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Conservative Dilemma: Do We Cut Government Spending or Starve it?
October 15, 2003
In the last edition of www.rightturns.com I wrote about the Myth in Barbara Streisand's "Myth of Big Government". Streisand, like most liberals, wrote that conservatives are unrealistic about big government. Everyone wants and uses it when in peril, e.g., hurricanes, earthquakes, etc. I ended the article with this:
"Finally, Barbra states this: "Eventually, we will be forced to have a national discussion about either repealing the (tax) cuts or asking the question: What everyday government spending programs are we really ready to do without?" Ms. Streisand, if you will email me here at www.rightturns.com, I will reply with my list of "spending programs we really (can) do without."
Well, since that article hit the webwaves, I have received many emails supporting the article, yet also asking for that list of "spending programs we really (can) do without."
My first reaction is start reciting my list: farm subsidies; at least one of the cabinet departments, . While thinking about this list, however, I came across two recent articles that put a twist into our conservative point of view about cutting government spending.
The first article is by George Gilder. Gilder wrote two books in the 1980's that helped open my eyes to conservative concepts in action: Wealth and Poverty and Microcosm. From Gilder's 10/9/03 post on the Gilder Technology Report subscriber message board:
First a warning to Arnold:
"Everyone will tell him that he has to cut spending in order to retrieve the state. If he tries to cut spending he will plunge into a quagmire, arousing the opposition of all the state's spending beneficiaries and its entire political establishment, and he will end up in some disguised deal that includes tax rate increases."
OK, George, what should Arnold do then?
"Rather than a futile focus on spending cuts, Arnold must present the supply
side arguments for dramatic tax rate reductions. With the economy on his
side--and trillions of dollars of capital gains available to harvest--fifty
percent lower rates can yield fifty percent higher revenues within three
years ." "A company (or government) that is losing customers can only win by lowering its prices." I hope this does not sound radical to the reader. It is simple supply and demand.
The second article was in the 10/10/03 Wall Street Journal, written by Gary Becker, Edward P. Lazear, and Kevin M. Murphy, titled "The Double Benefit of Tax Cuts".
"The (empirical) evidence is clear: Cutting taxes will have beneficial effects. Tax cuts will keep government spending in check (i.e., starve government spending by restricting revenues) and will provide the incentives necessary to produce a highly skilled, productive work force that enables high economic growth and rising standards of living" (i.e., leave taxpayers with more money to pursue what they wish to pursue).
For all you skeptics that do not believe reduced tax revenues will curb spending, Becker et al respond: " economic theory and empirical evidence suggest that spending often adjusts to available tax revenue rather than the other way around."
Note that neither article suggests directly cutting any government spending. So the question becomes for us conservatives: Do we continue a possibly futile effort to reduce government spending at all levels or do we act like supply-siders and starve government spending and allow citizens more money by cutting tax rates?
Sam T. Harper graduated cum laude from Vanderbilt University. Following a tour in the US Navy and a stint as Operations Manager at Roadway Express, he earned his MBA from Stanford University Graduate School of Business. He was a contributor to In Search of Excellence, the best selling business book of all time. Sam was also Manager, Economic Planning & Analysis at Sohio Petroleum, Partner and Chief Financial Officer at investment-banking firm Bridgemere Capital, and Chief Operating Officer of the Institute for Contemporary Studies, a San Francisco Bay Area-based think tank and international publishing firm that specializes in self-governing and entrepreneurial public policy. Sam was a chairman of the San Francisco Republican party and the GOP co-host of California Political Review on KALW-FM in San Francisco. Sam is currently the co-owner of the Tennessee based Institute for Local Effectiveness Training, LLC a management consulting, training, and coaching firm.