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December 13, 2004

don't tax, spend anyway

Don Herzog: December 13, 2004

Why oh why is this administration so bent on flagrantly irresponsible tax cuts?

 “Starve the beast”?  Well, that well-known fountain of leftist propaganda, The Economist, recently reported that in 2002, 2003, and 2004, this administration posted the largest annual percentage increases in real discretionary spending than all but two years (both under LBJ) of the last forty.  And they vigorously rejected the claim that the cause was the war on terrorism.

The extremists doing this are not to be written off as the likes of Ann Coulter and Rush Limbaugh, buffoons that no one really takes all that seriously, drummed out of respectable publications and the corridors of power.  No, they travel under the name of Republican president and Republican congress.  I wistfully remember the days when you could count on the GOP for fiscal sanity.  (I've been a deficit hawk forever.)  A serious and seriously right-wing friend of mine already had decided not to vote for Bush.  He didn’t think he could bring himself to vote for Kerry -- until he sat down and read through the most recent budget.

Conservatives have long bemoaned transfer payment programs.  Decades before the New Deal, William Graham Sumner was already thundering that A and B should stop putting their heads together and forcing C to do something for the sake of D.  (Kudos to the Liberty Fund, an outlet that has saved my students lots of money over the years by publishing their beautiful subsidized editions of classical liberal texts, for posting his book online.)  At least C has a voice in a democratic process.

The real problem with these torrential deficits is not that Japan and China might decide to stop buying our bonds and so dislocate the economy, not any arcane calculations about trade deficits and the domestic interest rate.  The real problem is that we are plundering future generations, who have no democratic voice at all.  “Responsible leadership”?  Gag me with a spoon.

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Comments

Posted by: David Velleman

Don:

In the comment thread of Liz's post on patriotism, I suggested ribbon decals saying "I support our troops: I pay my taxes." Then I realized that I don't support the troops by paying taxes, since the costs of the war are just being tacked on to the tab being run up in the name of my grandchildren. Why aren't we paying our own way for fighting the war? Because we hate government. Why are we fighting the war? So that the Iraqis can have a government.

Maybe the decals need to say: "I support our troops: raise my taxes."

Posted by: David Velleman | Dec 13, 2004 9:25:09 AM


Posted by: Deb Frisch

"The extremists doing this are not to be written off as the likes of Ann Coulter and Rush Limbaugh, buffoons that no one really takes all that seriously, drummed out of respectable publications and the corridors of power. No, they travel under the name of Republican president and Republican congress."

Many liberals believe that the Bush Administration's economic policy is kooky because Bush is a kook. But the real reason is that the BA trusts mainstream economists more than previous administrations.

According to Jonathan Weisman in the Washington Post, "Bush is trying to adhere strictly to economic theory, perhaps even more so than during the Reagan administration's early battles over deregulation and taxes."

http://www.washingtonpost.com/ac2/wp-dyn/A29878-2004Dec2?language=printer

R. Glenn Hubbard, for example, is a primary architect of much of Bush's faith-based economic policy. He is the dean of Columbia Business School.

So if you think Bush's economic policy is crazy, don't blame it on Republicans. Blame it on the tenured economics professors who dress up right wing rhetoric in economic mumbo jumbo and pass it off as "science."

P.S. What does it mean to "dislocate the economy?"

Posted by: Deb Frisch | Dec 13, 2004 9:31:14 AM


Posted by: Jeremy Pierce

It's worth noting that Kerry's plan had a much higher budget without that much of an increase in revenue to cover it. Someone who already likes Kerry for other reasons and would be willing to stomach that is thus much like someone who already likes Bush for other reasons and willing to stomach this for the sake of those other things. The people I don't understand are those who like Bush but won't vote for him for this reason and then vote for someone who is worse both on the things they like about Bush and on this issue.

Posted by: Jeremy Pierce | Dec 13, 2004 9:56:51 AM


Posted by: Henry Woodbury

The Republican Congress is doing what all congresses do: moving money to their districts.

Republican fiscal hypocrisy may also be caused by the long-term shift of Republican power to the relatively poor, formerly Democratic South. As Republicans have consolidated power, their expanded constituency has begun demanding payback.

