As part of a recent discussion at the Adam Smith Institute in London, I explained why advocates of sensible taxation in the U.S. and U.K. need to be serious about controlling government spending.
At the risk of stating the obvious, it will be almost impossible to achieve better tax policy if the spending burden continues to increase and we enter an era of endless deficits and debt.
We presumably won’t get needed policy reforms from the Democratic Party (the era of JFK is long gone, and Bill Clinton’s moderate approach also is a distant memory).
But what about Republicans?
In part I of this series, I argued that Trump’s big-government populism was bad politics as well as bad policy.
But I was not arguing for establishment Republicans such as Bush or Romney.
Instead, I think the GOP needs to return to the era of Reagan-style libertarianism.
That means some things that Trumpies want, such as lower tax rates, but it also means genuine spending restraint. Which we didn’t get during the Trump years.
In part II, let’s contemplate whether this is a realistic hope, at least once we get past the Biden years.
If history is any guide, the answer is yes. Here’s another video, from more than 10 years ago, that shows the fiscal discipline the nation enjoyed under both Reagan and Clinton.
If you want more recent evidence, we also had a five-year spending freeze after the so-called Tea Party Republicans took power in 2010.
What about today? Can Republicans sober up and once again become fiscal hawks, morphing into good supply-siders who want better tax policy and spending restraint?
Or are they the bad supply-siders, meaning they spout rhetoric about tax cuts but don’t take the tough steps (such as entitlement reform) that are needed to make lower tax rates realistic?
I’ll close with a very depressing observation. The current fiscal situation is bad, but remember that things will get much worse because of demographic changes such as population aging.
Those who oppose entitlement reform necessarily are embracing huge tax increases and perpetual economic stagnation. Not to mention handing more power to Democrats.
There is no alternative.
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Image credit: The U.S. National Archives | Public Domain.
