Political Horizons for Sunday, July 1, 2012

New choices beat starvation

At last, Louisiana’s elected officials are embracing a political strategy.

But it’s one that has been flogged by fiscal conservatives since the 1970s, and has since been widely discredited by economists of all stripes.

It was Alan Greenspan, the conservative economist and former chairman of the Federal Reserve, who dubbed the theory “Starving the Beast” during testimony in 1978. The idea is to cut taxes, create tax credits, expand deductions and otherwise cut off the flow of money to government.

He was speaking about the federal government on the heels of the famous Proposition 13 balloting, in which California voters elected to limit the property taxes that funded local and state government.

Louisiana has been doing the same sort of thing in dribbles and drabs. According to the Louisiana Department of Revenue, Louisiana could have collected $11.1 billion in the taxes on the books, but collected only $7.5 billion because of exemptions targeting specific industries, businesses and individual taxpayers. The roughly $4 billion uncollected would have covered cuts to higher education and increased spending on children in public schools.

State Rep. Hunter Greene, R-Baton Rouge, has long pushed to reduce revenues and has long argued that state government is too large. Greene says a number of his colleagues take the position that the only way to force a governor to curtail government spending is to give him less money.

Paul Krugman, a Nobel Prize-winning economist and columnist for The New York Times, wrote that taxes were eliminated “with the deliberate intention of worsening the government’s fiscal position.” The more responsible, though not as politically popular, action would have been to make cuts to specific services, he wrote.

Bruce Bartlett, a former U.S. Department of Treasury economist and columnist for Forbes, wrote that cutting taxes in no way restrained spending. Government outlays increased during the White House years of Ronald Reagan and George H.W. Bush. Bill Clinton, who took office in 1993, pushed a tax increase, and federal spending levels dropped, he wrote.

George W. Bush renewed tax cuts when he took office in 2001. Federal spending rose and the economy tanked. “In short, ‘Starving the Beast’ is a completely bankrupt notion that belongs in the museum of discredited ideas, along with things like alchemy,” Bartlett wrote.

Even the “No Tax” guru of the last couple decades, Grover Norquist, is losing influence, according to the conservative editorial pages of The Washington Times.

Norquist, who spoke in Baton Rouge before the 2012 session of the Louisiana Legislature, waves around his famous pledge that elected officials sign promising never to raise taxes regardless of the reason.

Sixty-seven candidates in Louisiana’s October 2011 state elections signed the No Tax pledge, according to Norquist’s Americans for Tax Reform. Thirty-two of the current 144 members of the Louisiana Legislature have signed the pledge.

“Unfortunately, it is Grover Norquist’s pledge that has been a ‘root cause’ of the gridlock in Washington and the uncertainty on Wall Street in the last few years,” the Washington Times daily newspaper wrote on Tuesday.

The issue is not about starvation, but about making tough choices and sticking to the decisions.

Taxpayers in Maryland, for instance, made fixing lousy schools their priority. They created a top-notch public school system, not by privatizing their institutions; but by doing what was necessary. They kept the infrastructures up to date. They strengthened curriculums, and helped teachers.

Though the school system is not perfect, Maryland parents who send their children to parochial schools these days are choosing a religious education, not because they have no other choice.

As good as Gov. Bobby Jindal’s education overhaul may be for parents whose children are in failing public schools, he did nothing to improve those schools. During the session, a usual Jindal supporter, state Rep. Sherman Mack, R-Albany, said the problem with the education overhaul is “I don’t see anything in here about fixing the quality of the schools for the future.”

Fiscal conservative Greene said he has been talking with legislators about transforming “No Way, No How” into a strategic plan that identifies the core responsibilities of state government, then fully funding those services. “That should be the first thing we do,” Greene said.

Mark Ballard is editor of The
Advocate’s Capitol news bureau. His email address is [e-mail].

Comments

1) Comment by Scrooge - 01/07/2012

Sadow, you think unfunded wars were irrelevant? When was Grover Norquist elected?

2) Comment by jeffsadow - 01/07/2012

Ballard needs to do his homework or be less disingenuous in his writing. He writes, "George W. Bush renewed tax cuts when he took office in 2001. Federal spending rose and the economy tanked," as if the cuts and the downturn were related. In fact, 9/11 was the trigger event that threw the economy into a short recession that might otherwise not have happened (the downturn had begun, but might have been temporary without that event). Then came the tax cuts, and economic growth (and government tax revenues) exploded as a result, which is documented extensively by a number of economists and research organizations. But it figures -- only the intellectually lazy read and actually accept Krugman's flawed hypotheses.

3) Comment by Cousin Dave - 01/07/2012

Somebody needs to tell Mr. Ballard that starving the beast is not the same thing as choking his chicken. If you want to go after our governor, Mark, you are going to need more than a lightweight like Greene, who couldn't even beat a school teacher in his recent bid for judge.