CNS News reports on a presentation by Senator Tom Coburn on Monday for his deficit-reduction proposal, “Back in Black,” in which the doctor from Oklahoma delivers a very tough diagnosis and prognosis for America. If Congress doesn’t end its profligate spending and fix the personal and corporate tax codes, the resulting debt load will force the government to start printing “fiat money” in order to meet its obligations. That will destroy accumulated capital among all classes in the US and significantly lower living standards for the next generations of Americans. We don’t have long to act before Washington begins imposing “financial repression,” Coburn warns:

“In the real world, a tax increase is any government policy that takes away your wealth. Well, that’s exactly what’s getting ready to happen in our country through financial repression. The assets that you have will be diminished in value as the government creates fiat money to pay for our profligate spending,” he told reporters at the Capitol on Monday.

“Tax expenditures are not tax cuts. Tax expenditures are socialism and corporate welfarism. Tax expenditures are increases on anyone who does not receive the benefit or can’t hire a lobbyist or special interest group to manipulate the code for their favor. Politicians love to play the tax code because it benefits the politicians. No conservative should support Washington picking winners and losers through the tax code. Who do we want deciding that? Markets or politicians?”

Coburn said his proposal would also save over $1 trillion by bringing Defense spending back to the level under the Bush administration at the “height” of the Iraq War surge.

“The American people are tired of Washington waiting until the last minute to avoid a crisis when it’s a crisis that Washington itself created. The crisis though is not the debt limit nor its deadline. The Congress’ crisis – the crisis is Congress’ refusal to make hard choices and reduce a debt that has become our nation’s greatest national security threat,” he said.

“Doing nothing is a tax increase, a benefit cut for seniors and the poor and a betrayal of the core values of both parties; 9 trillion dollars is very reasonable – that sounds idiotic to Washington.”

As an advocate of the flat tax for many years, I couldn’t agree more with Coburn’s assessment of the current progressive tax system. It leaves out too many people (nearly 50% these days) while gaming the system so badly that most Americans need legal help in determining their proper level of taxes. The corporate tax code is even worse, riddled with special favors inserted by lawmakers for their patrons that turn the government into the Deus ex machina of the markets, rather than consumers. It’s a mix of both socialism and corporatism, neither of which helps economic growth or the impartial rule of law — and I’d also add social engineering as a related charge of socialism.

However, as much as I agree with Coburn in this assessment, both on tax reform and his overall point, the effort on Monday loses substantial impact because of what followed. Instead of sticking with his plan, Coburn threw in his lot with the Gang of Six and their ambiguous proposal. Why not at least stay independent long enough to get the Back in Black proposal some serious discussion? I like it better than even the CCB Act passed last night in the House, as it actually reduces the footprint of government and rolls back much of the mischief in the tax code. The Coburn Plan doesn’t interfere with efforts to get a Balanced Budget Amendment, and it’s at least as ready as the Gang proposal for actual legislative work.