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"Starving the beast" bait and switch

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"Starve the beast" was never a serious strategy for reducing government spending. It was a cynical rationale for providing a tax holiday to the wealthy and passing the cost of government to citizens not yet born. And it worked.

Starve the beast IS working at the state level. The deterioration of our public schools would NOT be politically palatable except for politicians hiding behind so-called "budget crisis" to make cuts to education and other necessary state services.

In Indiana, Mitch Daniels orchestrated a shift from property taxes (and huge tax cuts for the millionaire slumlords) to more regressive sales taxes with a promise to make up for loss of funding for the schools. When the economy tanked and the state is collecting less tax revenue (a large automatic tax cut) Mitch refused to do anything about revenue and instead has cut school funding. Mitch lied about his promise to fund our schools and instead has given our public school money to his wealthy patrons. This is the way starve the beast works at the state level:

  1. Politicians cut taxes and lie to the people that services will not be cut.
  2. Revenue fall short and politicians carry through with their original plan to cut popular public services.

The ENTIRE premise for STB is BAIT AND SWITCH. The whole idea is to FORCE cuts to popular public services by creating a revenue "crisis" to be used as an excuse. This works because when Mitch Daniels runs for public office, he will brag that he cut taxes and didn't raise taxes. No one will bother to hold Mitch Daniels accountable for lousy public schools. The lousy public schools are the fault of the teachers unions. This is the way this LIE plays out.

"Starving the beast" is a fiscal-political strategy by Republican Party to use budget deficits via tax cuts to force future reductions in the size of government. The term "beast" refers to government and the programs it funds, particularly social programs such as welfare, Social Security, and Medicare.

The tax cuts of former US President George W. Bush's administration, still in place, are an example. He said in 2001 "so we have the tax relief plan [...] that now provides a new kind -- a fiscal straightjacket for Congress. And that's good for the taxpayers, and it's incredibly positive news if you're worried about a federal government that has been growing at a dramatic pace over the past eight years and it has been."

History

Prior to being elected as the President, then-candidate Ronald Reagan foreshadowed the strategy during the 1980 US Presidential debates, saying "John Anderson tells us that first we've got to reduce spending before we can reduce taxes. Well, if you've got a kid that's extravagant, you can lecture him all you want to about his extravagance. Or you can cut his allowance and achieve the same end much quicker."[5] It appears the earliest use of the term "starving the beast" to refer to the political-fiscal strategy was in a Wall Street Journal article in 1985 where the reporter quoted an unnamed Reagan staffer. [6] Reagan Office of Management and Budget chief David Stockman's 1986 book The Triumph of Politics: Why the Reagan Revolution Failed discusses the implementation of that budget policy in insider detail.

A well-known proponent of the strategy is activist Grover Norquist who famously said “My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub.” [7][8] Vice-President Dick Cheney said "Reagan proved deficits don't matter" as then-Treasury Secretary Paul O'Neill warned of financial dangers presented by them ahead, according to O'Neill. [9]

Some empirical evidence shows that such a strategy may be counterproductive, with lower taxes corresponding to higher spending. An October 2007 study by Christina D. Romer and David H. Romer of the National Bureau of Economic Research found: "[...] no support for the hypothesis that tax cuts restrain government spending; indeed, [the findings] suggest that tax cuts may actually increase spending. The results also indicate that the main effect of tax cuts on the government budget is to induce subsequent legislated tax increases."[10]

As ilsm noted in his remark to Starve the Beast Just Bull, not Good Economics tax cut served to feed war machine without public resentment about higher taxes, which are inevitable if the war is financed via taxation:

,,,It was not so much starve the beast (STB) but borrow (lower taxes on folks clipping bond coupons) money to feed the war machine.

Feeding the war machine wasted the leverage on stuff for the militarists' phoney toys and bond coupons which created no usable productivity.

Borrowing instead of taxing and then wasting the leverage.

Starving the beast merely brought in ideologues who might otherwise been more sane.


