I knew I was hooked when I read this:
A poorly applied supply-side analysis has infantilized Republicans when it comes to the budget. They love to cut taxes but cannot bring themselves to cut spending: It’s eat dessert first and leave the spinach on the table.
This line is from Kevin Williamson’s piece in the May 3rd issue of National Review, “Goodbye Supply Side.”
What’s great about Williamson’s article is that he masterfully walks the difficult line of coming out against supply-side economics but not against tax cuts. The argument is the following: Not every tax cut pays for itself. If they don’t and you don’t cut spending, you end up with a bigger deficit. If they do pay for themselves and you don’t cut spending, it’s likely that the increased revenue will be used for even more spending and the government will grow. So, basically, the theory called “starve the beast” doesn’t actually shrink the size of government.
Full disclosure: I used to believe in the starve-the-beast theory. I used to think that every tax cut paid for itself. I don’t anymore. More importantly, I don’t believe that tax cuts without spending cuts will reduce the size of government.
Does it mean I think we shouldn’t cut taxes if we don’t cut spending at the same time? I don’t know; I am conflicted about that. I love the growth that comes from cutting taxes. I want more of it. Yet I know it’s not enough. Debt matters, too, and spending needs to be cut dramatically, because tax cuts do not starve the beast — the government keeps on spending and growing, no matter who is in power. What I really want is a smaller government. (Actually, what I really want is small government.) Tax cuts alone can’t do. The question is, are they making things worse?
I will leave the last words to Williamson:
So, what should conservatives do? One, abjure magical thinking about tax cuts. Two, develop a rhetoric in which “spending” and “taxes” are synonyms, so a federal budget with $1 trillion in new spending means $1 trillion in new taxes – levies on Americans today or on our children tomorrow, with interest. Three, get a load of those tea-party yokels, with their funny hats and dysgraphic signage, and keep this in mind: They are opposed to the Democrats, but what they are really looking for is an alternative to the establishment Republicans, whom they distrust, with good reason, when it comes to the bottom-line question of balancing the budget and getting our fiscal affairs in good order. And then, finally, decide which angry mob you want to face: today’s voters or tomorrow’s bondholders.
The whole piece is here.