The End Of "Starve The Beast"

If only the Cato Institute instead of the Family Research Council set Republican domestic policy, and Hayek rather than Jesus Christ were Republicans' favorite philosopher, we'd live in a much healthier political culture. As things stand now, there's something charmingly idealistic about Cato's troubled but continuing allegiance to the Republicans.

How much longer will that last? Not necessarily very long. Will Wilkinson penned an op-ed for Cato that should leave Grover Norquist's economic theory dead and buried (it won't, though). The theory, blessed by no less a person than Milton Friedman, is that by crippling tax revenues (through tax cuts) so as to create budgetary shortfalls, legislatures will be forced radically curtail discretionary spending in order to avoid spiralling deficits and debt. As Wilkinson points out, "starve the beast" is not an economic theory so much as a guess about legislators' and voters' psychology. And just as rational choice theorists look at derived expected utilities because subjective valuations (i.e. individual psychologies) are opaque to research, economists can aggregate data that will confirm or disconfirm such hypothesis about spending preference.

The biggest problem with "starve the beast"---there are other problems, but this one will do---is that it's bollocks. Low tax revenue does not have the effect of reducing deficit spending because deficits are markers to be paid off in the future. Who would have thought that human nature was so shitty that people would think nothing of running up huge tabs on their grandchildren? Well, Hobbes for one. Wilkinson's money quote:

For many libertarians and conservatives, cutting taxes is about more than efficiency; it's about morality. We have a moral claim to the fruits of our labor. Every cent the government takes from us beyond what is strictly necessary to secure our basic rights is a token of injustice. Cutting excess taxes is rectification, a way of making abused taxpayers whole. Therefore, for many proponents of smaller government, passing up a chance at a tax cut, or, worse, defending a tax increase, is a willing perpetuation of injustice.

However, if further tax cuts would accelerate deficit spending, justice would be threatened. Under present conditions, further tax cuts would largely be tax shifts, moving the burden of government spending to future generations. And there is nothing notably moral about raising taxes on the future to subsidize the present.