Smaller Government, Not Lower Taxes, is the First Order of Business
The piece that I published this morning has already attracted a lot of attention, for which I am grateful, but seems to have generated some confusion, which is best avoided. Let me therefore see if I can clarify at least some of the issues.
The first point is that I am not writing on a blank slate. The policies that got us into this situation are not those that I have ever supported. Indeed, for years I have taken the position that the well would run dry on the entitlement frontier, that regulation would stifle production, and that public institutions would start to crumble with each new expansion in government power.
But unfortunately, we are not dealing with the blank slate. The question that we have to face is what to do now in order to control the situation. On this issue, the first point is that the villain of the piece is the increased level of government control over the economy. This is expressed not only in the direct use of public funds for various projects but also in the scope of regulation over the private sector. The sum of these activities has to be reduced before the level of federal excesses weighs down too heavily on the economy.
Thus I agree with Professor Paul Rahe that the last thing that we want is for a higher share of the GDP to go to the federal government. It is just for that reason that I would raise taxes (and flatten them as well) if that were a means to the end of a smaller federal government, which it can be only if there are spending cuts, which in turn can reduce the amount of borrowing, which is an implicit tax on the future.
I also agree that we should not in principle think about closing loopholes as a quid pro quo for lowering tax rates. The point is that closing these loopholes is probably a good thing, even if there are no tax reductions, given the sectoral distortions that they create on the economy. But that is small potatoes relative to the larger question of runaway expenditures. The corporate jet issue, about which I wrote some weeks ago, is a tiny issue relative to the larger question that we face. No satisfactory solution can be reached therefore, unless there is a systematic overhaul of the entitlement programs, which must be done regardless of what happens to taxes or debt finance.
To put the point in the most explicit terms, the overall size of government is too large. It is a decidedly second order question whether we fund government by taxation, by borrowing (with future taxes needed) or with inflation. Anything that brings down the overall level of spending is what is needed. If higher taxes are that lever, it is a prudential judgment that they should be accepted, not a statement of high principle that we like high taxes for their own sake.
So Scott Reusser is right when he says: "[A]bandoning the Norquist pledge is wise, but only in some future context of tax reform, not in our current context of spending cuts. And Bryan Stephens is right when he writes: “We cannot keep raising taxes to fund this madness. We have to spend less." The real question is how to get there, and with strong Democratic insistence that entitlement programs have to be kept out of the mix, it is a hard task indeed.
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Re: Smaller Government, Not Lower Taxes, is the First Order of Business
"I am not writing on a blank slate." Exactly, Richard, exactly. Just take a look at what has already been written on the slate:
In 1982, Reagan agreed to raise taxes in return for spending cuts three times as large. Reagan delivered--TEFRA, the Tax Equity and Fiscal Responsibility Act, raised taxes by some $90 billion over the next three years. Those three dollars in spending cuts for every new dollar in revenus? According to Ed Meese, who has reviewed various studies, the best estimates of the tax cuts that Speaker O'Neil and Senate Majority Leader Bob Dole delivered "range from 69 cents down to zero."
As William Voegeli writes in his recent book, Never Enough: “Liberal victories advance liberalism; conservative ‘victories’ postpone liberalism.”
What you propose--and you know that I respect you so thoroughly that I thought not twice but about five times before choosing to disagree with you--what you propose sounds all but certain to represent merely another effort to postpone liberal victories. Not that you intend that way. But the slate of our recent history shows that is all but certainly how it would turn out.
Edited on Jul 19, 2011 at 2:07pmRe: Smaller Government, Not Lower Taxes, is the First Order of Business
Where you and I would agree, I think, Richard, is on the need for constitutional--note the small "c"--reform. Attempting to flatten and broaden the tax base while conceding Obama his new levels of spending--that, I still insist, would only involve Republicans in ratifying the vast, outrageous Obama power grab in which he and the Democrats have in just two years increased federal spending from 20 to 25 percent of GDP. This must not be ratified. This must be rolled back.
