The Spectacle Blog

On Deficits and Conservatism

By on 7.15.10 | 11:25AM

Matt Yglesias and Ezra Klein have posts up arguing that Republicans -- and even conservatives -- don't care about deficits. Yglesias cites the fact that Presidents Ronald Reagan and George W. Bush presided over large increases in deficits, while conservatives consistently oppose tax increases as a means to balance the budget.

I'd offer a few points in response, some historical, and some philosophical. 

Reagan, it's often said, came into office with the goals of building up the military and winning the Cold War, cutting taxes, and reducing the size of government. He was tremendously successful in the first two areas, but failed to achieve the third goal. Reagan at least had the excuse of a Democratic Congress that fought many of his proposed spending cuts, and, credit where due, he actually reduced non-defense discretionary spending by 13.5 percent in his first three years in office. Yet Bush embraced big government and got the Republican Congress to go along, but this was much to the chagrin of conservatives.

Liberals always want to credit the tax increases from the 1990 and 1993 budget plans for the deficit reduction of the 1990s, but this analysis neglects a lot of other completely separate developments during that era that largely contributed to the deficit reduction we experienced. One was the tech boom, which spurred economic growth and led to a windfall of revenue to the federal treasury. Another was the post-Cold War/pre-9/11 "peace dividend," which triggered an historic reduction in military spending. And another factor was the election of the Republican Congress in 1994, because when a Democrat is in the White House, Republicans are much better at fighting government spending.

None of this analysis reflects well on Republicans, but it's important to emphasize that ideological conservatives have consistently argued that spending is the driver of deficits. Liberals argue that tax cuts are what produce deficits, but the need to raise revenue is a direct result of lawmakers saying the government has a role in doing certain things. If that role were smaller, the government wouldn't need as much revenue.

One of the most maddening perversions of the English language is when fiscal policy analysts describe tax cuts as a "cost." A cost to whom? It certainly doesn't represent a cost to the taxpayers who are now able to keep more of their own earnings and have more money to spend or save. To follow the liberal way of thinking to its logical conclusion is to say that government is ultimately entitled all money earned in America, and anything it collects short of that represents a "cost."

If I were to sum up my view of true fiscal conservatism in one easy sentence, it would be: If government does less, it costs less, and can charge less.

Conservatives are inclined to support all tax cuts and oppose all tax increases because we want people to be able to keep more of their money, but we have been put in a difficult spot by Republican politicians who refuse to cut spending. Former Reagan era supply-sider Bruce Bartlett has waved the white flag, arguing that because Republicans will never actually reduce spending, conservatives should embrace more efficient means to raise revenue, such as the VAT tax. But as I concluded in my review of his book:

The current political paradox is that Democrats want to increase government services without acknowledging that broad-based tax increases are required to do so, and Republicans want to cut taxes without acknowledging that dramatic cuts to government services will be necessary to do so. This is clearly an unsustainable path. But if there are political risks associated with either tax hikes or spending cuts, it should be the role of conservatives to press Republicans into attacking spending. Ultimately, Bartlett loses sight of the fact that conservatives' opposition to taxes is rooted not merely in economics or politics, but in a moral belief that individuals have a right to the product of their own labor.  

As I've also insisted, conservatives should pressure Republican candidates into meeting the Paul Ryan test -- either embrace his "Roadmap" plan, or come up with another serious plan to tackle our long-term debt crisis without raising taxes.

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