Romney Poised To Win Another State Saturday: MyFoxDC.com

Bachmann, Perry Compete On Same Issues: MyFoxDC.com

The point of contention is whether the elimination of a tax subsidy is tantamount to a tax increase.  This is the continuation of a conversation that was started last month when Republican leadership, in an effort to win an argument, offered the thought that reducing certain oil and gas tax advantages were the same as tax increases.

But are they really?

The simple reality is that subsidies, whether administered through the tax code or through spending programs, are wrong.  They are wrong because they are instances of theft typically perpetrated by a very small group of taxpayers on all taxpayers.  They are also corrosive because they migrate economic and other decisions from individuals to governments.

Pretty much everyone on the right side of the political spectrum agrees with this characterization.  However, there are some who believe that while tax subsidies should not be created because they are morally bad and inherently corrosive, those that are already in place can only be eliminated in those instances when the revenues in question are essentially rebated to all taxpayers.

These people know full well that such an approach is very nearly impossible (which is why it has not happened in living memory).  In short, they are prepared to acknowledge that subsidies are theft.  But they are perfectly comfortable in insisting that efforts to correct this moral bad have to be arranged in such a way as to ensure that they cannot be done.

For me, at least, the irreducible minimum is that the creation of these subsidies is itself a violation of the just order.  In each instance, a small, well-organized group carves a subsidy out of the body politic.  Repeal of such things, apart from any other consideration, results in a restoration of the original and intended order, and is therefore a desirable end irrespective of who gets what.

But let’s think about the specific instance.  Today’s disagreement involves ethanol.  There is no argument that the subsidy (totaling about $6 billion per year) is ridiculous and indefensible.  What is in question is whether the Senate should couple the elimination of the tax subsidy with an attendant and comparable decrease in the tax burden for all taxpayers.

Two thoughts occur.  First, the scale and scope are completely mismatched.  In a budget of 3.5 trillion dollars, 6 billion is less than one-fifth of one percent.  It is a rounding error.  If the Senate wants to true-up this rounding error at some point in the future, it should feel free.  But why waste the time and effort now.  In short, call me when the numbers climb above 1 percent (in total or in any specific moment).

Second, in a budget that is $1.4 trillion in deficit, it is probably important to remember that we are all thieves.  We are stealing from our children.  Viewed in this light, it seems comical to suggest that somehow we are “due” this measly, meaningless 6 billion dollars.

Finally, I am sensitive to the notion that federal government employees (like Congressmen) tend to spend whatever money they have available.  The answer is to work more diligently to make them responsible.  We have tried the Reagan idea of starving the beast.  It has failed.  The Democrats have discovered that they, too, can spend money they don’t have.  The idea that the current legislative crew is constrained by what they have or don’t have  is clearly contradicted by close to 40 years of experience.

The bottom line?  Intentionally or not, a rigid insistence on real-time, one-for-one offsets of tax subsidies (while ignoring subsidies on the spending side of the ledger), leads us to where we are — a place where it is difficult to get rid of a tax subsidy that everyone agrees is a disaster because they fear retribution from our version of Talmudic scholars.

To my mind, that singular comment sums up everything that is wrong and dangerous with the thinking of Republicans about the relationship between them and big business in general, and, more specifically, the thinking of Republicans with respect to the question of taxes and subsidies.

For some years now, I have labored under the idea that the right side of the political spectrum in this Nation is about smaller government, more personal autonomy, less federal interference in what Tom Wolfe called the “macaroni of life.” But it has become clear to me that some on the right have a fetish with business.  They are fully prepared to defend businesses, irrespective of whether the businesses in question even support the nominal policies of the Republican Party.

Take the oil and gas industry.  More than half supported cap and trade last Congress; the National Petrochemical Refiners Association  went so far as to construct a gasoline tax.  Even the most routinely reactionary company (Humble Refining) favors a gasoline tax to address global warming.  Even now, Boone Pickens wants another 9 billion dollars to spend on natural gas vehicles (which, coincidentally, will help him add more billions to his personal wealth).

Does it surprise anyone that more than 100 Republicans have already signed onto the Pickens boondoggle?  It shouldn’t.  The Republicans are in the grip of an unrequited love with big business in general and the oil and gas industry.  This crush undermines the core message of the right, and damages its ability to speak coherently across a wide range of topics.  If you doubt this, watch the debate on the debt ceiling and the deficit.  The business community is already working to undermine Republican and Tea Party efforts to use the debt ceiling increase to leverage reductions.  Similarly, they are working to undermine Republican and Tea Party efforts to reduce subsidies.

So if the mortgage interest deduction, which is the most widely available deduction, is a subsidy, then surely the oil and gas tax advantages – however meritorious – are also subsidies.

