[Congressional Record Volume 149, Number 66 (Tuesday, May 6, 2003)]
[House]
[Page H3659]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         THE WISDOM OF TAX CUTS

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Texas (Mr. Paul) is recognized for 5 minutes.
  Mr. PAUL. Mr. Speaker, the current tax debate is more about politics 
than serious economics. Both sides use demagoguery but propose only 
modest tax cuts. The benefits that could come from the current tax cut 
proposal, unfortunately, are quite small and not immediate.
  Some say tax cuts raise revenues by addressing economic activity, 
thus providing Congress with even more money to spend. Others say 
lowering taxes simply lowers revenues and increases deficits. Some say 
we must target tax cuts to the poor and the middle class so they will 
spend more money. Others say tax cuts should be targeted to the rich so 
they can invest and create jobs. We must accept that it is hard to give 
tax cuts to people who do not pay taxes. But we could, if we wanted, 
cut payroll taxes for lower-income workers.
  The truth is, government officials cannot know what consumers and 
investors will do if they get a tax cut. Plugging tax cut data into a 
computer and expecting an accurate projection of the economic outcome 
is about as reliable as asking Congress to project government 
surpluses. Two important points are purposely ignored: first, the money 
people earn is their own, and they have a moral right to keep as much 
of it as possible. It is not Congress' money to spend. Government 
spending is the problem. Taking a big chunk of the people's earnings 
out of the economy, whether through taxes or borrowing, is always 
harmful. Taxation is more honest and direct and the harm is less 
hidden. Borrowing, especially since the Federal Reserve creates credit 
out of thin air to loan to big spenders in Congress, is more deceitful. 
It hides the effects and delays the consequences. But over the long 
term, this method of financing is much more dangerous.
  The process by which the Fed monetizes debt and accommodates Congress 
contributes to, if not causes, most of our problems. This process of 
government financing generates the business cycle and thus increases 
unemployment. It destroys the value of the dollar and thus causes price 
inflation. It encourages deficits by reducing restraints on 
congressional spending. It encourages an increase in the current 
account deficit, the dollar being the reserve currency of the world, 
and causes huge foreign indebtedness. It reflects a philosophy of 
instant gratification that says, live for the pleasures of today and 
have future generations pay the bills.
  Two final points to remember: whether or not people can keep what 
they earn is first a moral issue, and second an economic issue. Tax 
cuts should never be referred to as a ``cost to government.'' Tax cuts 
should be much bigger and come much sooner for everyone.
  Remember, the real issue is total spending by government. Yet this 
issue is ignored or politicized by both sides of the aisle here in 
Congress. The political discussion about whether to cut taxes has 
avoided the real issue and instead has degenerated into charges of 
class and party warfare, with both sides lusting for power. Of course, 
the great issue for the ages, namely, what is the proper role for 
government in a constitutional republic, is totally ignored. Yet 
another question remains: Are the American people determined they still 
wish to have a constitutional Republic?

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