Meanwhile, the natural constituency for free trade and limited federal government are the wealthy, internationally-focused coastal states.

It may be nice for the federal government to pay for Boston's Big Dig, but in the big scheme of things, New England, New York, California, and other coastal states will do better if they keep their citizens' tax money home.

So hopefully, the next small-government, free-trading Reagan or Gingrich will be a liberal Democrat.

Posted by: Henry Woodbury | Dec 13, 2004 10:02:20 AM


Posted by: S. Weasel

So hopefully, the next small-government, free-trading Reagan or Gingrich will be a liberal Democrat.

If he were, I might well vote for him.

Posted by: S. Weasel | Dec 13, 2004 10:09:03 AM


Posted by: Peter Burfeind

This is remarkable. Liberals give personhood to people yet unconceived. To wit: "You're passsing these costs on to our grandchildren!" But you don't give personhood to beings which are truly in existence, but only unborn.

The fact of the matter is our nation has been in debt before during war, and as Alexander Hamilton argued, debt is the lubricant for the capitalistic machine. Our economy will grow out of this, expand to such a degree that its debt will be covered.

Why is the wheel brand new to the liberal each and every day?

Posted by: Peter Burfeind | Dec 13, 2004 10:12:27 AM


Posted by: Left2RightWatch

FALLACY ALERT: Poisoning the Well

"Anyone who agrees with the tax cuts is an extremist or buffoons"

Clap...clap...yet another fine show, Prof. Herzog.

Posted by: Left2RightWatch | Dec 13, 2004 10:28:43 AM


Posted by: Gary

Peter,
Growing out of this debt would require above average economic growth, which is unlikely. Most economists will tell you that the only way to reduce this debt is through tax increases or deep cuts in the spending. I know which one I would prefer, which one would you prefer?

Posted by: Gary | Dec 13, 2004 10:33:35 AM


Posted by: D.A. Ridgely

Oh, how it warms the cockles of a libertarian’s heart to hear liberals crying out for fiscal restraint!

I’ll let the professional economists here correct me, but I think a pretty good case can be made for the position that the method of financing government is not as problematic as the level and nature of government spending. All other factors being equal, whatever we spend on government is ‘stolen’ from our grandchildren anyway, whether we borrow now and leave them more non-government wealth but more debt when we die or tax ourselves more now and leave them less debt but less wealth. Since my grandchildren (and yours) are probably going to be vastly richer than I am, anyway, I’m not overly concerned about them. (For a better explanation of these points, I recommend a number of Steve Landsburg’s columns archived in Slate.)

Lest I get gang tackled too quickly, let me add that there are reasons for concern over how we run up deficits, specifically the extent to which government operations are being financed by foreign creditors. There, too, however, until there is more evidence that the Euro or some other foreign currency becomes the world’s safe harbor money, I’m not quite ready to start snapping up gold futures.

That said, my single biggest complaint about the Bush administration and the current Republican congress is their profligate spending. I can’t say that I am surprised, however. Politicians are weasels (well, not all politicians; it’s only the rotten 97% that give the rest of them a bad name); and while I still prefer my weasels to the other side’s weasels, its prudent to remember that they’re still weasels, after all. As always, Lord Acton’s most famous aphorism is – dare I say it? – right on the money.

Posted by: D.A. Ridgely | Dec 13, 2004 10:34:13 AM


Posted by: Mike F.

I'm a right-libertarian who votes Republican, and I used to be much more of a deficit hawk. But I'm a libertarian before a deficit hawk, and I am first concerned with what the government is asking of me, and only secondarily with what the government is spending.

Given the pathologies of our political system, I don't think spending will ever be cut if the revenue is there. So the only way to cut spending in the long term is to ensure that there are no new taxes, or, if possible, that taxes are cut. Having to raise taxes to do it is about the only thing that can possibly keep politicians from increasing spending. It's true that the beast is not starving yet, but things will eventually come to a head, and the bet people like me are making is that when they do, spending will be cut rather than taxes raised (or, at least, that our best hope lies that way).

Posted by: Mike F. | Dec 13, 2004 10:39:01 AM


Posted by: Left2RightWatch

Quick - you better turn off this thread! Because there is NO WAY there will be a decent discussion when the original poster (Dr. Herzog) started off by trolling. He already "poisoned the well" by calling those with different opinions "buffoons" and "extremists."

