I was standing in the Capitol hallway, tape recorder in hand, and Manhattan’s liberal Democratic Congressman Jerrold Nadler told me, “If you want to stimulate the economy and get the economy moving again, what standard economics tells you is run a deficit.”
I was shocked. I started to challenge him. “Some standard economics says that consumers should be able to keep their own money–”
He cut me off. “Standard economics,” he butted in, “basically says that during good times, you should run a surplus, during harsh times you should run a deficit. Over a long period of time you should be in keel.”
He went on, “If you want to stimulate the economy, you provide money in one way or another to people who are likely to spend it. So you cut taxes to people who are going to spend it, which means not the rich, because they’re spending what they’re going to spend anyway. You cut taxes to low-middle income people because whatever they get they’re going to spend.”
That was when I realized I didn’t care.
Bush is pushing an “economic stimulus” package. Cut taxes, he argues, so that the economy will rebound more quickly. Daschle argues the opposite. Tax cuts hurt the economy, he says.
Suddenly the error of the whole thing crashes down, and two thoughts appear.
First, I would want a tax cut even if it would send the economy into the tank.
Second, I can’t find the “save the economy” clause in Article I, section 8, of my copy of the Constitution.
Just like the $300 tax rebate checks were a mistake for making all Americans feel like the government was actually doing something good for them, the economic stimulus argument is a rhetorical disaster.
It is based on the premise that the government can and should do something active to manage our economy. This argument now comes in both the right ear (targeted tax cuts) and the left ear (deficit spending and unemployment insurance). So American politicians have now made it dogma that the government’s job is to rescue the economy.
Using tax cuts as a means towards a policy end should scare us. There may be some circumstance when, for the short-term, government interference, or even high taxes could aid prosperity. At least, there will certainly be a circumstance when the big-government folks can make that argument persuasively to the American public.
Reducing the burden of the state on our backs must be based on a principle more constant and more clear.
I want low taxes because I want freedom. The government should lower tax rates simply so that people who work can keep a bigger portion of their paycheck. If those people make terrible investments or put the money in the least efficient sectors of the economy, so be it.
It is the height of big-government hubris for any man to try to direct how that money gets spent. This is not only because the invisible hand is better than central planners at producing prosperity–even if it weren’t, our state’s current confiscation of private property would be immoral.
Free markets lead to prosperity. I regard this merely as a happy accident. However clear the connection between liberty and wealth may be, it should not be President Bush’s primary justification for cutting our taxes. He need only look to the Ten Commandments to see what he shalt not do.