The Politics of Budget-Cutting

Commentary by Victor Davis Hanson - The voters just spoke. They think they want no more gargantuan deficits, massive public spending and exponential growth in government -- or the specter of higher taxes to pay for all of it. No wonder: We are on pace to soon owe 100 percent of our annual gross domestic product in national debt, while compiling the largest annual peacetime deficits in our history. So cutting the borrowing and spending is inevitable if America is to avoid a Greece-like implosion. But as the blood sport begins, we should remember the strange politics that will soon govern the process. First, no one ever reduces government in good times, when we are far better able to limit spending, and the public needs less assistance. Cutting happens only after the economy falters and the money runs out. That fact always leads to a vicious cycle: When the people believe they need public assistance the most, an indebted government is least able to provide it. Recipients become accustomed to the steady additions in federal money they receive and will insist that they can survive only by continual increases, never by their own reduction in expenditures. Second, tax-raising has limits, as we see from the California meltdown. There, a 10 percent state income tax on upper incomes and a sales tax of nearly 10 percent did not result in balanced budgets, but instead either sent high earners and businesses out of state, or made them stop hiring and buying equipment. Employers will prefer to shut down or hide rather than take risks while they feed the ever-growing state beast. Read more

The Politics of Budget-Cutting