Starving the Beast


I'm able to buttonhole Steve Moore (who's both the Club for Growth's head and a Cato senior fellow) for a few minutes after the "Future Stars" event. I observe that even if the president can fulfill his promise to "cut the deficit in half in five years," as the Office of Management and Budget proudly projects, OMB and CBO both use current law, under which Bush's tax cuts expire, to make their projections. If they're made permanent, those massive deficits come right back in year six and keep growing… even before taking into account the Baby Boomer retirement cash-vortex. In light of all that, I ask, should CFG maybe stop making tax cuts their priority and emphasize spending reduction? Moore is adamant:

Absolutely not. Cato's stuff is completely wrong on this. [Me: What's that?] This stupid paper Cato put out; it was on the cover of Regulation. It said that lower taxes reduce the felt cost of expanding government. And evidence shows clearly that cutting taxes keeps spending down. If we can't cut spending, we should cut taxes; all the data for forty years make clear that tax cuts lead to future reductions in government. And tax cuts do also increase growth. The left isn't stupid about this; they understand better than some of the libertarians. If they thought that tax cuts increased the size of government, they'd be in favor of it.

Now, my own impression had been that the data are more mixed than that, and the author of the article in question isn't exactly a lightweight in this field, but I'm in no position—yet—to figure out who's got the best case. But libertarians and conservatives will soon have to figure out whether "starving the beast" is a strategy that works, or just a rationalization for letting the beast feed on our kids.