As I wrote yesterday my big concern over the next 4 years is the GOP falling victim to the temptations of big government
As I have been saying since November 9th, the GOP needs to make sure it sticks to its conservative principles despite the temptations from big government that befell the previous Republican administration. It’s going to be a hard fight, but knowing someone like Senator Sasse is going to be fighting in Washington gives me hope.
Senator Sasse is one of the only republicans who has had the guts to challenge Trump from the conservative side of the aisle (McCain & Grahmnesty have been attacking him as moderates). However, it seems he may not be alone anymore. Oklahoma Representative, Tom Cole, recently told the Wall Street Journal spending cuts are a necessity to cut the budget,
“You’re not going to be able to grow your way out of this one. It’s too big,” says Rep. Tom Cole (R., Okla.). He expresses worry about relying on rosy growth projections, through the use of so-called dynamic scoring, to assume tax cuts would stimulate the economy to materially offset upfront revenue losses. “I worry we’re so in love with dynamic scoring, and it never works out the way the tax gurus tell us it’s going to,” says Mr. Cole.
The GOP loves tax cuts because that stimulates growth and can lead to more revenue growth. However, the GOP rarely follows through on the spending cuts because that’s a much harder sell. Not only is a no go with all Democrats, most GOPers don’t support spending cuts. This creates a major budgetary problem. I think Kevin Williamson explained it best,
Part of the Republican response to this was based on Lafferism, and generally on a very naïve version of Lafferism: “You can’t call that notional $1 billion tax cut a $1 billion expenditure, because the tax cut will produce growth effects that add to tax revenue.” That is true as far as it goes — which is generally not as far as Republicans take it. There are commonly observed growth effects from cuts in tax rates, but they generally amount to something like 20 percent of the revenue “lost” under the static-projection model. Sometimes they have been more than that. But the pop-con belief that growth effects frequently amount to more than 100 percent of forgone revenue — that tax cuts “pay for themselves” or pay for themselves and then some — is not sustained by the evidence, and certainly not from the evidence of modern, advanced economies with tax rates that already are relatively low both by world standards and by historical standards.
Williamson is spot on. Far too many Republicans misunderstand lafferism. Lucky for us the Laffer Center clears this all up for us,
Importantly, the Laffer Curve does not say whether a tax cut will raise or lower revenues, nor does it predict that any and all tax rate reductions would necessarily bring in more total revenues. Instead it says that tax rate reductions will always result in a smaller loss in revenues than one would have expected when relying only on the static estimates of the previous tax base
Far too often, Republicans justify tax cuts and no spending cuts under the guise of increased revenue will make up the difference. After 30 years of data and 17 trillion dollars of debt, we clearly know that is not the case. The GOP needs to wake up from this fiscal fantasy and start budgeting. We can still cut taxes but for every dollar, in tax cuts, we need 2 or 3 dollars in REAL spending cuts. With social security and Medicare on the path to insolvency, we need to rectify this GOP myth today if we hope to survive in the future. It’s not going to be easy. Democrats and President Donald Trump might oppose this plan. Unfortunately we are getting to the point where we don’t have any other options.