Classical Liberals like to play the ideology card in a clever way--they often hide their political theory of small government under the rubric of economics. You see them argue--"you can't increase government spending, or raise taxes" because it hurts the economy. This isn't necessarily true--only in how you try to pull it off.
Nicholas Timmins From the Financial Times Arena talks a little about this in a recent post:
On the size of the state, this is not just a small ‘p’ political issue but one decided more by national culture rather any purely economic argument.
Scandinavian economies have operated, pretty successfully, with a much higher tax take to pay for a much more generous welfare state than say the US or UK. The UK’s problem has always been that British voters appear to want mainland European levels of social provision (health, education and benefit systems) while wanting to pay US levels of tax.
That equation doesn’t balance; and it helps explain why the UK’s public services so often struggle.
Its not how much you pay in taxes. Its how your spending aligns with the intake of revenue. The Bush tax cuts were irresponsible because we needed that revenue for spending we had. This is a huge part of the deficit--almost 50% of it in fact comes from the Bush tax cuts. Responsible "small government types" who prefer lower taxes should have required that spending cuts went along with the tax cuts so that we wouldn't have created the deficits we now face. Good economics would require them to do so. But Republicans are neither responsible when running government, nor good at economics, so we get what we had for the past eight years of Bush--not to mention the mess down at the Gold Dome here in GA.
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