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Starve the Beast Just Bull, not Good Economics

Economist's View

"Starve the Beast: Just Bull, not Good Economics" Bruce Bartlett says starve and feed the beast theory -- a favorite of Republicans -- is a "crackpot theory" that serves as a rationalization "for Republican budgetary irresponsibility":

Starve the Beast: Just Bull, not Good Economics, by Bruce Bartlett: A prime reason why we have a budget deficit problem in this country is because Republicans almost universally believe in a nonsensical idea called starve the beast (STB). By this theory, the one and only thing they need to do to be fiscally responsible is to cut taxes. They need not lift a finger to cut spending because it will magically come down, just as a child will reduce her spending if her allowance is cut — the precise analogy used by Ronald Reagan to defend this doctrine in a Feb. 5, 1981, address to the nation.

It ought to be obvious from the experience of the George W. Bush administration that cutting taxes has no effect whatsoever even on restraining spending, let alone actually bringing it down. Just to remind people, Bush inherited a budget surplus of 1.3 percent of the gross domestic product from Bill Clinton in fiscal year 2001. ...
When Bush took office in January 2001,... He immediately pushed for a huge tax cut, which Congress enacted. In 2002 and 2003, Bush demanded still more tax cuts, even as the economy showed no signs of having been stimulated by his previous tax cuts. The tax cuts and the slow economy caused revenues to evaporate. ...
Spending did not fall in response to the STB decimation of federal revenues; in fact, spending rose from 18.2 percent of GDP in 2001 to 19.6 percent in 2004, and would continue to rise to 20.7 percent of GDP in 2008. Insofar as the Bush administration was a test of STB, the evidence clearly shows not only that the theory doesn't work at all, but is in fact perverse. ...
But there is a flip side to STB at work as well. If tax cuts starve the beast, then it logically follows that tax increases must feed the beast. This variation of STB was on full display in a Nov. 21 Wall Street Journal op-ed article by ... Republican operative Steve Moore ... and Ohio University economist Richard Vedder. The Moore-Vedder article argues strenuously that tax increases must never be considered no matter how big the deficit is. The reason, ... is that tax increases always feed the beast, leading to spending increases larger than the tax increase ...
By this logic, the tax increase enacted in 1993, which raised the top federal income tax rate to 39.6 percent from 31 percent, should have caused a massive increase in the federal budget deficit. In fact, it did not. ... And contrary to another commonly-held Republican idea — that all tax increases reduce revenue via the Laffer Curve — revenues rose from 17.5 percent of GDP in 1992 to 20.6 percent in 2000. ...
Starve the beast is a crackpot theory, and its flip side that higher taxes invariably feed the beast is no better. They are just self-serving rationalizations for Republican budgetary irresponsibility.

Posted by Mark Thoma on Friday, November 26, 2010

Kathryn Huff

It's pretty bad when Republicans won't even listen to their own conservative economists. I can't imagine what Milton Friedman would be saying to these folks that are complaining about QE2 were he still alive.
Matthew D
Excellent post. Some further reading...None other that Cato Institute (a libertarian 'think' tank) President Niskasen noted several years ago that STB was a failure and showed -- I think from Reagan onward -- that the opposite effect actually occurs, namely that spending increases with tax cuts and is reduced with tax increases. He theorized that people view govt as less costly when tax cuts are enacted and are more conservative when taxes increase. The Atlantic Monthly also summarized his findings more recently and noted the elephant in the room of longstanding Republican ideology.

It's sad that so many of today's conservative leaders continue to peddle the idea that tax cuts pay for themselves and cure the common cold... and continue to win elections on such ideas.

I would expect the fringe to hold on to such obvious falsehoods and then eventually dissipate into the crackpot blogosphere.

I fear for our republic.

beezer
My mantra. Reasonably progressive tax tables and then leave the thing alone.

Taxes aren't the primary dynamic involved in producing robust economies. We're collectively spinning our wheels.

Maintaining industrial ecologies, balancing trade flows, establishing full employment policies and diversifying research and development efforts that expose us to serendipitous innovation are far more important.

The government tools are fiscal. Tariffs, direct subsidies, improvement in public goods--even capital controls.

Min
Bravo to Bruce Bartlett for speaking out against "starve the beast".

Small quibble. Starve The Beast is not a theory, it is a strategy. As the metaphor indicates, it is an anti-government strategy. Because it is based upon bad ideas, it does not work. As Dick Cheney put it, "Deficits don't matter." (OC, they do. Ours is too small right now.) But because the Dems still believe that deficits do matter, the starve the beast strategy is working for now.

In times like these, the belief that the gov't is some kind of beast or monster that threatens us takes away or hinders important protections that only gov't can provide. Good luck in the coming year!

