Feeding the Beast

Bill Niskanen has a take on how counterproductive Republican fiscal policy has been over the past quarter century:

The Washington Monthly: FEEDING THE BEAST....What happens if you lower the cost of something? People buy more of it. What if you raise the cost? People buy less of it. So: what happens if the federal government reduces taxes and runs a deficit -- thus lowering the "cost" of government? People will "buy" more government. This actually makes a strange kind of sense -- if there are no additional taxes to cause you pain, why shouldn't you support big government? -- and William Niskanen, the chairman of the Cato Institute, says he now has research to back this up:

Niskanen recently analyzed data from 1981 to 2005 and found... "no sign that deficits have ever acted as a constraint on spending." To the contrary: judging by the last twenty-five years (plenty of time for a fair test), a tax cut of 1 percent of the GDP increases the rate of spending growth by about 0.15 percent of the GDP a year. A comparable tax hike reduces spending growth by the same amount.... "I would like to be proven wrong," says Niskanen. No wonder: for the modern conservative coalition, the implications of his findings are discomfiting, and in a sense tragic.

In other words, "starve the beast" doesn't work. If you cut taxes, all you do is encourage additional spending.