Mafia State

It seems to me that Martin Feldman has a largely good idea ... that will never ever happen.

When it comes to spending cuts, Congress is looking in the wrong place. Most federal nondefense spending, other than Social Security and Medicare, is now done through special tax rules rather than by direct cash outlays. The rules are used to subsidize a wide range of spending including education, child care, health insurance, and a myriad of other congressional favorites.

These tax rules—because they result in the loss of revenue that would otherwise be collected by the government—are equivalent to direct government expenditures. That's why tax and budget experts refer to them as "tax expenditures." This year tax expenditures will raise the federal deficit by about $1 trillion, according to estimates by the congressional Joint Committee on Taxation. If Congress is serious about cutting government spending, it has to go after many of them.

For example, the Joint Tax Committee identified more than a dozen tax-based programs that subsidize education and training. These include small ones like the Coverdell education saving accounts (with a 2010 tax expenditure cost of $100 million) and much larger ones like the various tax credits for tuition (costing $11.7 billion). The hundreds of other tax expenditures include a $500 million annual subsidy for the rehabilitation of historic structures and a $4 billion annual subsidy of employer-paid transportation benefits.

Ignore for a moment the blatantly partisan nature of the the examples (gee, I wonder if businesses ever benefit from these type of tax expenditures?  Nope, looks like it's only education and transportation and liberal bullshit like that).  Ignore also that some of these benefits exist to make the tax code more progressive (nominally at any rate, I for one still think there's an proportional relationship between how progressive they make the tax code on the one hand, and how much they let large businesses take it out of poor people's pockets by reducing competition on the other). 

Neither of these objections matter really because it would be simple suicide for congress to relinquish its power to micromanage the tax system.  If they don't first condemn you, and then grant you a stay of execution, they lose all their power to collect protection money in the form of campaign contributions.  Congress doesn't regulate in order to improve an industry, it regulates, first and foremost, to extract its paycheck.  And the way it "regulated" finance in the last decade should remind us that congress is in the unique position of getting paid for doing stuff, and for not doing stuff as well.