Jim
Today's Republicans are very patriotic.

To the states of Texas and Georgia.

And to Jefferson Davis their founder.

Once you understand that, you understand everything.

Michael Cain
Starve the beast hasn't worked at the federal level, where the government is able to borrow apparently unlimited amounts of money. OTOH, it is working pretty much as intended at the state level, where balanced operating budgets are almost universally required. Roads and bridges are falling apart; higher education is taking major cuts; and as the WSJ recently reported, some states are at least looking at the option of withdrawing from Medicaid.

I have long been puzzled by Republican tactics in attacking the social safety net. Medicaid is clearly the program that would be most susceptible, yet they have largely ignored it to spend their time attacking Social Security and Medicare, both of which are immensely popular.

Rick Thomas
The "Starve the Beast" strategy failed because of an obvious moral hazard: it has been expedient to steal the beast's food, as demonstrated by the sheer looting done in the name of war and bank bailouts.
Anonymous
It's hard to say if Bartlett is engaging in strawman arguments, or regular old misunderstanding.

STB isn't economics, it's a long term fiscal strategy. The aim is not to reduce *deficits*, but to reduce *spending* by making each new dollar of spending harder to achieve, and each existing expenditure capped by debt limits. it was meant to force politicians to make the tough cuts we know are needed.

Higher tax revenues, the Laffer Curve effect, GDP growth/recession, and the Internet boom's one-time anomalous gift of wealth have nothing to do with the justification for reducing spending. Except insofar as more money makes more spending easier to achieve.

If STB had worked, you would expect to see deficits in the short run, dramatic showdowns and refusals to raise the debt limit. Instead, GOP advocates seem to have underestimated political will to rack up federal debt, and overestimated fiscal hawks' backbone.

RW
Anonymous...

"...STB isn't economics, it's a long term fiscal strategy ...to reduce *spending* by making each new dollar of spending harder to achieve, and each existing expenditure capped by debt limits. it was meant to force politicians to make the tough cuts we know are needed."

This is begging the question, the logic is circular at best: It assumes there really is a "we" who not only _knows that_ cuts are needed but also _knows which_ cuts are necessary; STB then unproblematically provides the mechanism to close the circle.

But there is no circle and it cannot be closed because there is no "we" who agree on either ends or means, not even among conservatives. Which leaves us where we started because STB was always and yet remains a political strategy and one rather specific to a particular strand of small-government conservatives (although others join when it suits and desert when it doesn't).

But you may be right that Bartlett is none-the-less engaging in a strawman of sorts here because he almost certainly understands this quite well: What I suspect, but obviously do not know, is that Bartlett is really arguing that STB is a bad idea because only two outcomes are likely and both are undesirable for conservatives: Either conservatives will continue to exhaust themselves by pursuing a strategy that cannot work or STB will work to some degree but bring about a result most conservatives would consider undesirable; e.g., economic collapse, electoral defeat, diminution of influence, philosophical and academic discredit, etc.

beezer
It's a political strategy that's become theology in the public mind--or at least the conservative version of the public mind. And it's way, way effective.

My take is many of the Republican leadership are cynics. They would probably call themselves 'realists.' You know what you're promising is pretty near impossible, but so what? You can't do anything if you don't win. That's being 'real.'

My fear is that the 'Tea Party' crew aren't cynics. They're wrong, but they don't know that they're wrong. So they may force the current leadership to actually make an effort to reduce government spending right now. Exactly the wrong thing to do, for the moment.

But they may force Republican leadership to reduce consumption--even though leadership understands the results will be bad for the population.

I hope the Tea Party is ignored. I can't recall when Republicans were any better than Democrats at reducing deficits.

Simon
beezer... Tea Party morons don't even know 10-15 million starved in America during the long depression due to the "free market", oh that is only some country that follows State-Capitalism er Soviet Communism.
Matthew D
beezer... federal debt outstanding as a % of gdp has been higher when Republicans control Congress measured since Reagan. Orwell would be pleased as these gruff angry old white guys have been spewing forth about tax & spend liberals for decades. And what do they do this election cycle ? They double down the lie and WIN.
Min
beezer...

I still wonder why the Tea Partiers do not vote Democratic, as the Dems are the more fiscally responsible party.

Curt Doolittle

WHY?

