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Do Tax Cuts “Starve the Beast”?

Ned6 Wrote: Jan 08, 2013 10:00 AM

We will never get spending under control without a totally different approach. Under the current system legislators weigh the personal political benefits of short term spending against the long term (and widely shared) costs of deficits. Instead, we must incorporate means tested programs and tax deductions into a progressive flat tax that cannot be manipulated for political purposes. That will still leave Discretionary Spending, which can be limited by offering legislators a significant bonus for restraint. For more on Fixing Everything watch this YouTube video: http://www.youtube.com/watch?v=9OaQH0CjURM

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Do Tax Cuts “Starve the Beast”?

There’s a debate among policy wonks about whether a no-tax-hike policy is an effective way of restraining the burden of government spending.

At the risk of over-simplifying, the folks who support the “starve the beast” theory argue that there are political and/or economic limits to government borrowing, so if you don’t let politicians tax more, you indirectly impose a cap on total spending (outlays = tax revenue + borrowing limit). We’ll call this the STB approach, for obvious reasons.

Critics of the theory, by contrast, say that a low-tax policy creates fiscal...