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According to Michael Munger, the recent proposals by the deficit commission are DAFT. DAFT is short for “deficits are future taxes” and is a useful analogy to counter the political myths about debt and taxation.
“With a total debt of more than $13 trillion, our government is in the midst of forcing the largest intergenerational transfer of wealth the world has ever seen.”
The primary point that Munger raises is that both democrats and republicans are pushing around fallacious arguments concerning polices to reduce the deficit. The Keynesian multiplier effect is bogus. Republicans want to cut taxes without cutting spending while democrats want to increase spending and increase discriminatory taxation. Here’s a novel idea – cut spending.
College students, how would you feel if your parents ran up a $50,000 credit card bill and then gave it to you when you graduated? This is precisely what is happening with federal spending.
The elephant in the room – federal government spending – has grown to a preposterous size. No amount of juggling can avoid the fact that everyone wants something out of the political grab bag and no one wants to pay the bill. Political promises will always out-pace the ability to finance those promises so long as the rules enable politicians to spend other peoples’ money without handing them the bill at the same time. We cannot continue to ignore the growing elephant in the room. The spending has to stop.