So why am I still optimistic? I believe in the American people, our entrepreneurial innovation, and the resilience and competence of our workers. That strength and resolve will be tested and needed, because the core problems are so great that they can’t be avoided. The Bush tax cuts have been extended two years for all Americans. Early indications of good poll numbers on small business optimism, rising corporate profits and an increase in consumer spending promise hope for economic growth in the private sector. That translates into more government revenue and more jobs. It worked for Ronald Reagan in the 80’s, and it can work again.
But economic growth is only half of the solution. Cutting spending is never easy. Federal tax revenue doubled under Reagan, but he failed to cut government size and spending. Revenue doubled, but spending grew even faster. Arnold Laffer, a Reagan advisor, confessed, “When it came to cutting welfare payments and school lunch,…it was very hard. Someone would come over and say, ‘How can you cut school lunches?’ Reagan would reply, ‘I guess you’re right, I’ll tell them not to cut that one.’”
The new Republican House, responding to taxpayer pressure, has promised to curtail out-of-control spending, cut entitlements, downsize or eliminate unnecessary departments, and scale back the size of government. It’s also unlikely they’ll agree to bail out states “too big to fail” without rock-solid austerity programs in place.
There is motivation for them to do so. Republicans know that the Tea Party voters could mount a third party threat in 2012 if they don’t stand firm for the conservative principles they campaigned on. May they have the courage and resolve to guide us through the coming storm. May we have the wisdom to trade a costly dependence on government for a return to liberty, opportunity and personal responsibility before it is too late.