Showing posts with label tax cut. Show all posts
Showing posts with label tax cut. Show all posts

Sunday, January 30, 2011

Matching grants--they work for CPTV--why not for the government

On CPTV, when they need money, they make an appeal on the air. Then some big donor promises to give a big chunk of money, but only if other donors make contributions to match their promise.

I have found it interesting that some politicians seem to think that money in the form of tax breaks is good, but money spent on government programs is a black hole. News flash--probably more of the goverment spending goes back into the economy. Government workers pay mortages and purchase groceries, all the paper for the paperwork has to be bought, which helps employ paper mill workers, lumberjacks, truck drivers, etc. So, both tax cuts and government spending stimulate the economy.

However, at this point we all probably recognise that the government is in bad shape--almost as bad as the recent unemployed college graduate who has acquired $100K plus in student loans in hopes of enhanced future earnings. If, as a country, we don't learn to match expenditures with revenues, we are in for major troubles in the future. Denial is not just a river in Egypt (and look what's happening there).

On one of my visits to my wife's homeland, Greece, I visited a small village on the Mani peninsula. One morning, while enjoying a coffee at the zaharoplastion, I observed a shopkeeper sweeping up in front of his store. She swept up all the dire and garbage . . . and then swept it in front of the shop next door and went inside for a day of business. About 20 minutes later the adjacent shopkeeper came out with a broom and swept up all the dirt and garbage and deposited it back in front of the original shopkeepers storefront. I suspect that these people might have a rosy future in American politics (if they could get a visa).

Our "shopkeepers" in Washington behave in a similar manner. Republicans want to "put more money in the pockets of the people" (with the people with the biggest pockets getting the most money) by cutting taxes (reducing government revenues) and getting back to even by cutting spending (which takes money out of the pockets of people and reduces important services). Democrats want to increase (restore) taxes and pay lip service to spending cuts. They argue back and forth about which approach is right and get nothing done.

So, here's the pitch. Create a matching program. Every dollar saved by a spending cut has to be matched by a dollar of increased tax revenues. Everybody gets to feel the pain of coming to terms with our profligate ways. Both actions are deflationary, so we need to exercise caution about how rapidly we proceed, but proceed we must. Both shopkeepers have to dispose of the garbage--not just sweep it to the other side of the isle.

This idea probably makes too much sense to work in Washington, though how we keep electing fools who won't pick up the garbage is beyond me.