It depends on the type of conservative that the republican's represent. There are at least two strategies by two different 'republican' social strata: The libertarians and conservatives in the middle class, and the conservative and classical liberal militial sentiments of group persistence and land holding in the remnants of the militial class.

1) "Democrats and socialists will bankrupt us, if we don't defend ourselves by bankrupting the state." This is a long term strategy, similar to the socialist strategy of incremental creation of dependent classes and redistribution, and 'equality' or 'punishment of the rich.' Effectively, this group of conservatives do not believe that they have any other defense against socialism.

2) "We must protect our markets, and our defenses, against the barbarians", which first ment communism, but now post collapse of managed economies, represents expansionist islam. Reagan spent to bankrupt the soviets. Bush spent to destabilize the muslims. Meanwhile our relative economic position has changed since the previously socialist economies have embraced capitalism.

3) "I must protect my cultural heritage", which is a protestant white middle class movement, and sees the government redistributing not just charity, but social status, and social status is the innate human accounting system, perceptible by all. While people speak money and politics what they mean is social status. They believe social status is not an egalitarian concept because social status is dependent upon cultural values. In effect, they see socialism as an attack on western civilization.

These are all, traditional "group persistence'" traits held by conservatives in every society. Since the movement of the conservatives in the south out of the democratic party and into the republican party, the republican and democratic parties are not different approaches to the same end, but increasingly polar opposites representing their most active constituents.

So, now, in concentration, across all states, these three CORE movements operate within the republican party, as a means of protecting the market, capitalism, freedom, and heritage, as well as communal sentiments of land holding by a) bankrupting the state faster than it can bankrupt itself with dependencies, b) Viscously keeping the barbarians inside and outside the country at bay through military strength, and c) protecting their social status and opportunities, rather than surrendering them.

These are the three motivating factors that drove the republican thought leadership. At this point the leadership believes that there has been sufficient social and economic degradation that they can gain the upper ideological hand and fully thwart socialism as a movement in the country. (This is nonsense. Demographically, the USA is headed toward the south american model of wealthy white urban core, surrounded by a ring of permanent poverty, and an somewhat novel, and increasingly culturally autonomous agrarian culture that dominates the rivers and plains. )

But more simply stated: "the socialists are going to destroy not only this country, but western civilization. If we cannot stop them with the protections of the constitution, we must at least use their tactics of overspending, and simply use the priority that the right-of-center society gives to military, and cultural values as a means of preventing the left from concentrating capital in socially destructive, economically destructive, legal culture of dependency, bureaucratic slavery, legislative plundering and state predation."

That is the unspoken conservative narrative. The three sentiments that have driven the strategy. There is no possible means of resolving this conflict of visions. These are not tastes. They are polar opposite views of how society should function: by political power on the left, or by economic power on the right. No one wants the third potential axis, which is violence - at least yet.

JohnH
Don't be fooled. "Starve the beast" is merely for rhetorical effort. Far from of "starving the beast," Republicans have committed themselves to a campaign of bleeding it to death. First were exploding, unfunded "defense" appropriations. Then it was homeland "security." Then there was TARP. All of this saddles the Treasury with layers of corporate leaches and parasites with no funding mechanism in sight. But busting the budget rewards Republican campaign contributors, who are more than happy to pick the flesh off the bones of the Treasury.
Curt Doolittle
[quote] STB isn't economics, it's a long term fiscal strategy. The aim is not to reduce *deficits*, but to reduce *spending* by making each new dollar of spending harder to achieve, and each existing expenditure capped by debt limits. it was meant to force politicians to make the tough cuts we know are needed.

If STB had worked, you would expect to see deficits in the short run, dramatic showdowns and refusals to raise the debt limit. Instead, GOP advocates seem to have underestimated political will to rack up federal debt, and overestimated fiscal hawks' backbone. [/quote]

Exactly.

