Posted by BN-Politics | From The Board, the blog of The New York Times editorial board:
A recent analysis by Berkeley economists Christina D. and David H. Romer found that, excluding tax changes driven by external factors like economic slowdowns or planned spending increases, tax cuts passed since the end of World War II have led mostly to increases in spending rather than budget cuts.
The pattern shows up time and again. From Kennedy and Johnson’s tax cut in 1964 to Reagan’s tax cut in 1981. Even excluding defense, spending grew 19 percent in the five years after President Bush’s first tax cut in 2001, substantially more than the 14 percent growth in total spending in the previous five years. (Does “Starving the Beast” Work?)
"The Board" blog thinks this pattern emerges because Republicans---and specifically Bush---want to bring the government to its knees by starving it of revenue. In other words, it attributes to them a motive, however questionable, based on ideological grounds. We take a more cynical view.
One could argue that the real goal is to preserve a place at the trough for themselves and those who placed them in power, while excluding everyone else. Assuming their cut-taxes-and-spend-protocol is intended to bring about an ideological goal assumes they don't want to go on running it. It also assumes that ideology trumps the dollar sign. Hard to credit, based on their past performance.
Presumably, the pattern referred to in "The Board" emerges because GOP and its members know all too well that tax cuts endear the GOP to its constituents, most of whom are also okay with spending programs designed to achieve GOP goals, and all of whom have managed (till now) to pull back at the right time and blame the higher spending on the Democrats, "known" to be friendly to big government and government expenditures.
On second thought, perhaps they'll manage it again.
President Bush’s plan might yet exceed that of his Republican predecessors. Though the Bush Administration has spent money like it’s going out of style, there has not yet been any tax increase to offset the cuts of 2001 and 2003.
He is leaving that to future administrations, possibly Democratic ones.(Does “Starving the Beast” Work?)
As the post points out, "The result might seem paradoxical until one considers that spe nding without taxing is the closest a politician will come to a free lunch — a good deal all around if one doesn’t waste much time or energy paying attention to the budget deficit."(Does “Starving the Beast” Work?)
The comments are interesting.
"RJS": I’ve said this many times. Republicans get elected by cutting taxes and increasing spending (the equivalent of the bull in the china shop as far as national fiscal health is concerned). Eventually, they get voted out because enough of the electorate sees through this sham or they self-implode, ala Mark Foley, Duke Cunningham etc. etc. Democrats then come in and clean up the GOP mess, only to have the Republicans come back in the next election cycle to bash them over the head with the mantra “tax and spend liberals”. The GOPers then get re-elected (voters have no sense of history and no memory beyond the last TV spot) and the cycle starts over again. It’s crazy. (rjs)
"National Insecurity": By cutting taxes and increasing spending, Americans are led to believe that they can have the exact same government for less money. So they spend more not knowing. It is not unlike the ATM machine that gave me $20 without telling me that the account was empty and that the $20 was a loan with a $27 fee. But what is insidious is that Bush has jacked the national debt 56% ( past 9,000,000,000,000, now that’s a surge ! ) and built our economy on overseas borrowing. Our children are going to have to pay for this. Why Republicans are seen as the party of fiscal prudence is a real mystery, or a mental habit in action. (national insecurity)
"RAY": I’m not sure the cycle rjs describes is accurate, but one thing is clear: when the feds cut taxes but not spending, and nobody does that better than the New Republican Party, the difference is made up by borrowing. Financing the federal deficits by borrowing has a lot of baleful consequences: it makes the Iraqi was less painful and thus harder to stop; it increases the leverage of China over the U.S. since creditors always have clout over debtors when they choose to use it; it sticks our children and with the cost of supporting us, etc. But, and here’s the real point, it makes life easier politically for the borrower because he can distribute more benefits in the way of spending than costs in the form of taxes.
This is no different than what we saw in the NYC fiscal crisis when mayors borrowed to close budget gaps rather than cut spending or raise taxes. Eventually, the creditors got nervous and stopped lending money until their “terms” were met. It will be the same situation with the federal government when China and other countries start setting down the “terms” for continuing to bail out the Republican “tax and borrowers.” (ray)
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