The needed constitutional reform? In my judgement, the Wall Street Journal called it this very morning:
Jul '10
Re: Smaller Government, Not Lower Taxes, is the First Order of Business
"Smaller Government, Not Lower Taxes is the First Order of Business"
It's not about lowering taxes, it's about not raising them--on anyone. To do so would further imperil an oh so slowly recovering economy (and also imperil Obama's prospect for a second term) In one sense Tea Party Republicans are trying to save Obama from himself and the irony is that if they succeed the result may be having to deal with the Redistributionist in Chief for another four years.
Jul '10
Re: Smaller Government, Not Lower Taxes, is the First Order of Business
The fact that neither side can be relied on to follow through on promises or threats, those sides being heavily populated with feckless crap weasels, means that some outside movement must maintain a political full nelson on the lot of them through the whole process. Another round of zero-sum "$36B" cuts ain't gonna cut it.
Edited on Jul 19, 2011 at 2:22pmMay '10
Re: Smaller Government, Not Lower Taxes, is the First Order of Business
I favor tax reform, but that is side issue now. We must shrink government and we must do it now.
The GOP will lose its base if it caves, again.
Edited on Jul 19, 2011 at 2:29pmApr '11
Re: Smaller Government, Not Lower Taxes, is the First Order of Business
Why The Democratic Party Is Doomed
"The Democratic Party, as we have known it for the past 70 years, is now in its last days.
"The long-term trends are almost all bad news for the left wing of the party.
This week’s fight over raising the federal debt limit exposes a key weakness in the warfare-welfare state that has bestowed power onto the Democratic Party: Without an ever-growing share of the economy, it dies. Every vital element of the Democrats’ coalition — unions, government workers, government contractors, “entitlement” consumers — requires constant increases in payments, grants and consulting contracts. Without those payments, they don’t sign checks to re-elect Democrats.
Like it or not, Obama is not the new FDR, but the new Gorbachev: a man forced to preside over the demise of a political system he desperately wants to save."
http://blogs.forbes.com/richardminiter/2011/07/18/why-the-democratic-party-is-doomed/
Oct '10
Re: Smaller Government, Not Lower Taxes, is the First Order of Business
I completely agree. And let's not kid ourselves: the only way we'll ever get a smaller federal government is if we take it to it's logical conclusion, and allow blue states to exercise their socialist impulses to their heart's content. Reducing the size of the federal government will not reduce the size of government everywhere. But at the very least, shifting power back to the states will result in policy competition, which will wean out insane liberal policies over time.
Mar '11
Re: Smaller Government, Not Lower Taxes, is the First Order of Business
"It is a decidedly second order question whether we fund government by taxation, by borrowing (with future taxes needed) or with inflation." All three of these are forms of taxation; inflation is a pernicious tax that taxes anyone who owns a dollar by devaluing the dollar as it sits in your pocket. And it is a "regressive" tax, to put it in leftist parlance, because the "rich" do not have their wealth in dollars; inflation may even improve their wealth in a dollar amount.
How does it help anyone to take more of their money from them at a time when they have little to spare and hand it to the government who will send it down its giant maw of a rat hole.
The only solution is to reduce the size of governemt, restrain its ability to spend, and reduce taxes denying it the life blood of corrupt-ocrats returning this money to its rightful owners earners/producers. If we don't do this, and soon, the U.S. will become the Hindenburg of all Greeces recalled in the annals of history as a tragedy brought down by petty little beings.
Oct '10
Re: Smaller Government, Not Lower Taxes, is the First Order of Business
And spending caps! We need credible spending caps that work. A balanced budget amendment would be ideal, though I've not seen any credible proposals (the past five years should add up to balance (to avoid pro-cyclicality), not just the past year; we don't want the budget to increase massively in good times--when tax revenue spikes from economic growth--than suddenly shrink sharply in recessions--when tax revenue collapses).
