It sounds reasonable enough at first glance. Instead of borrowing the money the federal government needs to continue the savings-and-loan bailout, why not raise taxes or cut spending?
This is how a House banking subcommittee proposes to raise most of the $80 billion needed to supplement the bailout effort. The first $20 billion of this amount would be borrowed, but the rest of the money must come from cuts and taxes over the next five years. Without a fresh appropriation, the bailout effort will come to a halt by the end of this month.But given the lack of discipline in Congress, it is safe to assume that most of the additional $60 billion needed would have to come from new taxes rather than spending cuts. But for years every new dollar in taxes has been matched by substantially more than a dollar in new spending.
Unless the federal government can somehow improve on this record, what would seem on the surface to be fiscally prudent might do nothing more than lay the groundwork for more spending than would otherwise occur.