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Location: Nashville, Tennessee, United States

8/02/2002

Rethinking The Structural Deficit
For the past three years, we've been hearing that Tennessee has budget problems because of a "structural deficit" in the tax code and that we need to reform the "tax structure" of the state before it bankrupts state government. We've been hearing that from politicians who favor higher spending and higher taxes. Their favored reform: the unconstitutional income tax.

However, their argument is flawed. They allege that the existence of a gap between revenues and planned spending proves the tax structure is flawed. But one does not prove the other. There is no cause and effect. A politician's unaffordable wish list does not prove the tax structure is flawed because it doesn't generate enough money any more than my desire for a new Lexus proves my employer isn't paying me enough. Tennessee's tax structure produced $7 billion in revenue this year. The Big Spenders wanted to spend $8 billion. As my Daddy often said, they "have a champagne stomach and a beer wallet." (Which is a funny thing for him to say given that my Daddy doesn't drink.) Daddy never said that if I had only a beer wallet and wanted champagne it was okay to blame it on my boss and force him to buy me a bottle of Dom Perignon. The governor and legislators are the people's servants, not their boss. The people are the boss and they are willing and able to pay for the government to buy a six-pack of Bud, but not a bottle of Dom.

It makes abundantly much more sense to blame the budget shortfall on the state's recent "structural spending surplus" caused by a flaw in the "spending structure" of the state that has allowed the governor to propose budgets far in excess of what the state could afford.

Tax revenue results from the essentially natural and naturally essential activity of the economy - people working to earn a living to buy the things they need to survive. Government spending, however, is much more arbitrary and controllable. Spending is the result of voluntary decisions made by politicians who could chose to propose to spend less.

There is no law that says a government program can not be trimmed, reduced, altered, cut or eliminated once it has been established. There is no law that says government must grow as fast or faster than the people's ability to pay for it. There is no constitutional right for anyone in Tennessee not to have their favorite goverment program or entitlement reduced, reformed or ended. Every dollar government spends was first taken from someone who earned it, and what some call "entitlements" are, in fact, gifts given to them by taxpayers via the legislature - gifts the taxpayers have the right, through new legislative action, to stop giving.

It's time we stopped talking about the tax structure and started talking about reforming the state's spending structure. History shows that states that have "solved" their budget shortfalls with higher taxes and income taxes have found that government and the recipients of its largesse never seem to be satisfied, and so the politicians return to the taxpayers for more and more and more, again and again and again.

That is why it is crucial that we reform Tennessee's spending structure. We must eliminate our state's structural spending surplus, before it bankrupts the people of Tennessee.