[May 08, 2010] "Tax Cuts And 'Starving The Beast'"

Bruce Bartlett argues that "starve the beast" doesn't work, and may even lead to the opposite of the intended effect:

Tax Cuts And 'Starving The Beast', by Bruce Bartlett, Commentary, Forbes: I believe that to a large extent our current budgetary problems stem from the widespread adoption of an idea by Republicans in the 1970s called "starve the beast." It says that the best, perhaps only, way of reducing government spending is by reducing taxes. While a plausible strategy at the time it was formulated, STB became a substitute for serious budget control efforts, reduced the political cost of deficits, encouraged fiscally irresponsible tax cutting and ultimately made both spending and deficits larger.
Once upon a time Republicans thought that budget deficits were bad, that it was immoral to live for the present and pass the debt onto our children. ... Republicans also thought that deficits had a cost over and above the spending that they financed and that it was possible for this cost to be so high that tax increases were justified if spending could not be cut.
Dwight Eisenhower kept in place the high Korean War tax rates throughout his presidency, which is partly why the national debt fell from 74.3% of gross domestic product to 56% on his watch. Most Republicans in the House of Representatives voted against the Kennedy tax cut in 1963. Richard Nixon supported extension of the Vietnam War surtax instituted by Lyndon Johnson... And Gerald Ford opposed a permanent tax cut in 1974 because he feared its long-term impact on the deficit.
By 1977, however, Jack Kemp, Dave Stockman and a few other House Republicans concluded that the economy was desperately in need of a permanent tax rate reduction. Kemp believed that such a tax cut would so expand the economy that the revenue loss would be minimal. He also thought that much government spending was driven by slow economic growth--welfare, unemployment benefits and so on--that would fall automatically if growth increased.
But the Republican Party's economic gurus--Alan Greenspan and Herb Stein, in particular--were not comfortable supporting a tax cut without stronger assurances that the deficit would not increase too much. ...
After enactment of California's Proposition 13--a big property tax cut with no offsetting spending cuts or tax increases--on June 6, 1978, there was an immediate change in attitude among Republican economists who were previously skeptical of a permanent cut in federal income tax rates. They could see that a tax revolt was in the making and that Republicans could very possibly ride it all the way back into the White House in 1980.
On July 14, 1978, a few weeks after the Prop. 13 vote,... Greenspan ... was the first Republican to articulate what came to be called "starve the beast" theory. ... Citing Greenspan's testimony, conservative columnist George Will endorsed Kemp-Roth and STB in a column on July 27, 1978. ...
On Aug. 7, 1978, economist Milton Friedman added his powerful voice to the discussion. Writing in Newsweek magazine, he said, "the only effective way to restrain government spending is by limiting government's explicit tax revenue--just as a limited income is the only effective restraint on any individual's or family's spending."
By 1981 STB was well-established Republican doctrine. In his first major address on the economy as president on Feb. 5, Ronald Reagan articulated the idea perfectly. ... Unfortunately there is no evidence that the big 1981 tax cut enacted by Reagan did anything whatsoever to restrain spending. ...
Rather than view this as refutation of starve the beast theory, however, Republicans concluded that Reagan's true mistake was acquiescing to tax increases... By the end of his presidency, Reagan signed into law tax increases that took back half the 1981 tax cut. His hand-picked successor, George H.W. Bush, compounded the error, Republicans believe, by supporting a tax increase in 1990.
When Bill Clinton became president in 1993, one of his first acts in office was to push through Congress--with no Republican support--a big tax increase. Starve the beast theory predicted a big increase in spending as a consequence. But in fact, federal outlays fell...
Although all of evidence of the previous 20 years clearly refuted starve the beast theory, George W. Bush was an enthusiastic supporter, using it to justify liquidation of the budget surpluses he inherited from Clinton on massive tax cuts year after year. Bush called them "a fiscal straightjacket for Congress" that would prevent an increase in spending. Of course nothing of the kind occurred. Spending rose throughout his administration... Nevertheless STB remains a critical part of Republican dogma. ...
Despite its continuing popularity among Republican politicians, at least a few conservative intellectuals are starting to have misgivings about STB. ... By eliminating tax increases as a necessary consequence of deficits, it also reduced the implicit cost of spending. Thus, ironically, STB led to higher spending rather than lower spending as the theory posits.
In the latest study of STB, political scientist Michael New of the University of Alabama ... concluded. "The evidence suggests that lower levels of federal revenue may actually lead to greater increases in spending."
In effect STB became a substitute for spending restraint among Republicans. They talked themselves into believing that cutting taxes was the only thing necessary to control the size of government. Thus, rather than being a means to an end--the end being lower spending--tax cuts became an end in themselves, completely disconnected from any meaningful effort to reduce spending or deficits.
Starve the beast was a theory that seemed plausible when it was first formulated. But more than 30 years later it must be pronounced a total failure. There is not one iota of empirical evidence that it works the way it was supposed to, and there is growing evidence that its impact has been perverse--raising spending and making deficits worse. In short, STB is a completely bankrupt notion that belongs in the museum of discredited ideas, along with things like alchemy.

