Spending Our Future Tax Cuts?

Spending Our Future Tax Cuts?
February 1, 2004



Not too long ago, conservative lawmakers talked about enacting new tax cuts each and every year of the Bush administration. The White House has been led by a President who fought for the second largest tax cut in history ... and then came back and enacted the third largest tax reduction. We had hope for continued tax reform and lower tax burdens on all working Americans.

Today that bright future of less government, lower taxes, and more freedom is threatened by an uncontrolled congressional spending spree. At some point--and we are not far from it--the spending increases threaten the viability of future tax cuts. We cannot continue massive expansions in farm subsidies, the largest expansion of federal education spending since the Great Society, and congressional appropriators increasing spending on each area of government pork each year and still make the case for tax cuts.

We cannot add the largest expansion of Medicare spending ever in the form of a prescription drug benefit, without any financial reforms, and expect to use new tax cuts to grow our way out of deficit spending. And this is especially true in a time of war, when large increases in military spending are needed to meet the federal government’s primary constitutional responsibility: to provide for the common defense.

I have spent a great deal of time in politics and I understand the temptations to make short-term compromises. I understand that it is almost always easier to win friends by using the federal treasury than standing for the principles of limited government. As a political matter, the Medicare legislation passed by the Republican Congress provides a short-term benefit over the hapless Democrat party. The Republican majority took away an issue the Democrats are supposed to own. But the long-term consequences are too high a price to pay.

The Medicare issue was not won by the hard work and admittedly risky path of making the case for fundamental Medicare reform. An argument was not made for market forces, competition, and financial sustainability. Instead, the issue was won by generating a majority vote for a huge new entitlement expansion.

So much remains uncompleted on tax reduction. The Death Tax remains with us, which punishes savings and investment. Capital gains tax rates are too high for international competitiveness. Investors are still punished with the double taxation of dividends. Fundamental tax reform for all taxpayers is left unfinished. Liberals oppose these common-sense ideas. The arguments get harder for conservatives while government spending continues to explode.

The short-term spending “victories” threaten the long-term argument between conservatives and liberals. In the long run, if America wants lower taxes, America must have limited government. I believe there are already fewer votes in the Republican majority for a 2004 tax cut than there were before the Medicare expansion passed. There are fewer Republican tax-cutters than there were before the education expansion and the farm subsidy expansion. And in the long run, that is a very heavy price to pay for a short-term tactical victory.

There has been little semblance of fiscal discipline since 9/11. After the 2001 terror attacks, Congress rightly appropriated virtually unlimited sums for military action and homeland defense, but afterward, the Republican majority allowed the infection to spread through the entire budget. We must find a way to stop it--and stop it very soon.


For 18 years in the House of Representatives, Dick Armey fought for lower taxes, less government, and more freedom. He joined Citizens for a Sound Economy (http://www.cse.org) in 2003 as its co-chairman.