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February 09, 2004

The Wages of (Budgetary) Sin

The one place that George Bush is generally likely to get high marks is for his tax policies. He has pushed for tax cuts every year of his administration to date, and his zeal to cut taxes seems one of his most compelling features. But Bruce Bartlett points out the flaw in Bush's ointment: his unwillingness to keep spending down.

As Bartlett correctly notes, eventually we're going to have to pay for the various programs President Bush has signed into law, most particularly including his Medicare prescription drug benefit. There are two ways to pay for government programs (actually, only one: with Other People's Money, but there are two ways to allocate their money): raise taxes, or cut spending elsewhere. My preference, unsurprisingly for those who know me, is for cuts in other spending. I'd feel far more comfortable with government spending if I knew there was a ceiling above which spending wasn't permitted to go. But the growth of entitlements means that, even if I could get a political consensus for that technique, it wouldn't work for the debts we're now incurring. Between Medicare, Medicaid, and Social Security, we could cut all other federal spending and still not have enough cash in the till to cover our (self-imposed) obligations. When that time comes, our only choices will be to raise taxes or to refuse to pay out the promised benefits. Which do you think Congress will opt for?

Yes, Bush's tax cuts have been nice. But his other policies are ensuring that they are a temporary blip in the ever-increasing share of the economy that will go to the government.