CNBC's Joe Kernan asks "how can a tax cut be paid for"

This morning on CNBC's Squawk Box, David Gregory suggested that Republicans were going to have some difficulty because many are "still clinging to the idea of tax cuts even if they are not paid for."

In this comment, Gregory is repeating a talking point that attempts to equate a tax cut with spending, as if allowing a person to keep 75% of their income instead of only 70% is somehow a government program. And Kernan politely calls him on it:

Republicans would say, what do you mean you have to pay for tax cuts? Was the Clinton level written in stone and anything beyond that we've already spent? So we need to find money to pay for taking less of the money that's already yours? Do we start at 100% taxation and anything below that we need to somehow pay for? That doesn't make sense.

David Gregory looking completely perplexed, as if he has never heard an argument likes this (which he hasn't), replies:

I don't know what part doesn't make sense. If you are concerned about deficits...and you were a proponent of the tax cuts, and then got to a point where they needed to be paid for, I don't know how you square those two things.

Kernan:

Well, why don't you spend less? So what you are saying is that the spending is already done, and you were planning on having more tax revenue from the higher rates from the 90s before they were cut...?

It was a little clumsy, but the point Kernan is making is an important one. Allowing someone to keep more of his own income is not a government program that needs to be paid for. It's always and everywhere government spending, either current spending or previous spending, that causes deficits and thus "needs to be paid for".

And his point about starting at "100% taxation" is even more important. Saying that a tax cut needs to be paid for is almost like suggesting that all income and wealth produced in an economy is by default property of the government. And when the government allows people to keep some of it, it is in effect a government program that needs to be "paid for". Kernan points out that this is completely backwards, and I think most of us would agree.

You can watch the video here.