Tax Reform?

It’s easier to balance a budget with growth than with spending cuts.  Cutting spending causes pain.  Growth makes people happy.

Spending needs to be cut, no doubt.  It’s ridiculous.  The federal government pisses away so much money it’s a scandal.  There’s an awful lot of low hanging fruit in the federal budget.  Just not enough to bring spending down to where it equals revenue, if revenue is static.

The Reagan Initiative is a growth agenda grafted on to the traditional BBA.  Because the economic and fiscal  impact of both regulatory reform and of the transfer of federal lands to the states is so obvious and so enormous,  these two easily fit within a reasonable definition of a “Balanced Budget Amendment.”   Does tax reform?

Rand Paul is out with a flat tax proposal, drafted principally by Stephen Moore of Heritage.  It is my cup of tea.  I’d like to think a President Paul, with big Republican majorities in Congress, could get it passed.  I’m a dreamer, I know.  Even if all the corrupt Republicans in Congress (and there are a lot of them) voted for it, there’s the filibuster by Senate Democrats.  How do you get 60 votes in the Senate?

Maybe you don’t have to.  Maybe the flat tax qualifies as germane to a budget bill under the Byrd Rule, and thus can be passed as part of a reconciliation bill.  With 51 votes, not 60.  The Senate Parliamentarian is the one who would make the call (subject to being overridden by a 60 vote majority).

If the flat tax fits under the Byrd Rule it fits within a BBA.  And I would argue it fits.  A flat tax would produce an economic bonanza, as Moore argues convincingly.  The Roaring 20’s aren’t in it.  There would be so much wealth created that the federal government’s cut would balance the budget.  If you combined a flat tax with regulatory reform and transferring federal lands to the states we’d see growth that would put the 80’s to shame.

The nice thing about doing all this through Article V is that it’s in the Constitution.  Tough to change.  One of the criticisms of the flat tax is that Congress could always jack up rates, or impose a VAT, or somehow screw everything up.  If it’s in the Constitution Congress can’t touch it.  Maybe you’d have a provision for wars (only the declared kind) or natural disasters, allowing Congress to make temporary changes with a 2/3 vote.  You have to be a little flexible.

Like every other discussion of Article V, the number 38 pops up.  Forget getting 38 state legislatures to ratify.  Too tough.  But would the people of 38 states elect delegates to ratification conventions who’d vote for a package that contained, say, regulatory reform, land transfers, a flat tax, and spending restraints?  Who knows?  It would be the defining political fight of 21st Century America.

Whenever I think of 38 I see purple, as in Maine, Minnesota, Washington and Kentucky.  Are there majorities in these states for a pro-growth BBA?

Maybe, just maybe, we should find out.  It’s a political call.  I say leave the decision to the delegates.  They’re all politicians.  Let’s leave it up to them.

But let’s give them the option.

There’s no need to talk about all this at the Federal Assembly.  The first meeting, in San Diego, is all about One State, One Vote, One Amendment.

But down the road ……?

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