Prepare for a flamewar, Dr. Herzog. This is the Internet baby, not your class where you can attempt to demean other points of view without response.

Posted by: Left2RightWatch | Dec 13, 2004 10:42:28 AM


Posted by: S. Weasel

My guess would be, Left2RightWatch, that Herzog made the remark because the thread before has dissolved into a "whose buffoons are buffoonier?" grudge match. I can't imagine why you'd want to launch a flamewar over it.

Posted by: S. Weasel | Dec 13, 2004 10:48:46 AM


Posted by: Terrier

Our economy will grow and cover this debt the way it did after the revolution? Last I noticed there were no unsettled western lands ripe for exploitation. I do have prime Brooklyn property if you're interested.

Are Radical Republics even serious about reducing the deficit and having a balanced budget? I am really unclear about their plan. I seem to remember Kierkegaard writing that it would be simple matter for the government to borrow the amount that it already owed and thus double it's debt and that it should do so immediately and give all the money to him. If we have a deficit and tax cuts then aren't the tax cuts just borrowing money so that the taxpayers don't have to pay for the government that they are getting? Can I increase my current income by borrowing money to pay the electric bill and thus not paying it from my current salary? Is this what they mean by diaelectrical materialism?

Posted by: Terrier | Dec 13, 2004 10:52:12 AM


Posted by: Don Herzog

S. Weasel:

Yes, for that reason. And also for the same reason that David protested the "yeah but what about Jane Fonda?" way of thinking, and arguing. But the logic of my post is just not what L2RW thinks it is. I do not say, opposition to my way of thinking counts as buffoonery. I say, embrace of deficits cannot be written off as a fringe position on the right: it is now mainstream politics entrenched as law -- and therefore as actual debt.

And yes, I do call it extremism. But that can't count as poisoning the well in these circles. Even some of us on the left fondly recall Goldwater's maxim: extremism in the defense of liberty is no vice, and moderation in the pursuit of justice is no virtue.

The only problem is, it's hard for me to see these deficits as promoting liberty or justice.

Posted by: Don Herzog | Dec 13, 2004 10:56:26 AM


Posted by: Gary Farber

"I'm a right-libertarian who votes Republican"
Personally, I never understood how a libertarian philosophy is reconciled with conservatism. My understanding is that libertarianism is about liberty through and through, not limited to the economy, or ideas about the government but also extending to the social and cultural sphere as well. So libertarianism is about ‘anything goes’ as long as it does not infringe on others private property. The imminent libertarian economist Hayek wrote an essay why he is not a conservative, aptly title "Why I am not a Conservative." It seems to me that this is just a condition of cognitive dissonance. Anyone want to try to defend that?

Posted by: Gary Farber | Dec 13, 2004 10:56:29 AM


Posted by: Peter Burfeind

Gary, obviously I'd choose spending cuts...dramatic spending cuts...

My point is that the debt isn't as big a deal as people make it out to be. The country hasn't been debt-free since Andrew Jackson. One of the obvious tenets of capitalism is that the economy is not a zero sum gain, but that money can indeed, literally, expand out of thin air with the promise that it will be used to create future goods/services which in turn will provide collateral for past financing. And this cycle goes on and on as the economy expands exponentially. Thus, big debt today is fianced by greater returns in the future. This has been the doctrine governing our economy, (indeed, even our own individual economies) for over two centuries.

I'm not up on these stats, but what percentage of the total economy is our national debt, as compared with other eras in American history?

That's the real question.

Posted by: Peter Burfeind | Dec 13, 2004 10:57:56 AM


Posted by: votermom

Why oh why is this administration so bent on flagrantly irresponsible tax cuts?

When I am in a cynical mood, I decide gloomily that this is on purpose, to increase the number of people living near or below the poverty line, and to pull the "barely rich" into the really rich. A large, prosperous middle class is the biggest obstacle to increasing the authorities of a small elite.

Posted by: votermom | Dec 13, 2004 11:00:44 AM


Posted by: Ted

Mr. Farber: If you read Hayek's piece you will see he is speaking about European Conservatives, not American conservatives who are share many of the classically liberal premises of libertarians. But it is an uneasy marriage.

