Frankly I really don't see how the GOP can keep advocating for tax cuts if they hope to balance the budget. They've shown that even they can't control spending when they have control of the legislature and the Presidency. Even The Gipper raised taxes when he needed to! A knee jerk reaction to the word tax is irresponsible, and is one of the reasons why our country is in such dire straights. What did people think would happen to the deficit when Bush W. was cutting taxes and raising spending. Even his father knew that was voodoo economics!
Here is a great article about it:
http://www.nationaljournal.com/njmagazine/st_20090221_4101.php
Real Reaganites Raise Taxes
Conservatism may need to abandon the anti-tax dogma that it adheres to in Reagan's name.
That heavy feeling in the pit of conservatives' stomachs this week was more than just indigestion brought on by the pork and fat in the Democrats' giant fiscal stimulus bill. Conservatives suspected that something irreversible was happening: that the sheer immensity of President Obama's fiscal and financial interventions may permanently change the size of government and the shape of post-Reagan conservatism.
One conservative who understands the potential implications is a curmudgeonly visionary named Bruce Bartlett. In today's Washington, he is something of a voice in the wilderness. Liberals mistrust him because in the 1970s, as an aide to then-Rep. Jack Kemp, R-N.Y., he helped fashion the original supply-side revolution. Conservatives mistrust him because in the 2000s he broke publicly with President Bush, in a book called Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy.
Conservatives hope that Bartlett is wrong. But there is a good case that he is right. To reclaim President Reagan's legacy in the Obama era, conservatism may need to abandon the anti-tax dogma that it adheres to in Reagan's name.
Conservatives and liberals have spent the past 40 years arguing about the size of government. But the size of government has not, so to speak, been arguing about them. As a share of the economy (gross domestic product), federal spending has remained curiously stable. Wars ended and began, double-digit inflation came and went, defense was cut, entitlements swelled, and outlays fluctuated as a share of GDP. Yet, as the chart shows, spending always returned to about 21 percent, almost as if regulated by an internal thermostat.
Over the same period, meanwhile, revenues had a comparably strong homing instinct, but the set point was lower: a little above 18 percent.
This budgetary stability, or stalemate, or whatever you call it, has been the greatest policy surprise of the last quarter-century. No one foresaw it, and no one has fully explained it. But it proved convenient for both sides.
Liberals (and Bush, who expanded Medicare) discovered that, up to a point, a growing economy would let them grow government without destabilizing spending as a share of GDP. Conservatives discovered that, up to a point, a growing economy would let them dig in against tax increases, and periodically cut taxes, without destabilizing revenues as a share of GDP.
For decades, everyone pretended to have a profound ideological disagreement about the size of government, but the reality was a comfortable standoff between 21 percent liberalism and 18 percent conservatism. In the end, both sides got what they most wanted: 21 percent spending for liberals, 18 percent revenues for conservatives -- at the politically tolerable cost of a deficit averaging 2 to 3 percent of GDP. This result was handy for politicians and acceptable to the public.
In Washington now, the obvious question is: Has Obama ended the 21 percent era? In January, the Congressional Budget Office forecast outlays at 25 percent in fiscal 2009. That was before enactment of the latest stimulus, which increases outlays by more than $500 billion through 2012; and the forecast didn't account for further financial bailouts. Unofficial estimates take 2009 spending to 26 percent or higher.
And after 2009? CBO forecasts that spending, after popping up this year, will decline to (where else?) 21 percent of GDP in 2012. But CBO is required to make some unrealistic assumptions. The analysts I interviewed believe that spending is likely to be well above 21 percent in 2012.
"I'm going to say spending is never going to go below 21 percent again in this country," says Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget. At the Brookings Institution, Isabel Sawhill, an economist and a former Clinton administration budget official, says, "My best guess would be 24 percent in 2012."
In the short run, of course, the stimulus increases spending. Not all of that spending will be temporary. ("At this point, these things are temporary," an administration spokesman told The Washington Post last week. Ah. Temporarily temporary.) Liberals have already broadcast their intention to extend some of the package's provisions, and federal beneficiaries have sticky fingers. Plus, there are those costly financial bailouts.
