The tax bill and Washington’s spending

The lame duck Congress featured an instructive debate over the so-called tax compromise that President Barack Obama and Senate Republicans crafted and passed into law. Whether the tax rates in place for most of the past decade are extended for two more years is important -- and thankfully the Republicans pushed the Democrats to get them extended. But keep in mind, tax relief doesn't impact our staggering budget deficit -- spending does.

Unfortunately, the "compromise" also featured $313 billion in new spending -- including a $6 billion subsidy for ethanol. Pundit Charles Krauthammer, noting even Al Gore admits ethanol subsidies are a mistake, labels them a "boondoggle that has induced American farmers to dedicate an amazing 40 percent of the U.S. corn crop -- for burning! And the Republicans just revived it."

If they waited until January, Republicans could have gotten everything they wanted on the Bush tax cuts retroactively, while not buckling to new spending and without fear of a presidential veto. President Obama and congressional Democrats know they lost the Nov. 2 election (and Republicans know why they won) because the Democrat majority kept insisting on massive spending over the past two years and a united GOP opposed it.

How often do we hear members of Congress say, "I didn't like the bill, but we only had a short time to avert disaster?" That's akin to saying, "I'm going to walk over the cliff and then someone will throw me a lifeline because I walked over the cliff." They know the cliff is there but they keep jumping. And -- get this! -- taxpayers who don't accept the new spending "to get tax relief" are called "irresponsible" by many liberals and their media allies, and ironically, some Republicans.

All too many in Congress, and all too many Americans, have been seduced into the mind-set that taxes are the government's money. It's not. It is our money they take. In the tax bill the death tax went from zero to 35 percent and some called it a win because the government is only taking 35 percent of your wealth. How absurd.

It leads Wall Street Journal columnist Daniel Henninger to raise an important question: What are taxes for?

"What balance between the private and public economies will best allow the U.S. to remain the world's pre-eminent economic (and military) power for the next generation?" Henninger asks. Many Democrats don't understand the proper balance.

Indeed, it seems some in the Obama administration and even the president himself no longer see a justification or need for U.S. supremacy as the leader of the free world. Yet incoming GOP House Speaker John Boehner and GOP Senate Leader Mitch McConnell agree that, to ensure our primacy, the pre-eminent purpose of a modern tax system should be to achieve the highest possible level of growth in the private economy with a competent federal government in simply a supporting role.

In this respect, The Wall Street Journal editorially notes that the real pro-growth victory is the extension of tax rates on income, capital gains and dividends. "These are the rates that most effect the decisions to work and invest, as well as the profits of small business job creators who pay individual tax rates under subchapter S of the tax code," the paper says. "After years of opposing an extension of these rates, Democrats conceded that raising them would hurt the economy and thus their own prospects in 2012."

But back to the spending question. Republicans fared far better -- as did the taxpayer -- when a united Senate GOP shot down the pork-laden $1.1 trillion "omnibus" spending bill. That victory came a few days after the tax "compromise" with President Obama, so let's hope voters are watching the rediscovery of the Republican's traditional fiscal conservatism.

To the liberal and government bureaucrat, the goal is to pluck the goose with the least squawk. It is to raise more money for more government. To the beleaguered taxpayer, the mission is how to prevent government from spending any more money.

It means applying citizen pressure to the Congress to drastically reduce the size and scope of the federal government. That's why the incoming House speaker is emphasizing spending process reforms. That's why he and incoming House Budget Committee Chairman Paul Ryan are focusing on defunding the new and expensive ObamaCare law.

The Republicans are hoping their popular emphasis on stopping President Obama's spending spree will deny most of its members even the temptation of requesting pork earmarks. Their work in this regard should effectively put the brakes on the Democrats' crusade for bigger government, less freedom and more debt.

J.C. Watts (JCWatts01@jcwatts.com ), chairman of J.C. Watts Companies, a business consulting group, is former chairman of the Republican Conference of the U.S. House, where he served as an Oklahoma representative from 1995 to 2002.