Starve the beast was always backwards. There is some simultaneity in the choice of spending and taxes, and causal lines likely run in both directions, but the main causal effect is that tax rates adjust to spending over time, causality from taxes to spending in not as strong.

However, I don't want to say that starve the beast has been a complete failure. I believe our response to the crisis would have been different - hopefully it would have been considerably larger -- if we had been running a large surplus rather than a large deficit. Tax cuts weren't the only factor that put pressure on the budget, spending on the war mattered too, but I believe the tax cuts did reduce the magnitude of the response to the crisis. The tax cut portion of the stimulus package was smaller than it might have been if taxes hadn't been cut so much already, and spending would have been larger if surplus monies were present. I also think that discussions over spending on Social Security and other social programs would be different if the government's finances were in better shape, i.e. if taxes had not been cut. There would still be issues to resolve in the long-run, but there wouldn't be as much pressure to solve the problem immediately through drastic cuts in benefits.

So while I do believe that the strongest causal effects run from spending to taxes, I don't think we can say that causality in the other direction -- from say tax cuts to spending during an economic crisis -- is insignificant. It mattered.

Caleb Azariah-Kiros:

Starving the beast insanety as it is is not so much about economics as it is about ideology what is needed is regressive budget busting tax cuts for the few rich people in top of the economic hierarchy distributing as much wealth from the broad middle class to the smaller and narrower upperclass.

And in doing so busting up the budget deficit then insisting on cutting the budget deficit even where deficit is non structural but self-made through irresponsible tax cuts.

wjd123:

Every time Mark Thoma takes an article form links and features it he leaves behind the comments that were already made. I had to decide whether to leave my comment where it was or move it to where the discussion would be. It's embarassing to re-post a comment. Mark, stop moving things around.


Re: "Tax Cuts And 'Starving The Beast'" - Bruce Bartlett

"Starve the beast was a theory that seemed plausible when it was first formulated. But more than 30 years later it must be pronounced a total failure. There is not one iota of empirical evidence that it works the way it was supposed to, and there is growing evidence that its impact has been perverse--raising spending and making deficits worse. In short, STB is a completely bankrupt notion that belongs in the museum of discredited ideas, along with things like alchemy."--Bruce Barlett

I would like to believe that this is a sign that republicans are coming to their senses, but I can't when I look at the Republicans in congress.

The Republican in congress are not only ready to support ever tax cut that comes their way but are also ready with their fear game. At the very time we need Keynesian economics to put Americans back to work they want to play on deficit fears.

Perhaps Barlett's statement on why "starve the beast" doesn't work will make life harder for these republicans. When faced with the choice between lowering taxes and lowering deficits they will no longer be able to pick both since their presuppositions have been undermined. Perhaps, but I doubt it.

It was their starve the beast political policies--with help from their laissez faire economics--that brought us to the wilderness. They aren't able to lead us out bucause their philosophical beliefs won't allow them. Now, no matter which course they pick it will be wrong.

Republicans, just wrong for the times.

paine :

hey to BB gubmint spending is still a beast unless it's for pushing out the frontier of our yankee empire this is old school republicanism

circa the defeat of taft-ites by ike-iltes we need to form a middle party the decently frugal corporate party for dlc dems and these neo ike -itse both the rioght and left could ramble better that way

ilsm :

Where's the beef?

It was not so much starve the beast (STB) but borrow (lower taxes on folks clipping bond coupons) money to feed the war machine.

Feeding the war machine wasted the leverage on stuff for the militarists' phoney toys and bond coupons which created no usable productivity.

Borrowing instead of taxing and then wasting the leverage.

Starving the beast merely brought in ideologues who might otherwise been more sane.