Ms. Votermom: So your argument is that Republicans hate poor people. This is very enlightening. Thank you for sharing.

Posted by: Ted | Dec 13, 2004 11:06:43 AM


Posted by: Ted

Serious question: If Congress is spending like a drunken sailer, are the Democrats in the House and Senate voting against these spending bills? Have they proposed any spending cuts?

Posted by: Ted | Dec 13, 2004 11:10:04 AM


Posted by: mw

What's going on? My sense is that it is partly a form of political hardball. Spend a lot of money on new programs (e.g. medicare prescription drugs) and what does that leave the Democrats to argue? That we actually should have spent more on the program than we did? And also that we should raise taxes to pay for not only the Bush version but the more deluxe Democratic version that should have been passed? Also, if you're the party that passes a new program, you're the one who gets credit for it forever--even when most of the tough work of figuring out how to pay for it is done later by others (e.g. FDR and social security).

But I don't think it's *entirely* cynical -- I think there are Bush admin types who really do believe that we can grow our way out of the deficit. And it's not impossible -- that does seem to be what happened in the 1990's. We didn't balance the budget because government got serious about fiscal restraint over the course of many years. Instead, the economy started throwing off tax revenues at an unexpected rate--so quickly, in fact, that it was faster than Washington got around to spending it. So growth *could* reduce or eliminate the deficit, but it's not a safe bet by any means.

Bush didn't lose all that many fiscal conservative voters in '04, though, because Kerry *did* in fact seem to be promising even more spending and the cancelling of upper-income tax cuts wasn't going to be enough to pay for it.


Posted by: mw | Dec 13, 2004 11:12:38 AM


Posted by: S. Weasel

Personally, I never understood how a libertarian philosophy is reconciled with conservatism. My understanding is that libertarianism is about liberty through and through, not limited to the economy, or ideas about the government but also extending to the social and cultural sphere as well.

Libertarianism is closer to what I believed was liberalism when I was a kid. But, given power, liberals appear to be about enforcing social and cultural ideas, rather than allowing them. If I may be forgiven a crudity in defense of my point, conservatives use law to forbid me to smoke marijuana and say "shit." Liberals use the law to forbid me to smoke cigarettes and say "nigger." I don't especially want to do any of those four things, but I don't see a lot of difference in terms of liberties, either.

Currently, conservatives come in more to my liking on many issues, such as taxes, interpretation of the law and gun ownership, so that's where my vote goes.

Posted by: S. Weasel | Dec 13, 2004 11:13:00 AM


Posted by: Gary Farber

"American conservatives who are share many of the classically liberal premises of libertarians."
Surely not the ones that are running the Congress, the Senate or the WH. So who are these American conservatives that share classily liberal ideas?

Please explain the difference between the European Conservatism vs. the American Conservatisms within the sphere of cultural and social issues?

Posted by: Gary Farber | Dec 13, 2004 11:17:41 AM


Posted by: Deb Frisch

FALLACY ALERT: Poisoning the Well

"Anyone who agrees with the tax cuts is an extremist or buffoons"

Clap...clap...yet another fine show, Prof. Herzog.
-----
A blog with its own cop - cool! But methinks the sheriff is off-base here. Ann Coulter and Rush Limbaugh are dolts and anyone who believes that tax cuts are a sensible economic move today is a moron.

Chill out, Starsky.


Posted by: Deb Frisch | Dec 13, 2004 11:23:09 AM


Posted by: Henry Woodbury

Let's face it, any classic liberal or libertarian who wants a fiscally-conservative government is in the political wilderness. The question "How can you be x and vote y" is just a nonstarter. You either vote for a third party or play darts with issues.

RI Republican Senator Lincoln Chafee, a classic social liberal fiscal conservative, is widely considered an odd-ball. Which would be true, no matter what party he was in. I vote for him every six years knowing he is an outlier.

