Ashby 2008

Nothing illustrates the mass delusion that has overtaken the Republican Party more than the Club for Growth. For those who don’t know, the Club for Growth is an organization of very wealthy people who promote the economic benefits of lower taxes. For some reason, the members of the Club for Growth seem to have concluded that budget deficits resulting from the Bush Tax Cuts do not prime the growth of government, don’t distort the economy, and won’t have to be repaid by their children and grandchildren. At some point, all delusions come to an end. At some point, the members of the Club for Growth, (or the member’s children), will likely look back on its positions and conclude that the Club for Growth was instrumental in a larger government and larger tax burden. Yes, the Club for Growth should be re-named the Club for Growth in Government.

A balanced budget has always been the linchpin of Republicanism and fiscal conservatism. A balanced budget was a key tool to control the size of government, limited the degree to which the government could distort the economy, and was morally the right thing to do – it protected the interests of future generations that would be asked to repay any deficit.

Socialism by revolution certainly is the most dramatic, but Republicans have historically recognized that socialism by evolution, a gradual and inexorable expansion of government responsibility, was in some ways a greater danger. We don’t talk about socialism much anymore, but fear of creeping socialism was a primary reason that Republicans were so adamantly against government deficit spending. Republicans recognized that one of the best ways to control the growth of government was to force voters to pay for it as they used it. If voters actually had to foot the bill for the government services being provided, they would be much more likely to examine each proposed service to insure it was worth the money coming out of their pockets. Decoupling government spending from taxes almost guaranteed that the amount of money government spends would grow, and thus the government’s intrusion into our economy and lives would grow as well. People just tend to spend more if they can put it on a credit card.

As importantly, budget deficits undermined belief in the free market. Explicit in a budget deficit is the idea that the free market won’t grow and prosper on its own, that government intervention and control of supply and demand are necessary for the health of our economy. Republicans were concerned that if voters came to accept the idea that the government needed to manipulate and control the economy by pumping money into it to insure growth, then any shortcomings in the economy would lead to demand for government to do more. Once this cycle was started, each swing in the business cycle would result in ever-greater government spending, ever-larger deficits and even greater intrusion into the economy. Who knew where this might lead—would government eventually lose confidence in people’s ability to decide which agricultural products to buy, or to oversee their children’s education?

Strangely enough, the Bush Tax Cuts have proven everything the Republicans always worried about. The deficits have distorted the economy, leading to speculation and instability, and facilitated growth in the size and expense of government. President Bush will go down in history as the Republican President who most increased the size of government and the tax burden on U.S. citizens. Who knew that it would be a Republican President that confirmed the worst fears of the Republican Party?

Republicans also used to recognize that at some point, deficit spending would have to come to an end—our country would actually have to pay for all of the services being provided by our government. Modern fiscal conservatives seem to have this fantasy that in this situation the government would largely collapse, unable to pay for everything it is doing. Beyond the craziness of the idea (“We had to bankrupt the country to get it to spend less money”), Republicans who had lived through the Depression realized that in a democracy the answer is far more likely to be confiscatory tax policy—government would simply increase its tax rates on those who controlled the means of production to pay for the services government provided to those who didn’t. Republicans used to worry that bankruptcy wouldn’t be the end of Big Government—it would be the practical end of private ownership of the means of production. Yes, that’s right – in accepting massive budget deficits the Club for Growth is pushing us down a path that wealthy people used to believe would result in socialism.

This, ultimately, is what’s so baffling about the Club for Growth and the support of the Bush Administration tax policy in general by the wealthy. Certainly, the Bush Tax cuts put more money in this generation’s pockets. However, wealthy people used to understand the difference between a tax cut and a tax deferral. Wealthy people used to know that the only way to actually cut taxes was to cut government spending; in theory people with money understand a balance sheet, and that liabilities eventually have to be repaid. Have the members of the Club for Growth really deluded themselves into believing that the government debt won’t have to be repaid, and that it won’t be their children and grandchildren paying it? Is this what is now considered prudent stewardship? Have the members for the “Club for Growth” really convinced themselves that they are doing their heirs a favor?

This entry was posted on Monday, January 7th, 2008 at 2:26 pm and is filed under Blogroll, Economics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.