No, Starve the Beast Didn’t Win

I strongly disagree with one strand of the post-deal analysis: that current low taxes were a key motivating force.

Adam Serwer thinks that the debt limit deal shows that a long-term conservative strategy paid off:

The debt ceiling deal reached yesterday can only be described as total victory for the conservative strategy of “starving the beast,” i.e., depriving the government of tax revenues to force cuts in spending.

Ezra Klein said something similar over the weekend:

Republicans can’t necessarily sell the country on big cuts in federal programs, but they can make them necessary. All they need to do is hold the line aganst taxes, allow deficits will continue to mount, and then use forcing events like the debt ceiling or the budget to demand huge spending cuts. A world in which the two parties can’t agree on tax increases but can agree on spending cuts is one in which the government eventually shrinks dramatically. Republicans understand this. Do Democrats?

I strongly disagree.

Imagine that instead of the debt exploding following tax cuts and increased spending, Republicans had won a landslide after several years of tax increases and spending restraint. Oh, wait — we don’t have to imagine it; that’s exactly what happened in 1994. And yet, in that atmosphere, Republicans ran against runaway spending (just as they did in 2010) and, when elected, promptly attempted to slash spending, just as they did in 2011.

I think that Bruce Bartlett continues to be right about this: starve the beast just doesn’t work. The logic of why it doesn’t work is that once government spending is decoupled from government revenues (which starve the beast does deliberately, assuming that in the long run there will be a spending-cuts payoff), there is no longer much reason to oppose spending, because it’s in effect free. A PAYGO approach, on the other hand, by insisting that every spending increase (or tax cut) be fully paid for within the budget, works just fine.

Of course, that doesn’t mean that starve the best makes it impossible to cut spending. All the current deal shows is that when a party wins a landslide election running on spending cuts and then pushes hard to get them, they’ll succeed. But in my view, and certainly based on the 1994-1996 experience, there’s basically zero relationship between that and current spending and deficit levels. What does matter a lot is whether the GOP is in a slashing mood or not, but that appears driven by political context, not the fiscal outlook.

UPDATE: And I had missed it, but the political science literature gives empirical and theoretical support to this view, in the form of an article in the current issue of The Forum by Joseph Daniel Ura and Erica M. Socker. Here’s a taste, from the abstract:

The notion of “starving the beast” has been an important justification for fiscal programs emphasizing revenue reductions since the mid-1970s. While the idea of restraining government spending by limiting government revenues has an intuitive appeal, there is convincing evidence the reducing federal tax rates without coordinated reductions in federal spending actually produces long-term growth in spending.

[Cross-posted at A plain blog about politics]

Jonathan Bernstein

Jonathan Bernstein is a political scientist who writes about American politics, especially the presidency, Congress, parties, and elections.