps justify the argument that a heavier tax burden should be borne by the most fortunate among us. At the time, though, I argued that before the government demands more from any of us, it owes it to all of us to be more responsible with our tax dollars. 

I remain consistent in my assessment of half a decade ago when it comes to the current proposed Republican tax plan. The truth is, most taxpayers would selfishly welcome paying less taxes. But what is the cost of these tax cuts for society as a whole? Just like I once questioned the wisdom of raising taxes in light of a fiscally irresponsible government running up the federal debt, I now question the call for cutting taxes while the government runs budget deficits on a yearly basis.

The main argument in favor of the Republican tax plan is that it will spur economic growth, thereby increasing government revenue. But that involves a very precarious presumption: that the economy will continue growing uninterrupted, even when the current streak is already one of the longest ever. Just like a responsible family accounts for unforeseen circumstances when crafting a budget, the government must consider what happens if the economy slows. And while a family with a robust emergency fund can better withstand a monetary hit, one with a mortgage, car payments, student loans, and several maxed-out credit cards would likely face financial ruin if a major crisis surfaces. With the federal debt currently at over $20 trillion and annual deficits of hundreds of billions of dollars, there's no disputing which family's budget situation most closely resembles our own government.

A balanced budget amendment to the U.S. Constitution might be a solution to the government's out of control spending. Of course, such an amendment could bring about a whole new set of problems. Ultimately, just like a family facing the reality of a less-than-ideal financial situation, it would take courage, sacrifice, and innovation for our government to operate within its means. 

The bottom line is, even though the idea of tax cuts is always attractive to those who pay them, the government getting its fiscal house in order by controlling spending is a much more pressing priority. Almost five years ago, I called on the government to hold off on raising taxes until it cut wasteful spending. Today, we should call on the government to hold off on tax cuts for the very same reason.