Mar '11
Re: Smaller Government, Not Lower Taxes, is the First Order of Business
Viator, thanks for the link to Richard Miniter's column I agree with all of it but I am not sure the Democrat's gilde path is as steep as he suggests. Then we have the wizard Mike Murphy and his minions who believe the situation is just the reverse and we fanatics on the right are about to lose our political sway.
Jul '11
Re: Smaller Government, Not Lower Taxes, is the First Order of Business
I used to think the debt commission findings would work. I no longer think so. I do not trust any of those in power on the left to keep their word and I do not trust half of the right. Maybe the sooner we collapse economically we can rebuild better than if collapse occurs 50 years from now with less free thinkers and the masses nearly all entitled and indoctrinated. In addition, collapse now still leaves our country with valuable resources and a constitution that actually might mean something again.
Mike Murphy believes the mechanisms of government as he knows it can solve this. I contend the very mechanisms in place now are the reasons for our demise.
Somehow a deal gets done, full of empty promises and Obama is re-elected. That is the goal of the left and whoever feels that this benefits our country is not a real conservative.
Re: Smaller Government, Not Lower Taxes, is the First Order of Business
Richard, alas, I agree with Peter Robinson. I, too, favor in principle eliminating most of the subsidies (apart from the one for charitable deductions). But we have to face the political facts. Spending cuts promised will never be made; taxes raised will indeed be raised.
Mar '11
Re: Smaller Government, Not Lower Taxes, is the First Order of Business
One is impossible without the other. You'll never have a smaller government without lower taxes. Taxes feed the beast. The issues go hand in hand.
Dec '10
Re: Smaller Government, Not Lower Taxes, is the First Order of Business
If raising taxes is inevitable, then lets raise them on everyone. Let those who consume so much from the hand of government count at least some of the cost of that government. I do not want a larger television because I know what the cost is and that I would bear it myself. Those who want ever bigger government have no idea what its cost is because they share none of its burden.
Mar '11
Re: Smaller Government, Not Lower Taxes, is the First Order of Business
Mr Obama thinks that the first order of business is to raise taxes on those rich capitalist running dogs earning more than $250000 - it's only fair.
Oh, and to grow government, so they have to raise taxes even more, so they can spread the wealth to those who unfairly earn less.
But I am only an amateur tea-drinker - what do I know?
Edited on Jul 19, 2011 at 4:05pmRe: Smaller Government, Not Lower Taxes, is the First Order of Business
The Heritage Foundation's Dr Daniel Mitchell points out:
And after President Reagan lowered the top marginal rate from 70 percent to 28 percent? "Total tax revenues climbed by 99.4 percent during the 1980s ..."
And from Byron York in yesterday's Examiner:
Now, what was that about the need to "increase taxes?"
Edited on Jul 19, 2011 at 4:09pmRe: Smaller Government, Not Lower Taxes, is the First Order of Business
In the abstract, Richard, your argument makes sense. Suppose now that we translate your proposal into the political arena. How in practice, given what we know about Congress, do we get from where we are to where you want to go? And how do we stay there?
When I pose this question, I have in mind democracy's soft despotic drift.
Mar '11
Re: Smaller Government, Not Lower Taxes, is the First Order of Business
Dave Carter:
Now, what was that about the need to "increase taxes?"
The need is "fairness", aka socialism, not the Laffer curve, which would tell us to reduce the tax rates to increase revenue.
Jul '10
Re: Smaller Government, Not Lower Taxes, is the First Order of Business
Richard, this is the point of contention. The Democrats are fundamentally unserious about addressing the problem when entitlement programs are what is driving the problem. We can't get this under control without touching entitlements.
Jul '10
Re: Smaller Government, Not Lower Taxes, is the First Order of Business
While taxes feed the beast, lowering the rates (and broadening the base) can often feed the beast even more as we found in the 60s,80s and 2000s not that it mattered in any practical sense, they spent that and a whole lot more besides. What makes anyone think that without a constitutional amendment those in power won't "compromise" us into a bipartisan collapse regardless how much or how little we tax ourselves? Compromise is how we got here in the first place!