The Corner

Budget Rules

Jonah: I agree with you that if we were choosing between, say, a $700 billion tax cut and $700 billion in spending cuts on the one hand, and the tax cut alone on the other, the better option is to have both. But would a rule requiring that tax cuts be offset by spending cuts be more likely to result in both spending cuts and tax cuts, or in no tax cuts at all? And if the choice were tax cuts without spending cuts on the one hand and neither tax cuts nor spending cuts on the other, which is better? There are rational theories for answering that question either way. Most of the time, I’d be inclined to take the tax cut. Certainly I think the tax cuts of 1981, 2001, and 2003, none of which were fully offset by simultaneously enacted legislation, were worth having. (I doubt any of them could have passed with such offsets.) I don’t think tax cuts should be held hostage to spending cuts. Among other things, that rule would trap Republicans in their pre-Reagan role as tax collectors for the welfare state. Another point worth mentioning: Previous budget rules have required tax cuts to be offset by cuts in entitlement spending (or increases in other taxes), not cuts in discretionary spending–which raises the bar against tax cuts pretty high.

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