The United States has set itself on a path of unsustainable debt levels with little political prospect to implement the policy mix that will turn this tide. What America needs is a government committed to generating real and sustainable economic growth and a real lowering of the fiscal deficits through strong commitments to (1) permanently lower tax rates on households and businesses and (2) stricter responsibility and control on government spending.
Recent research by two Harvard economists highlights the link between regaining a balanced budget by the federal government, lower tax rates, and the economy. This research supports the model of economic growth where a reduction in the tax rates faced by households and businesses stimulates an economy much more than a model relying on more government spending.
Printing more money to pay off our debt (by creating inflation so the fixed debt is worth less in real terms) is out of the question because of the possibility of losing control of the high inflation. Hence, our only remaining option is to pay off the debt the old fashioned way, by creating budget surpluses and paying a bit of our debt every year.
Moreover, the research recommends that a strong commitment to cost-cutting measures will also contribute substantially to lower and sustainable deficit- and debt-to-GDP levels. A critical step we could take to decrease spending is to cut costs of largely inefficient government-sponsored programs, allowing lawmakers to cut back tax rates across the board accordingly.
And yet this is easier said than done. Government-sponsored entitlement programs have no end in sight, making it hard to significantly cut spending and by extension to refrain from raising taxes to fund these entitlement programs. The stimulus bill and the current health care bill will make it even more difficult to achieve fiscal solvency. These authors conclude:
Health care reforms seem to imply large increases in spending, the retirement of the baby boomers is not too far, and in the pressing time of the crisis the issue of Social Security has been in the background, but it has not disappeared. A relatively high unemployment for a couple of more years will require spending on subsidies. The budget outlook looks rather grim on the spending side. The Congressional Budget Office predicts deficit of 7 per cent of GDP up to 2020. This is not a rosy scenario.”
Aleksey Gladyshev currently is a member of the Young Leaders Program at the Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/About/Internships-Young-Leaders/The-Heritage-Foundation-Internship-Program
A year ago this week, the American people elected a President who had promised during the campaign that he would: “cut taxes for 95% of workers and their families,” expand the Army by 65,000 and the Marines by 27,000, and enact “a net spending cut” for the federal government. Lower taxes, a strong defense and shrinking the size of government. Those are all core conservative beliefs. Accordingly, President Barack Obama entered the White House with sky high approval ratings.
But since being sworn into office, President Obama has raised taxes, weakened our defenses, and overseen arguably the largest expansion of government ever. As a result President Obama’s approval ratings have steadily declined, and the American people have only become more conservative. According to Gallup, Americans, by a 2-to-1 margin, say their political views in recent years have become more conservative. While independents and Democrats most often say their views haven’t changed, more members of all three major partisan groups indicate that their views have shifted to the right rather than to the left.
And this is before the more radical elements of the Obama agenda are to be forced on the American people. Both the cap and trade and health care legislation currently moving through Congress will transfer unprecedented power from the private sector to unelected and unaccountable bureaucrats in Washington. Search the texts of each bill for the phrase “shall” or “may establish.” Every time these phrases appear in these bills, the left in Congress is empowering unelected Obama Czars at the expense of your liberties. And this is not by accident. The empowerment of unelected bureaucrats is at the very core of Obama’s progressive agenda. Hillsdale College Associate Professor of Political Science Ronald Pestritto explains:
It is the Progressives’ desire to free bureaucratic agencies from the confines of politics and the law that allows us to trace the origins of the administrative state to their political thought. The idea of separating politics and administration–of grounding a significant portion of government not on the basis of popular consent but on expertise–was a fundamental aim of American Progressivism and explains the Progressives’ fierce assault on the Founders’ separation-of-powers constitutionalism.
The Heritage Foundation’s Center for American Studies Director Matthew Spalding details the rise of the progressive movement and their assault on the founding principles of our nation in his new book, We Still Hold These Truths: Rediscovering Our Principles, Reclaiming Our Future. The book is built around 10 foundational principles that created a free, prosperous and just nation unlike any other: Liberty, Equality, Natural Rights, Consent of the Governed, Religious Freedom, Private Property, The Rule of Law, Constitutionalism, Self-Government, and Independence.
The progressive movement represents a threat to these founding principles. For the left, “progress” means fundamentally transforming America with a new form of government that will engineer a “better” society by assuring equal outcomes. It would redistribute wealth through a distant, patronizing welfare state that regulates more and more of the economy, politics and society. President Franklin Roosevelt’s New Deal and President Lyndon Johnson’s Great Society were grand steps toward achieving the progressive platform.
We Still Hold These Truths offers a different direction. Spalding makes the case that we don’t need to remake America, or discover new and untested principles. We need a great renewal of the true roots of American greatness–and a radical reapplication of America’s core principles to the great questions of our day.
These core principles can be the source of a new and unified American conservatism, one that reminds economic conservatives that morality and self-reliance are essential to limited government, reminds cultural conservatives that unlimited government threatens moral self-government, and reminds national-security conservatives that energetic but responsible government is the key to safety at home and prominence in the world.
Quick Hits:
- According to ABC News, even using the White House’s most optimistic job numbers, Obama’s failed stimulus has spent $160,000 for every job “saved or created.”
- Many communities hit hardest by job losses, those built around dying factories and mills, have been slowest to see relief from Obama’s failed stimulus plan.
- According to recently released White House records, Service Employees International Union President Andrew Stern has been the top visitor to the White House, with National Organization for Women President Kim Gandy, and NARAL Pro-Choice America President Nancy Keenan also in the top ten.
- The ACORN affiliated Working Families Party is citing the 5th Amendment right against self-incrimination to withhold documents related to whether the WFP is scamming the campaign finance system.
- Claremont Review of Books contributing editor William Voegeli details why California’s high-benefit/high-tax model no longer works.