Posted by: Henry Woodbury | Dec 13, 2004 11:23:15 AM


Posted by: Gary Farber

"Liberals use the law to forbid me to smoke cigarettes and say "nigger.""
Good point, but liberals will not incarcerate you for smoking or being a racist, while conservatism will throw you in jail and throw away the key just to pretend to be tough on crime and to continue its nonsensical War on Drugs. So you believe that in liberty terms going to jail is tantamount to being fined or annoyed?

Posted by: Gary Farber | Dec 13, 2004 11:26:27 AM


Posted by: Ted

From a libertarian perspective, lower taxes means I personally have greater control over my finances. Both deficit spending and greater taxation are poisons to the economy. However, with lower taxation I can grow my capital in a way to protect my finances from the damage done by Congress to our economy.

In short, my advocacy of lower taxation is based on the rationale I can spend my money better today than the government could today. The marginal value of having money today is of bigger value than trusting the government to "pay off" the deficit at a later date (which of course, is impossible because our currency is based on 200 years of debt).

If Democrats were advocating spending cuts to balence the tax cuts it would only be a positive in considering who I would vote for.

Posted by: Ted | Dec 13, 2004 11:26:35 AM


Posted by: Terrier

Weasel - How can changing the level of discourse thru social pressure be equivalent to a law? If they passed a law saying that you can't be crude I was not informed and apparently neither were you. If some localities prohibit smoking in public places when was the last time an offender received life-in-prison for breaking this law? Is a non-smoker’s right to air less important than a smoker's right and does any locality have a law that you can't light up at your own home?

Posted by: Terrier | Dec 13, 2004 11:30:44 AM


Posted by: D.A. Ridgely

Mr. Farber writes: "...liberals will not incarcerate you for smoking or being a racist"

Not so, any time someone serves for the commission of a 'hate crime' beyond the time he would serve for a regular crime is, essentially, time served purely for his racism (or homophobia, or whatever.)

Posted by: D.A. Ridgely | Dec 13, 2004 11:32:37 AM


Posted by: Ted

Mr. Farber: The Tradition of the USA is that of classical liberalism. When US conservatives advocate "tradition" they usually mean one of limited government, markets, etc. The European Tradition is (for the most part), one of Throne and Alter.

"So who are these American conservatives that share classily liberal ideas?"

The Republican Liberty Caucus (www.rlc.org). You are correct that this is minority group in the GOP.

Posted by: Ted | Dec 13, 2004 11:32:45 AM


Posted by: votermom

Ms. Votermom: So your argument is that Republicans hate poor people. This is very enlightening. Thank you for sharing.

Hi Ted. Thanks for your quick response. I am simultaneously flattered that you resond so quickly, and curious as to why the tone of your response seems argumentative? hostile? (Not only here but in a previous thread)

If you read my post I didn't say anyone hates anyone.

And I wasn't arguing the position I did state, only saying that that is what comes to mind, when I feel cynical. When I feel cynical, here's what I do: I look at the likely result, assume that the likely result is the desired result, then look at the possible list of motives for desiring that result.

In no way does that imply that republicans hate the poor people. I was saying that it seems that the current administration is shrinking the middle class, and speculating that this may be deliberate, in which case the likely motive is in order to decrease the voice of the middle class in the political process.

When I am not feeling cynical, I allow the benefit of the doubt in that maybe the likely result is not the desired result, and then other reasons come into play, including incompetence and/or short-sightedness.

My basic premise is that an excessive national debt hurts the US economy; I am not convinced by any argument that poo-poohs the danger of the large national debt.

I think many republicans agree with my basic premise and are actually fiscally conservative.

Posted by: votermom | Dec 13, 2004 11:34:44 AM


Posted by: S. Weasel

Weasel - How can changing the level of discourse thru social pressure be equivalent to a law? If they passed a law saying that you can't be crude I was not informed and apparently neither were you.

But "hate crime" is enshrined in law, and "hate speech" will turn a simple assault into a more serious offense. And there are laws regarding obscenity in print and public, and have been stronger ones in the past, and would undoubtedly be stronger ones again if many social conservatives had their way. Beg pardon for not using more obviously obscene language to illustrate my point, but I was pushing good manners as it was.

If some localities prohibit smoking in public places when was the last time an offender received life-in-prison for breaking this law?

So, your slogan is, "vote for our fascism, the penalties are lighter"?