There is no beef!

ken melvin:

Be it CA or the nation, the evidence is in. When yet they persist in believing in spite of all evidence to the contrary we must assume that they are either very dumb or completely nuts.

paine:

proof starve the east was not the motivator but the cover story

payroll taxes were increased while cap gains taxes were decreased we had a great shift in the burden of gubmint from capitalists to wage workers add in the rampant health costs also "deducted from payrools" and hourly productivity gains not passed thru to tyher bottom line get gobbled up pretty nicely

i like the clear parallel between a clinton democrat and an eisenhower republican btw

wally shedd:

Others here are getting at this point, but let's state it clearly: starve the beast was never a serious strategy for reducing government spending. It was a cynical rationale for providing a tax holiday to the wealthy and passing the cost of government to citizens not yet born. And it worked.

paine said in reply to wally shedd...

"passing the cost of government to citizens not yet born"

no "passing it to pay roll tax payers now as to who services the added debt down the road:"

well we the weebles can shift that burden back onto the class that created it to build and maintain our global rmadas

add up all the pentagon spending since say 1960 -- give the kold war 15 years to get sorted out benefit of the doubt--
but when premier K offered dis armament and ike and jfk passed on it ...

i say it was no longer even in any meaningful way about national security

it was and is about "Empire". Let those who benefit from empire pay the tab for it. the tab starts to build

paine said in reply to wjd123...

hey
to BB gubmint spending is still a beast
unless it's for pushing out the frontier
of our yankee empire
this is old school republicanism

circa the defeat of taft-ites by ike-iltes
we need to form a middle party
the decently frugal corporate party
for dlc dems and these neo ike -itse
both the rioght and left could ramble better that way

ilsm:

Where's the beef?

It was not so much starve the beast (STB) but borrow (lower taxes on folks clipping bond coupons) money to feed the war machine.

Feeding the war machine wasted the leverage on stuff for the militarists' phoney toys and bond coupons which created no usable productivity.

Borrowing instead of taxing and then wasting the leverage.

Starving the beast merely brought in ideologues who might otherwise been more sane.

There is no beef!

ken melvin

Be it CA or the nation, the evidence is in. When yet they persist in believing in spite of all evidence to the contrary we must assume that they are either very dumb or completely nuts.

paine said...

proof starve the east was not the motivator but the cover story

payroll taxes were increased while cap gains taxes were decreased we had a great shift in the burden of gubmint from capitalists to wage workers add in the rampant health costs also "deducted from payrools and hourly productivity gains
not passed thru to tyher bottom line get gobbled up pretty nicely

i like the clear parallel between a clinton democrat and an eisenhower republican btw

wally shedd said...

Others here are getting at this point, but let's state it clearly: starve the beast was never a serious strategy for reducing government spending. It was a cynical rationale for providing a tax holiday to the wealthy and passing the cost of government to citizens not yet born. And it worked.

paine said in reply to wally shedd...

"passing the cost of government to citizens not yet born"

no
passing it to pay roll tax payers now

as to who services the added debt
down the road:

well we the weebles can shift that burden back onto the class that created it
to build and maintain our global rmadas

add up all the pentagon spending since say 1960
--give the kold war 15 years to get sorted out
benefit of the doubt--
but when premier K offered dis armament and
ike and jfk passed on it ...
i say
it was no longer
even in any meaningful way
about national security
it was and is about "Empire"
let those who benefit from empire pay the tab for it
the tab starts to build

anne said...

What was need was a tax cut and less than 6 months for President Bush to turn the continually declining government deficits and continually rising surpluses of the Clinton years to a government deficit. Then, with continually increasing military spending and further tax cuts President Bush assured us what would be a continually rising deficit. President Obama has continued with tax cutting and increasing military spending, while more and more threatening Social Security and Medicare and promising to freeze or cut all other government spending on social programs.

paine :

anne
to be fair
you need to factor in
the revenue loss from the dot bubble burst
---cap gains yields collapsed as i recall--
and the coincident and subsequent
general economic down turn
or did bush make that all happen too ??

Steve Roth said...

The right can't seem to understand the difference between short- and long-term, levels and changes:

Pretty much every economist will agree that tax cuts and spending increases spur *short-term* economic growth -- especially in recessions. (And hence, probably, long-term growth as well.) And vice versa. Countercyclical, no-duh, move along.

But, in prosperous countries, at least tax *levels* (within the range of taxation in prosperous countries) have no discernible effect on long-term growth. Dozens of econometric studies make that clear.

bakho:

Starve the beast IS working at the state level. The deterioration of our public schools would NOT be politically palatable except for politicians hiding behind so-called "budget crisis" to make cuts to education and other necessary state services.

