Archive for the ‘taxes’ Category

Bruce Bartlett: Conservatives should accept the need for more taxes, and focus on limiting the damage

January 29th, 2009 No comments

Bruce Bartlett, who worked in both the Reagan and Pappy Bush administrations and was a trenchant critic of the recent Bush administration, has a new article in the Politico that argues that conservatives should resign themselves to rising welfare costs that have been bequeathed to the Obama administration (with further damaging increases as the Bush administration and now Obama and Dems implement plans to deal with the economic crisis) and should focus instead on finding least-damaging ways to raise the taxes needed to close the fiscal deficit.

Bartlett’s key point is as follows – it almost sounds like Bartlett is arguing for a shift from taxes on income, capital and labor to consumption taxes (query: carbon taxes?):

I think conservatives would better spend their diminished political capital figuring out how to finance the welfare state at the least cost to the economy and individual liberty, rather than fighting a losing battle to slash popular spending programs. But this will require them to accept the necessity of higher revenues.

It is simply unrealistic to think that tax cuts will continue to be a viable political strategy when the budget deficit exceeds $1 trillion, as it will this year. Nor is it realistic to think that taxes can be kept at 19 percent of GDP when spending is projected to grow by about 50 percent of GDP over the next generation, according to both the Congressional Budget Office and the Government Accountability Office. And that’s without any new spending programs being enacted. 

If conservatives refuse to participate in the debate over how revenues will be raised, then liberals will do it on their own, which will likely give us much higher tax rates and a tax system that is more harmful to growth than necessary to fund the government. Instead of opposing any tax hike, I think it makes more sense for conservatives to figure out how best to raise the additional revenue that will be raised in any event. 

In the end, the welfare state is not going away, and it will be paid for one way or another. The sooner conservatives accept that fact, the sooner they will regain political power.