Is a non-smoker’s right to air less important than a smoker's right and does any locality have a law that you can't light up at your own home?

The way our public health authorities have diddled the data to support the idea that second hand smoke is a danger is...another topic for another time. Let's assume, for the sake of argument, it is the grave risk they claim. Shouldn't a bar owner or restauranteur be allowed to make that decision, provided the business is adequately marked as a smoking facility? Where smoking and insurance overlap, it is also forbidden in the home. Cops and firemen, for example, are forbidden to smoke, even at home, in some areas.

I'm not a smoker, but I can follow the line leading to fat taxes and salt taxes...more labeling, more busybodying in general, and I'm not having it.

Posted by: S. Weasel | Dec 13, 2004 11:44:10 AM


Posted by: Ted

Ms. Votermom: So please answer the question - are those who advocate tax cuts motivated by stealing from middle-class people to make them poor to rob them of their vote? If so, why couldn't we say their motiviation is based on hatred?

Or that all of them are short-sighted and incompetent (i.e. stupid), and thus have no rational reason for what they do (other than for sinster motivations, as above)?

Please enlighten me, I am serious (not being sarcastic). Can you see why I, as somebody who does advocate tax cuts, might take this as hostility? Or be offended?

PS: "Fiscally conservative" to most fiscal conservatives does not only mean being against deficits, but also against excessive spending.

Posted by: Ted | Dec 13, 2004 11:46:37 AM


Posted by: Gary Farber

So, your slogan is, "vote for our fascism, the penalties are lighter"?

How about vote for "our fascism our panalties are saner?

Posted by: Gary Farber | Dec 13, 2004 11:52:31 AM


Posted by: votermom

If so, why couldn't we say their motiviation is based on hatred?
I think it is about power and self-interest, not hatred. Just because someone grabs something doesn't mean that he hates the owner, just that he wants what the other person has. Did the Enron execs hate their employees? They just didn't care about them as much as they cared about their own pockets. In fact, they probably didn't think about them at all. It's not hate, it's indifference.

Can you see why I, as somebody who does advocate tax cuts, might take this as hostility? Or be offended?

I like getting tax cuts too. I don't think the tax cuts are causing the deficit*. It's the Very Expensive War that is. And the ever present government waste.

What I don't like about the tax cuts is that it comes with reduced federal money to state and local governments, which boils down to my property taxes skyrocketting. You know how the all corporate costs eventually get passed to the consumer? All government costs (expenses) eventually get passed to the tax-payer. There is no such thing as a free lunch.

*I may be wrong, as I am not an economist.

Posted by: votermom | Dec 13, 2004 12:00:50 PM


Posted by: rumpy doppelganger

To try to stay on topic:

I think most conservative/libertarian types would concede that the profligate deficit spending that has gone on is a valid criticism of the current administration.

Speculating, this policy is probably a result of political calculation rather than a deliberate attempt to hurt the middle class (the relative tax burden has in fact shifted increasingly upwards with the tax cuts.)

Obviously, however, such conservative/libertarian types would argue that the proper policy is to restrain spending, rather than to increase taxation as the author suggests.

Posted by: rumpy doppelganger | Dec 13, 2004 12:01:22 PM


Posted by: Terrier

When I was talking about the "right to air" I was not talking about the silly second-hand smoke argument - beat that straw dog all you want, I don't care - what if the non-smoker just doesn't like the smell? Should I be allowed to impose any smell I want on your personal space and you have no recourse? How much should the government spend to knock in your door, drag you into your living room handcuffed in front of your children, and confiscate your property leaving your wife and children to depend on social services to survive while the state jails you? Is that is equivalent to asking you nicely not to fill the air with foul smelling smoke in a public place?

As for "Hate" crimes - although I agree they should be unnecessary it seems to me that the push for them arose more out of the desire for some justice when a local authority dropped the ball and failed to convict for obvious crimes.

How much sales tax do we forgo by having clandestine untaxed economies going on all around us? How much do we spend to prevent that activity? For those with personal experience of private debt collectors, do you relish the thought of the government using private collectors to collect tax debt?

