It’s really crazy! So many people – including the president and those in his administration – refer to tax cuts as if they were stand-alone government policies. None of them wants to address, or even mention, the obvious relationships between taxes and government services and they don’t want to acknowledge the potential effect of tax cuts on the national debt. But without any doubt, when our government reduces taxes, programs must be eliminated or our national debt will increase.
So, let’s consider the first option, which programs should be eliminated or curtailed? Should we now withhold monies from the armed services or homeland defense? How about education – should we not improve our school facilities and the training of teachers? I don’t believe that we want our highways and bridges to go uninspected and unrepaired. Certainly we should properly fund the Medicare and Medicaid programs. How about protection against corporate fraud and tainted food and ineffective drugs? We certainly should keep our national parks open and properly staffed. I do think that if we are honest and objective, we will generally agree that we want to retain all of these programs, plus lots of others.
OK then, we have to consider the second alternative – should we let the national debt continue to increase. If so, what are the ramifications of that? First of all, our kids will be obligated to pay the interest, which is even now approximately $300 billion per year and is headed higher. That’s not too pleasant, but another aspect of our debt may have even worst implications. Increasingly, the bonds that we issue in order to keep our government solvent are being bought by foreign interests. That leaves our economy very vulnerable to changes in their investment policies, the relative strength of the dollar, and the vagueness of interest rates. I hope that you’ll agree that increasing the debt is a bad choice.
So maybe cutting taxes isn’t really in our nation’s best interests. Maybe we all need to remind ourselves that this is one great country and we must fully fund it in order to be able to keep the services that we cherish.