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Tax Cuts Are Free


President Clinton insists that a tax cut is as irresponsible for the country as a pricey vacation would be for a family that can’t pay its mortgage and meet other important expenses.

Speaking to a women’s group last week, the president said, “One of my bright staff members said, it’s kind of like a family sitting around the kitchen table saying, you know, we have always wanted to plan a really fancy vacation to Europe — let’s just do it and blow the works, and when we get home, we’ll figure out whether we can pay the mortgage, the car payment and send the kids to college.”

That staff member is more clever than bright. If Mr. Clinton is listening to him or her, he’s not quite as bright as he’s reputed to be. Actually, this is not a matter of intelligence but ideology. Mr. Clinton’s premise is that the country is like a family, only bigger. This is collectivism pure and simple and must be rejected. The analogy jeopardizes the principles of liberty that this country was founded on and, ironically, subverts the integrity of real families.

Taxes are forced extractions from productive people that are used to finance projects chosen by politicians. Most of these projects consist of transfers of wealth to favored constituencies of nonproducers (some of whom are wealthy). Much of the money is taken from families, leaving them less not only for vacations, but for housing, education, medical care, and other priorities. Many people pay more in taxes than they do for food, clothing, and housing.

Mr. Clinton went on to say, “Why are we even discussing it [a tax cut] before we decide what it takes to save and strengthen Medicare, and what it takes to save Social Security, and what we have to invest in the education of our children, the defense of our nation, the protection of our environment?”

Because the money doesn’t belong to Mr. Clinton and his fellow spenders of other people’s money. He himself proposes a trillion dollars in new spending. He’d rather expand the welfare-warfare state than let people keep what belongs to them–an outrageous, inverted set of priorities.

As for saving Medicare and Social Security, Mr. Clinton continues either to engage in rank demagoguery or to live in deep denial. These programs are doomed and there is no saving them. They have always been pay-as-you-go schemes, which means they simply transfer money from producers to nonproducers. No money is invested, and the systems are susceptible to the aging of the population. When the baby boom retires, two taxpayers will be forced to support each retired person. The cost of Medicare skyrockets well beyond the government’s projections. Mr. Clinton’s heralded plan to save these disastrous programs only pushes the problems a bit further off into the future, when someone else will have to deal with them. His budget magic would get a private financial officer thrown into the hoosegow.

If he were more interested in people and less in government, Mr. Clinton would dump the programs and recognize each American’s right to keep his money and invest for his own retirement. Not only would citizens make better provision than a bureaucracy ever could, they would regain their autonomy and dignity. Why should Americans be dependent on shortsighted, scheming politicians for retirement income and medical care?

Finally, Mr. Clinton’s collectivism is starkly revealed whenever he asks how tax cuts are to be paid for. Tax cuts don’t have to be paid for. They are not a form of government spending. They consist of leaving money in the hands of the people who made it. If there’s a cost, it’s only to the people who haven’t made it. It’s the same as the cost to a robber who is scared away by his would-be victim before he commits the crime.

The Republican tax cut is pitifully small. That Mr. Clinton is so adamantly against it shows what a man of government he is.

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    Sheldon Richman is former vice president and editor at The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State. Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..." Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics. A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.