Wednesday, November 21, 2012

The GOP Needs To Replace Its Starve The Beast Theory

This article traces the origin of the "starve the beast" theory back to Alan Greenspan, and to the proposition 13 law in California.  The GOP came to believe that the best way to reduce the role of government in the economy was to cut taxes.  It was also a good way to win elections, since few object to a cut in taxes.  Unfortunately, the theory has been disproved.  Ronald Reagan and George Bush embraced the theory but they did not reduce government spending.  As Dick Cheney remarked, Ronald Reagan proved that the public does not worry about  budget deficits that result from tax cuts without a reduction in spending.  The GOP can win elections by cutting taxes without the need to cut spending on popular programs that people like.  As we have learned, they can let Democrats worry about deficits. The GOP can focus on deficits when Democrats are in office.  Let them try to win elections by raising taxes and by cutting popular programs.

We are in a situation today where tax revenues are well below their historical average.  The focus should be on raising the income that we need to run the country.  The following post picks up on that theme.

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