Posted by: Terrier | Dec 13, 2004 12:02:28 PM


Posted by: Steve Sheldon

The problem of debt and deficit spending is not that debt is bad per se... The problem is the debt payment plan. Right now we're paying around $300-400 billion each year in interest payments and it's only going to go up as interest rates increase and we have more debt to pay interest on.

At some point, the debt payments will surpass what is spent on government services. This leads to the viscious cycle, for to maintain the same level of service the govt must either create more debt, or raise taxes. Either path means that we will be creating nothing from something, which turns into a viscious cycle which only goes downhill.

It's how economies collapse.

There is no higher meaning here, they are not trying to starve the beast or destroy the economy, at least not purposefully. For Generations now politicians have learned that the way to get votes is to promise lower taxes and bigger spending. That's it, it's all about DeTocqueville.

Posted by: Steve Sheldon | Dec 13, 2004 12:10:14 PM


Posted by: pedro

Ted's mention of the Republican Liberty Caucus brings up an interesting question. If the Democrats need to reach out across the aisle, and forge alliances with some Republicans, what sort of concessions ought to be made. David Velleman--in this blog--and other commentators elsewhere have identified a few sensible and important areas in which Democrats can seek to find consensus with the religious center of the Republican party. I like some of the ideas proposed, but I do confess that my beef with the Republican party is far more about its pandering to the religious right wing than about its fiscal policy. I often wonder why American libertarians choose to side with social authoritarians rather than with liberals, and I do wonder what types of concessions on economic policy might move the libertarian community away from their strange partnership with Robertson, Falwell, Dobson, et al.

Posted by: pedro | Dec 13, 2004 12:10:51 PM


Posted by: S. Weasel

Terrier, why don't you ask the nice man if he'll start a thread this would be appropriate on? We're kind of derailing this one.

Posted by: S. Weasel | Dec 13, 2004 12:14:31 PM


Posted by: Ted

"I think it is about power and self-interest, not hatred. "

How is in the GOP interests to screw over the middle-class? Either way it is unproductive to assume people you disagree with are simply Evil.

" It's the Very Expensive War that is. And the ever present government waste."

Well I don't think it is all the War. Personally I see nothing wrong with deficit spending for a war - as future generations do benefit.

"There is no such thing as a free lunch."

Well we agree on that!

Posted by: Ted | Dec 13, 2004 12:17:23 PM


Posted by: Bret

1.) As I've written here, the debt during the Bush Administrations will have minimal impact on the viability of the economy.

2.) The minority party is always for fiscal restraint, the majority for massive spending. That explains why the Republicans were the party of restraint, now they're not. The best way to get a fiscally restrained government is to get a President from one party and a congress from the other.

3.) Many distinguished economists like tax cuts and don't mind debt. For example, this year's Nobel Prize for Economics went (shared) to Edward Prescott, and his specialty is economic policy and the business cycle. Here's what he has to say:

====

"What Bush has done has been not very big, it's pretty small," Prescott told CNBC financial news television.

"Tax rates were not cut enough," he said.

Lower tax rates provided an incentive to work, Prescott said.

Prescott and Norwegian Finn Kydland won the 2004 Nobel Economics Prize for research into the forces behind business cycles.

The American analyst, who is a professor at Arizona State University and a researcher at the Federal Reserve Bank of Minneapolis, said a large tax cut in 1986 had lowered rates while collecting the same revenue.

But "in the early '90s the economy was depressed by the tax increase in '93 by about four percent, and it's right at that level now," Prescott said.

====

So now we have an economist, who specializes in economic policy and won the Nobel Prize, who says that Bush's tax cuts were too small. There is now nobody with equal stature and specialization who takes the other side.

4.) Belief in economic damage from deficits is subjective. There's simply not enough data to prove it with any confidence. Indeed, inconveniently the data shows that the United States has had much of its best growth during high debt periods (see here). I'm currently working on an essay that shows a subjective, but plausible, economic model that shows benefits from deficits.

Posted by: Bret | Dec 13, 2004 12:20:05 PM


Posted by: D.A. Ridgely

For a painful example of my "weasels will be weasels" theory, I would invite the liberals here (whom I'm guessing don't read the Weekly Standard very often) to read Andrew Ferguson’s “A Lobbyist’s Progress”:

http://www.weeklystandard.com/Content/Public/Articles/000/000/005/022nwtca.asp

I agree with Bret. If we can’t have smaller government, grid-locked government is the next best thing. Human nature being what it is, elected officials and their colleagues will behave badly, regardless of their avowed ideology, whenever they are given too much power.