In Indiana, Mitch Daniels orchestrated a shift from property taxes (and huge tax cuts for the millionaire slumlords) to more regressive sales taxes with a promise to make up for loss of funding for the schools. When the economy tanked and the state is collecting less tax revenue (a large automatic tax cut) Mitch refused to do anything about revenue and instead has cut school funding. Mitch lied about his promise to fund our schools and instead has given our public school money to his wealthy patrons. This is the way starve the beast works at the state level:

1. Politicians cut taxes and lie to the people that services will not be cut.
2. Revenue fall short and politicians carry through with their original plan to cut popular public services.

The ENTIRE premise for STB is BAIT AND SWITCH. The whole idea is to FORCE cuts to popular public services by creating a revenue "crisis" to be used as an excuse. This works because when Mitch Daniels runs for public office, he will brag that he cut taxes and didn't raise taxes. No one will bother to hold Mitch Daniels accountable for lousy public schools. The lousy public schools are the fault of the teachers unions. This is the way this LIE plays out.

bakho:

This is why Republicans are against more stimulus money going to the states. Republicans want their governors to be able to do their dirty work of cutting services. More federal funding to the states would remove the excuse they use for anti-social policies.

bob mcmanus

:"Starve the beat" worked like a charm in the 80s, and is still working today. Bartlett chooses to look at total gov't expenditures rather than the changing composition of federal expenditures, e.g., much less to social programs and infrastructure and much more to defense, agricultural pork, and interest on the debt.

Bartlett was around during the regressive tax shift of the FICA increases and the SSRF, and his recent conversion is simply about passing his VAT or other regressive taxes in order to further increase the wealth at the top and demoralize the lower middle and middle classes.

anne said...
"I like the clear parallel between a Clinton Democrat and an Eisenhower Republican btw"

Eisenhower

1953 to 1960 Real GDP = 2.71%
1953 to 1960 Real GDP per capita = 0.90%

Clinton

1993 to 2000 Real GDP = 4.01%
1993 to 2000 Real GDP per capita = 2.81%

Michael Cain:

It seems that one could make the argument that the error was in thinking that "starve the beast" would have results in the short term. As a long-term strategy, it appears that it is beginning to bear fruit. Constrained revenues and two recessions within a decade (one small, one large) have put enormous pressure on state budgets. Within state legislatures, there is growing support for the notion that rather than cutting spending across the board and doing everything badly, it might be better to chop entire large categories of spending and do the remaining things well.

Colorado's legislature has passed a bill that requires all of the public higher ed institutes to submit plans on how they will handle a 50% cut in their state funding; as introduced, the bill would have required the plan to consider both 50% and 100% cuts. Arizona has terminated its SCHIP program and tightened its Medicaid eligibility. Given current revenue forecasts, when the temporary ARRA increase in federal matching rates for Medicaid expire, many states will be faced with the choice of following Arizona's lead or cutting other programs.

Creating the conditions for a financial catastrophe at the federal level is harder because of the ability to borrow staggering sums of money. Still, it seems quite possible that the federal government can be pushed into a series of financial crises that force it to abandon large programs.

See also

References

  1. ^ Europe's Welfare States. The Economist. April 1, 2004.
  2. ^ Bartlett, Bruce. Origins and Development of a Budget Metaphor. The Independent Review. July 2, 2007.
  3. ^ Lindberg, Mark. Foundations Have a Stake. Minnesota Council on Foundations. Spring, 2007.
  4. ^ http://georgewbush-whitehouse.archives.gov/news/releases/2001/08/20010824.html
  5. ^ Mallaby, Sebastian. Don't Feed the Beast: Bush Should End This Tax-cut Myth. The Washington Post. May 8, 2006.
  6. ^ http://www.independent.org/publications/tir/article.asp?issueID=50&articleID=641
  7. ^ http://www.ppionline.org/ndol/print.cfm?contentid=251788
  8. ^ http://www.prospect.org/web/page.ww?section=root&name=ViewWeb&articleId=9335
  9. ^ http://www.washingtonpost.com/ac2/wp-dyn/A26402-2004Jun8?
  10. ^ Christina D. Romer, David H. Romer. "Do Tax Cuts Starve the Beast: The Effect of Tax Changes on Government Spending. National Bureau of Economic Research. Working Paper No. 13548. October 2007.

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