In the medium term, many economists expect a deep recession and a slow recovery. That would increase the spending-to-GDP ratio by suppressing growth in the denominator. In the longer term, intense upward pressure on spending will be generated by the combination of Baby Boom retirements -- which begin during the current administration and accumulate rapidly -- and soaring health care costs.
The Baby Boom fiscal shock would have arrived anyway, but the recession, the stimulus, and the bailout will have the effect of pulling it forward -- more or less to the present. In which case, the end of the 21 percent equilibrium may already have arrived.
In American politics, the dissolution of a 40-year equilibrium is likely to be a pretty momentous event. Liberals will have a practical problem. If they don't get serious about reforming and restraining Medicare, Medicaid, Social Security, and other entitlements, many of the other programs they most care about will be squeezed out of the budget. With his promise of a fiscal responsibility summit and his warnings about the need to confront long-term entitlement spending, Obama seems to grasp what liberalism must try to do, though whether he can deliver is another matter.
Conservatives, however, will face a doctrinal crisis. Or so Bruce Bartlett's logic persuasively suggests.
Many conservatives insist that structural reforms of entitlement programs -- benefit cuts, means-testing, privatization, and so on -- could keep spending at or even below 21 percent of GDP going forward. Dream on, Bartlett says.
"We're looking at a massive expansion of government spending," he says. "I became convinced in November of 2003, when a Republican president and Congress instituted a massive expansion of Medicare, at a time when the program was already badly broken and needed to be fixed, that there was absolutely no hope of restraining the growth of spending on those programs."
How will we pay for, say, 24 percent government? Permanent deficits at 6 percent of GDP would be unsustainable, and the creaky, inefficient income tax is barely able to raise even today's inadequate revenues.
The only really workable option, Bartlett argues, is a value-added tax or its equivalent: a broad-based tax on consumption. "It's the only way of preserving incentives and keeping the economy alive." Because it taxes spending rather than saving or investment and is inhospitable to market-distorting loopholes, this kind of tax raises a lot of money at relatively low economic cost.
Reaganites hate the value-added tax precisely because it is such an efficient cash cow. But Reagan, Bartlett contends, would have known better. Reagan was a conservative who admired FDR, and what he conserved was FDR's welfare state. He understood that the most practical way to make government less economically burdensome was to grow the economy.
By taming inflation, restructuring the tax code, and thinning regulatory undergrowth, Reagan made the welfare state sustainable, something liberals had proved unable to do. He wooed middle-class voters away from liberalism by stabilizing the modern entitlement state, not shrinking it.
If the 21 percent era is over, then the challenge for conservatives today is to give up on 18 percent government, which the public doesn't want and which conservatives can't deliver. Instead, as Bartlett wrote recently in Politico, "Conservatives would better spend their diminished political capital figuring out how to finance the welfare state at the least cost to the economy and individual liberty." Just like Reagan.
We had two bags of grass, seventy-five pellets of mescaline, five sheets of high-powered blotter acid, a salt shaker half full of cocaine, a whole galaxy of multi-colored uppers, downers, screamers, laughers…Also a quart of tequila, a quart of rum, a case of beer, a pint of raw ether and two dozen amyls. The only thing that really worried me was the ether. There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge. –Raoul Duke
It is hard to shed anything but crocodile tears over White House speechwriter Patrick Buchanan's tragic analysis of the Nixon debacle. "It's like Sisyphus," he said. "We rolled the rock all the way up the mountain...and it rolled right back down on us...." Neither Sisyphus nor the commander of the Light Brigade nor Pat Buchanan had the time or any real inclination to question what they were doing...a martyr, to the bitter end, to a "flawed" cause and a narrow, atavistic concept of conservative politics that has done more damage to itself and the country in less than six years than its liberal enemies could have done in two or three decades. -Hunter S. Thompson
