Number One – I generally subscribe to the line of thinking that says the surest way to reduce the public and politician appetite for governments spending is to raise taxes and balance the books. Deficit spending — either in the short-term or over the long haul — allows people to get $1 worth of government services for less than a $1 worth of taxes. That’s a strong incentive fore everyone to think positively about spending programs, even ones that are probably not neutrally worth the money. I don’t think any government program is good or bad per se; but I do think that they should be judged neutrally, and that includes judging them based on their true present cost.

This is kind of the opposite of the “starve the beast” strategy that some opponents of governments pending try to employ; instead of refusing to increase taxes, you require an increase in taxes to cover obligations. However, this remedy is sensitive to progressions in the tax code. That is, it works better if the tax burden is shared equally among all, or at least proportionally flat. For example, if the current budget deficit is reconciled by raising taxes only on billionaires, that doesn’t do much to make the average recipient of government spending feel the true cost of the services being received. And so there’s a connection between the cheap cost of government services and the progressiveness of the tax code. My hunch is that’s a secondary reason many people in politics get so worried about raising taxes on the middle-class; not just because it’s, well, raising taxes on the middle class, but also in part because it intellectually exposes the middle class to the true costs.

Number Two – I’m about two press conference mentions of “loopholes” away from kicking in my television. Somehow people in DC seem to have gotten the idea that all tax breaks are “loopholes,” which is pure nonsense. A “loophole” in the tax code is a situation in which someone has cleverly figured out how to save money on their taxes by exploiting an unintentional consequence of the tax structure.  These exists, for sure, and there are many people who make a lot of money by finding them for clients. But the vast, vast majority of things that people are calling “loopholes” are actually intentional tax break carve outs. The child tax credit is not a loophole. The mortgage interest deduction is not a loophole. The untaxed employer-side health care benefits is not a loophole. Oil and gas subsidies are not a loophole. These are intentional pieces of tax legislation, designed for specific purposes (some good, some not so good) and operating exactly as intending. The upshot, of course, is that “fixing the loopholes” isn’t the politics of cleaning up a unintended error that some individuals/companies are exploiting; it’s the politics of reversing an intentional carve-out. And the latter is a lot harder to accomplish than the former.