60 Minutes ran a segment on November 20th regarding a signed pledge by hundreds of congressional politicians to always oppose any and all efforts to raise taxes. There are 41 Senators and 238 Representatives that have committed to this Americans For Tax Reform "non-binding" political pledge. This was the first I had heard of such a powerful "doctrine" controlling our political landscape. Those that have gone against their pledge have mostly been eliminated from office at a future election.
With the stalemate on deficit reduction having reached epic levels (nothing is being done), I thought I would look at this pledge a little deeper. On the surface, I think most Americans would say this doesn't make sense and how could a politician with the best interests of America in mind vehemently oppose some tax increases to help solve our financial crisis. After all, we want to be reasonable and if they can cut spending and increase taxes at some level then we are that much closer to reducing our deficit. Seems like a good compromise all things considered.
However, this "pledged" group opposes any increase in taxes so finding a compromised solution is not in the cards. Basically, they are stating that any and all deficit reduction must come from spending cuts alone. In theory, I oppose what they are doing but in practice, it makes total sense. Have you ever seen executive management of a corporation sign a pledge or state in their mission statement to never increase prices to its customers, ever?! Heck no. At times, it makes for good business to charge more for ones products and services when other things have been attended to first. Specifically, the entity has developed a superior product or service, is operating efficiently, knows in which markets it can compete, has streamlined operations, cut corporate waste and overhead, etc. Then, once all of this has been done, a corporation may be able to look for increased revenues by enacting price increases for its products and services only if the market will bear it. Customers of course can opt to not buy so management had better be right or it will negatively impact their financial model. I can't imagine an executive management team believing they can get out of the red by passing along their inefficiencies on to their customers!
Unfortunately, the problem with government is many politicians look to tax increases as a way to solve shortfalls well before anything substantial is done to provide for an efficient and effective government. We are running in the red every year for the forseeable future including 2012 despite nearly $3 trillion in projected federal receipts. We all know there is incredible waste and unnecessary programs that drain our financial resources. Let's purge all we can now and start operating within the constraints of our current revenues. Some day, it may make sense to increase taxes as taxpayers are getting what they want from their government and/or we need to fund a war or other strategically important initiative. But until then, it requires drastic measures like "the Pledge" to get things right-sized in government.
