The American Spectator

Special Report

Still Fighting Reaganomics

By Peter Ferrara on 6.4.08 @ 12:08AM

(Page 3 of 3)

But apparently balancing the Federal budget at 18.5% of GDP, and eliminating all future deficits, was not good enough for the supposedly deficit hawk Concord Coalition, as not a peep of support or praise for the effort has been heard from the organization. No tax increases, so I guess the effort was no good.

Conservatives and free market advocates have to recognize that the Concord Coalition does not believe in limited government. It is not working for smaller government in any way. That is fine, the organization does not have to be part of the conservative movement if it doesn't want to be. But the rest of us need to recognize that they are not, and not be fooled into working with them or giving them unwarranted credibility when that may not advance our own goals.

Moreover, we need to recognize that their economic analysis is simplistic and wrongheaded. The budget deficit is not the most significant factor for long term economic growth. What matters most is incentives for savings, investment, entrepreneurship, risk taking, and work. That means lower taxes, not higher. The effect of any deficit we are likely to experience is minor compared to these factors.

The Coalition argues that deficits eat up domestic savings, which results in less investment and lower productivity, wages, and prosperity. But the Federal government borrows capital for the deficit in a global market for savings and investment. That borrowing is small compared to the magnitude of these global markets. Incentives are far more important because they can draw in savings and capital from the entire world, swamping the effect of any domestic deficit.

The bottom line is that conservatives and free market advocates should not be looking to the anti-Reagan Concord Coalition for leadership.

Peter Ferrara is Director of Entitlement and Budget Policy for the Institute of Policy Innovation, and General Counsel of the American Civil Rights Union. He served President Reagan in the White House Office of Policy Development. He is a graduate of Harvard College and Harvard Law School.

Letter to the Editor

topics:
Taxes, Health Care, Barack Obama, Hillary Clinton, Business, Federal Budget, Social Security, Law, European Union