Bartlett, Taxes, Etc.
June 11, 2009
I think 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, rather than fighting a losing battle to slash popular spending programs. But this will require them to accept the necessity of higher revenues.
It is simply unrealistic to think that tax cuts will continue to be a viable political strategy when the budget deficit exceeds $1 trillion, as it will this year. Nor is it realistic to think that taxes can be kept at 19 percent of GDP when spending is projected to grow by about 50 percent of GDP over the next generation, according to both the Congressional Budget Office and the Government Accountability Office. And that’s without any new spending programs being enacted.
In the end, the welfare state is not going away, and it will be paid for one way or another. The sooner conservatives accept that fact, the sooner they will regain political power.
This isn’t just a politically relevant point either. On principle, the first enemy for fiscal conservatives ought to be the deficit, not taxation. This is why I think there’s a strong case to be made that Norway and Canada represent far more viable models for fiscal conservatism than the United States: both have comparatively large social safety nets, but they are by and large paid for. Both regulate their banking system so as to avoid catastrophic bailouts. Perhaps most importantly, both maintain political cultures based around a right-wing aversion to debt, so the issue of a conservative government running up the deficit isn’t really an issue.
I recognize all of this should be old hat to most readers. But I continue harping on it not just because its true but also because I think it lies in the long term interests of the Right to return anti-deficit policy to the center of their thinking. Though favoring some tax increases will be unpopular with the base, to a nation who’s savings rate just jumped a good four percentage points, that kind of anti-debt policy could prove popular. Moreover, should Republicans commit to actually doing some good old fashioned deficit reduction, it would go a long way to redeeming their profligate spending during the Bush years, and to regaining the moral high ground on the issue. (Which, incidentally, they must regain in order to have any hope at all in this environment; so long as Obama can portray the Right as incapable of making the tough decisions, .)