The New York Times has an interesting article this morning titled “House Tightens Disclosure Rules For Pet Projects.” Here is the crux: “The House voted Friday to pull the shadowy tradition of Congressional earmarking into the daylight, requiring lawmakers to attach their names to the pet items they slip into spending or tax bills and certify that they have no financial interest in the provisions.”
The first thing that went through my mind was not “good for them.” It was, “you mean to tell me those rules were not in existence already!” I am in the financial industry and no off the books financial transaction can happen under any circumstances. Even if you want to give your client a Christmas basket, it can be no more than $100. In my experience American business works in a pretty stand up and non-corrupt world, except when it comes to politics.
Let me get back to the article. “The vote on the new earmark measure was linked to a rule known as “pay as you go” that would prohibit the House from increasing the deficit by passing any new tax cuts or entitlement spending programs without offsetting them with spending cuts or tax increases.”
This rule is so logical. How could anyone not agree with it? Sure enough, “Republicans denounced the ‘pay as you go” rule as an excuse for Democrats to increase taxes.”
Let me get this straight. The ‘pay as you go” rule, in my understanding says this: if you are going to cut taxes or set up a program of entitlement (like welfare) you have to figure out how you are going to pay for it. You cannot just put it on the credit card forever, seems logical to me.
This brings up a point that has stuck in my craw for a long time. We gave the highest income brackets tax cuts four years ago. We did this even though we did not have the money in the budget to do it. That is, we borrowed money to reduce people’s taxes.
I understand this may be justifiable in some circumstances but let’s look a little deeper. If you are very wealthy you do not get your income from a pay check, you get it from investments. Investments pay income in two ways, capital gains and dividends. If you own a company you have the option to pay yourself a stock dividend rather than a salary.
So when you cut the tax rate on dividends from 33% to 15% you have cut the taxes of a wealthy person by more than half. Yes, wealthy people are paying half the taxes they were paying four years ago.
Why did they not cut my taxes in half? As long as we are borrowing money from China and Japan to give 50% tax cuts, why not give it to everyone? I can hear it now, that would be fiscally irresponsible, and the middle class does not donate to my campaign.
I think pay as you go makes a lot of sense. And, by the way, the next time I hear the phrase “tax and spend Democrat” I am going to either laugh or cry with incredulity.