DEFICIT THINKING….In an unsigned editorial that’s up right now, National Review says this about the Bush tax cut:
The size of the proposed tax cuts should also be judged in relation to the spending increases that Washington is planning. If Snowe and Voinovich prevail, there will be more than two dollars of new spending for every dollar of tax cuts in the budget. One federal program, Medicare, is slated to get $400 billion over the next decade. That?s more than Snowe and Voinovich would allow in tax cuts. President Bush?s full tax cut is not too much to ask ? especially since it, unlike federal spending increases, would help the economy.
Now normally I’d just disagree with NR and be done with it, since that’s the safest way to bet, but I can’t even figure out what point they’re trying to make here.
What do spending increases have to do with tax cuts? Are they suggesting that every dollar of spending increases should be matched by a dollar of tax cuts? That strikes me as peculiar economics even for a magazine that’s desperately trying to support Bush.
There’s nothing wrong with short term deficits, especially in a flat economy, but surely everyone should agree that over the long term the budget ought to be more or less balanced. In the case of Social Security and Medicare, demographics is indeed destiny, which means that these programs are going to grow a lot over the next few decades, and they are also politically very popular, so there’s no realistic chance that they’re going to be cut back in any significant way.
So there are two choices. Either you can cover your ears and pretend this isn’t true, thus committing yourself to endless budget deficits, or you can face reality and fund the programs properly, which means tax hikes. The Republican party needs to choose: fantasy or reality. What’s it going to be?
POSTSCRIPT: Since the NR editorial is titled “Bush’s Modest Proposal,” I’d normally think it must be some kind of satire. But if it is, it’s way too subtle for me. I am, of course, open to potential satirical interpretations if anyone has one to offer.