In short, we have arrived at the inflection point in the debate.  There are only three possible arguments to make.  All subsidies are legitimate.  None are legitimate.  The legitimacy of a subsidy can only be determined by the political strength of its advocates.  Given both our fiscal situation and our longstanding commitment to smaller government, only the second of these is supportable.

Yet, inexplicably, some have chosen to select the third argument.  Our subsidies are good; yours are suspect.  Worse yet, some have argued that opposing our subsidies would raise the price of gasoline, thereby presenting the features of a tax.  That is a particularly wrong and dangerous line of rhetoric.  First, whether as consumers or taxpayers, the public is already paying what the increased cost of gasoline would be – most of it directly to the oil companies and then a tiny fraction (2 cents a gallon?) to the federal government.  What conceivable difference would it make if the consumers pay all of it to the oil companies directly?

Second, and potentially much more damaging, this line of thought and language leads us into a situation in which we will not be able to reduce any subsidy under almost any circumstances.  Surely, that cannot be the desired result.

Perhaps everyone would be better served if the conversation pivoted to the wisdom of all other subsidies.  The bottom line is this:  all subsidies are either good or bad; they either distort investment and spending or they don’t; they either corrupt the political process or they don’t.  I think they are all bad.

This is too easy. As we have noted here and elsewhere, “all of the above” is not a coherent policy; it is a note passed to a teller during a bank robbery. I thank Speaker Gingrich for making my point so concisely, and for placing in stark relief the intellectual bankruptcy of the policy.

One other thing. It sickens me that he is being given time to speak at tomorrow’s Catholic Prayer Breakfast. If three wives do not disqualify you from communion with the Church of Rome, what, conceivably, could be the point of any of its rules?

Of course, we do not have to imagine any of this, because it all happened.  Joe Miller was the Republican nominee in the State of Alaska for the United States Senate election held in 2010.  Lisa Murkowski was an independent candidate in that same election.  We even know how the Republican caucus in the Senate treated Senator Murkowski:  they welcomed her as one of their own with open arms.  They reestablished her seniority on the Energy and Natural Resources Committee and offered her the Ranking spot on an appropriations subcommittee.

All of that may seem well and good and proper.  I would note without reservation that Senator Murkowski is both well-qualified to execute those jobs, and is, without question, a solid member of the vast right-wing conspiracy.  But what about the precedent such treatment sets?  Do the Republican Senators fully comprehend what they have done?

By treating a candidate who has lost a Republican nominating contest and subsequently won the general election as an independent (thereby, obviously, causing the defeat of the Republican nominee) as a member in good standing of the Party, the Senators have undermined the value of a Republican nomination.  It is difficult to see what would keep another candidate who loses a Republican nominating contest from mounting an independent campaign and claiming to be the legitimate Republican in the race.  What will the Senators say then?

While this may seem a small matter today, it is easy to imagine a future nominating contest in which a tea party candidate loses, refuses to accept that decision, runs as an independent (claiming to be the “legitimate Republican”) and wins.  What will the Republican caucus in the Senate do then?  Having already devalued the Republican brand and set the precedent that a Republican nomination is not worth much when dividing up posts in the Senate, how will they resist such an independent’s claims?  They will, of course, not be able to.  In turn, that will serve to reduce the value of the nomination that each and every one of them will seek (at great expense) during their next reelection.

By treating Senator Murkowski as the Republican candidate from Alaska (which she was not), they have announced their indifference to those who challenge the Party’s decisions as encoded in the nomination process.  How will they be able to argue for the enforcement of party discipline in the future?

As part of the budget roll-out, the Administration promised us that it would cut $1.1 trillion from projected spending over those same 10 years.  That works out to about $100 billion a year, or roughly the same amount the Republicans want to cut from the remaining seven months of this year’s budget.  In other words, the Republicans, in office for less than two months, are fully prepared to almost double what the Administration proposes to cut on an annual basis.  Please keep in mind that the Administration’s proposed budget cuts are from a baseline of spending that they themselves created.

There are only two possible ways to view the Administration’s budget.  It is either woefully and intentionally inadequate.  Or, it is specifically designed to bring about financial collapse.  Either way, it is a clear signal to Republicans and others in Congress that the Administration is profoundly and systemically unconcerned with the Nation’s finances in general, and the debt in particular.

Many Members of Congress are unsure what the appropriate course of action is with respect to the debt ceiling increase that will shortly be upon us.  The Administration’s budget, with its intentional addition of more debt, with its unwillingness to even nod to financial realities, and with its stubborn insistence on conducting business as usual, answers that question.

It is now clear that the crisis is coming.  The only question is when and under what circumstances.  Congress should begin to fix this problem here and now, before it gets any worse.  Congress must vote against increasing the debt ceiling.