Cutting Spending, Not Marginal Tax Rates

Cutting Spending, Not Marginal Tax Rates

For several decades now, Republicans have used cutting tax rates as a path to office. It worked--but it had consequences.

There's no question that cutting marginal tax rates--especially in the higher brackets--promoted economic growth. I think it is also pretty well proved that the Laffer Curve was correct--that growth meant that revenues actually grew faster. Had spending kept pace with inflation, most of these tax cuts would have resulted in shrinking deficits--but alas, keeping spending under control with our current political system is pretty much impossible.

As I previously mentioned, one downside of this is that increases the amount of wealth that people making above $200,000 a year have available to fund hard left causes. Can you imagine how small MoveOn would be if there weren't vast numbers of multimillionaires in America to keep them funded?

Another consequence was that it ballooned deficits--because while cutting taxes makes you popular with the under $100,000 a year crowd, there has been relatively little conservative emphasis on cutting spending. And there's a reason for this. Cutting spending is a two-edged sword (maybe three edges).

1. Cutting spending means that some programs that put money into the pockets of rich people will have to be cut. For example, limiting farm price supports to people making less than $500,000 a year would infuriate large numbers of "gentleman farmers" who get a million dollars in farm price supports so that they can keep their Gulfstream V jets fueled up. There aren't millions of these people; there might be thousands or tens of thousands of them. Their votes don't much matter; their political contributions do. If Republicans were to run on a platform of cutting spending on programs for the extremely rich, we would have to work very aggressively on getting the word out to the masses--the people whose taxes are raised to keep those Gulfstream V jets fueled.

2. Cutting spending means that we would have to actually educate some significant number of voters about why some of these programs are not just expensive, but often bad ideas. Now, I know that there is no realistic possibility of educating most voters. You can only get their attention with slogans and simple ideas. (I like to think that these voters are almost all Democrats, but alas, there are more than a few Republicans who operate at this same lizard-like level.) There is a significant fraction of voters who are actually capable of thinking and learning. The problem is that so much of political campaigning is built around signs, bumper stickers, and simple slogans. To do this right is going to require some significant revision to how political campaigns operate.

3. At some point, we need to openly state that the reason that we are focusing on cutting spending is that the marginal tax rates are actually low enough now that there's really not any reason to cut them more. The harsh reality is that I look around America, and I see an awful lot of signs that a lot of people (especially in the higher salary ranges) now have more disposable income than they can sensibly use. There are an awful lot of teenagers developing no character at all because Mom and Dad have $200,000 a year coming in, and as a result, they are spoiling their kids rotten.