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August 2nd, 2010 11:12 pm
Senator Fareed Zakaria (D-Newsweek)
Posted by Print

It gets a little tiresome having to read columnist Fareed Zakaria’s senate floor speeches masquerading as opinion pieces in Newsweek every seven days. Dr. Z has a tendency to write columns with grandiose titles such as “How to Salvage Afghanistan” and “Defusing the Debt Bomb”.  While it’s admirable that he’s at least trying to offer solutions, most of Zakaria’s bigthink is pretty small — conventional Washington wisdom masquerading as divine revelation.

Zakaria’s gift for analysis is not nearly as deep as he thinks and nothing proves it more than his new piece in Newsweek, entitled “Raise My Taxes, Mr. President”. Taking a page out of the Obama playbook and fashioning himself a centrist who can rise above the fray, Zakaria writes:

[The Bush tax] cuts are set to expire this year. The Republicans say they want to keep them all, even for those making more than $250,000 a year (less than 3 percent of Americans). They say that higher taxes will hurt the recovery. But for months now they have been arguing that the chief threat to the economy is our gargantuan debt and deficit. That’s what’s scaring consumers, creditors, and businesses. Given a chance to address those fears by getting serious about deficit reduction, though, they run away.

Fareed is making a mistake that should be recognizable to anybody who’s ever watched an episode of “House”. He’s making a diagnosis based on symptoms rather than an underlying cause. Yes, America’s debt is horrible. But let’s keep one of Milton Friedman’s key insights in mind: all spending is a form of taxation — it has to be paid for sooner or later, one way or another.

Balancing the budget through tax increases only moves the government’s burden on the private sector from debt to taxation. Think of it this way: if you want to get your personal finances in order, does it make more sense to simply pay for your reckless spending with cash instead of a credit card or to actually buckle down and stop spending as much? If you realize that the first can save you a few bucks here and there, but only the second can provide financial salvation, you’re on the right track. You’re also smarter than Fareed Zakaria.

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