Tax Analysts Blog

Starve the Beast, Feed a Crisis

Posted on Jul 25, 2009

Some years ago a group of folks in Washington devised what they thought was a clever idea. It was known as the Starve-the-Beast (STB) theory. The 'beast' here is a pejorative reference to our federal government, which was portrayed as bloated, bureaucratic, inefficient, and statist. Admittedly, the government is all of those things to varying degrees. But the STB movement wasn't just about fighting bureaucracy or wasteful government programs. It was a modern-day crusade against perceived forces of darkness.

The beast's motivation -- these folks would have you believe -- was to deny us our liberty, to deprive us of freedom, to generally make life unbearable. In short, the government was Lord Voldemort minus the charm. Any hope for our future depended on annihilating this evil beast. How would one accomplish that? Simple: deprive the beast of it's life blood, i.e., tax revenue. Your tax dollars were the beast's fuel.

Thus STB became a convenient justification for lowering taxes anytime, anywhere, anyhow -- while cloaked as serving America's best interest. No matter what the country's current state of affairs happened to be, STB theory dictated that taxes must be lowered at all cost. Deficits be damned, this was tax cut über alles.

If the country was at peace, we must lower taxes. If we're waging multiple wars, we must lower taxes. If there was a big hurricane or other natural disasters, we must lower taxes. If the financial markets are bullish, bearish, or indifferent ... you guessed it ... we must lower taxes. Under STB theory, there is no conceivable set of circumstances under which lowering taxes is not the correct decision.

STB was premised -- and naively so -- on the understanding that a revenue shortfall would inspire fiscal responsibility among our lawmakers. The ultimate goal was that Congress would be forced to shrink the size of government because it lacked the funds to pay for things. Fat chance.

Yes, federal income taxes were lowered in 2001 and 2003 with some of the largest tax cuts in history. But government never grew any smaller. The envisioned restraint on public spending never materialized; not even with eight years of a Republican administration and several years of Republican control over both houses of Congress. The size of government actually expanded in the Bush years, just as it continues to grow today under the Obama administration and a Congress controlled by Democrats.

The results have been a massive deficit and a skyrocketing national debt. Our country's finances are now in crisis mode. I suspect the STB crowd was well aware this would happen. They were repeatedly cautioned that reckless tax cuts would create a deficit and feed the national debt. Their response was that deficits didn't matter; neither did the national debt. I wonder if STB advocates are still preaching that gospel.

History will view STB as a failure. In fact, it failed quite spectacularly. Say what you will about "tax-and-spend" liberalism, it seems America has done far worse under this odd brand of "tax-less-spend-more" conservatism, which has proven to be downright destructive. (You might recall that the government enjoyed balanced budget in the years before STB was hatched!)

If there's a lesson here it's that you shouldn't mess with beasts you can't control. Starve it all you want; it will come back nastier, meaner, and hungrier than ever.

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