Posted by: D.A. Ridgely | Dec 13, 2004 12:28:56 PM


Posted by: goethean

> Let's face it, any classic liberal or
> libertarian who wants a fiscally-conservative
> government is in the political wilderness.

But recognize that that's only because deficit-reduction is a low priority among the electorate.

Posted by: goethean | Dec 13, 2004 12:29:05 PM


Posted by: rumpy doppelganger

what types of concessions on economic policy might move the libertarian community away from their strange partnership with Robertson, Falwell, Dobson, et al.

I think this is a good topic for one of the authors to write on.

Posted by: rumpy doppelganger | Dec 13, 2004 12:30:24 PM


Posted by: gary farber

"So now we have an economist, who specializes in economic policy and won the Nobel Prize, who says that Bush's tax cuts were too small. There is now nobody with equal stature and specialization who takes the other side."
There is George A. Akerlof and Joseph Stiglitz who both woth the Nobel Prize in 2001, William Sharpe’s who won 1990, Daniel Kahneman who won in 2002, Lawrence Klein who won 1980, Paul Samuelson who won 1970 , and Robert Solow who won 1987

Posted by: gary farber | Dec 13, 2004 12:46:43 PM


Posted by: Bob Flynn

Why oh why is this administration so bent on flagrantly irresponsible tax cuts?

This is bad writing, bad thinking and bad logic. Here's what Herzog is trying to say/ask:

1. Tax cuts are irresponsible (implied premise)
2. Bush supports tax cuts (true premise)

3. Therefore, Bush is acting irresponsibly (conclusion)

4. Why is Bush acting irresponsibly? (question)

For God's sake, Herzog, Why not start your pieced, without this wimpy, implied, left-wing assumptions, and simply pose the question:

Were the tax cuts good for the economy or not?

Then, you will truly have a debate, and learn something, and learn whether or not Bush is or is not acting responsibly.

Really, this isn't hard.

Posted by: Bob Flynn | Dec 13, 2004 12:51:24 PM


Posted by: suzy

you want an example of a pathetic right-wing extremist buffoon? look no farther than Bob Flynn and Bret.

sorry Bob & Bret, but maybe you should stop letting FoxNews tell you what to think!!!!

Posted by: suzy | Dec 13, 2004 1:17:36 PM


Posted by: votermom

How is in the GOP interests to screw over the middle-class?
The administration is a subset of the GOP. Not equal. The administration can pursue policies that are not necessarily in the interests of the larger GOP.

Either way it is unproductive to assume people you disagree with are simply Evil.
I was going to go on and say that I am not assuming they are evil etc --- but to be honest, I do think there are policies this administration has pursued that are evil. Torture in Abu Ghraib and Guantanamo. Much of what has been done in Iraq. Environmental negligence. But that's all out of the scope of tax and spend. That's just irresponsible.

But it may be true that my disgust at what I see as evil actions may be coloring my view of other policies that are not evil.

At any rate, when it comes to the economy, I think (actually I hope!) that my cynical reading is incorrect, and as someone else posted, it's simply a matter of getting votes, d*mn the consequences. Which I consider short-sighted.

Do you think the tax cuts and deficit spending are actually good for the economy? Are they good for the middle class?

Posted by: votermom | Dec 13, 2004 1:18:00 PM


Posted by: Terrier

After looking at the RLC material this is what I don't understand: they want liberation from taxes and would be willing to accept some government interference in their lives if they could avoid the loss of real income. Private wealth is the solution to all problems. If I remain personally wealthy then the bankruptcy of the government should not concern me. Is this right?

Social spending by the government should be avoided because it will reduce personal wealth and private charity will take care of the problem. But who will provide funds for private charity - if it will negatively affect their personal wealth?

Posted by: Terrier | Dec 13, 2004 1:20:01 PM


Posted by: pedro

Well, were the tax cuts good for the economy?

Posted by: pedro | Dec 13, 2004 1:20:14 PM


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