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Deficits as a Tool to Curb Public Spending

May 28, 2003

Re "Taxing Credibility," Opinion, May 25: It's rare for neoconservatives to be forthright in describing their fiscal agenda, but Bruce Bartlett let the cat out of the bag. Huge deficits are fully intended, as a political strategy to constrain public spending. Irving Kristol arrived at this strategy after realizing during the mid-1970s that the traditional Republican insistence on budget balancing was a political dog. The lion's share of public budgets is politically popular: a strong military, good schools, old-age security and well-maintained roads. "Rather than explaining to the populace, parent-like, why the good things in life that they wanted were all too expensive," neoconservatives decided to court fiscal disaster -- in the form of massive deficits -- as a way to force spending cuts.

How to tempt voters down this path? By offering them immediate gratification in the form of tax cuts. Meanwhile, the Democratic Party continues to offer its own brand of short-term inducements: reckless spending growth without corresponding tax increases. The result? Budget disasters like the one California faces.

Politicians on the right and left get elected by promising a fiscal free lunch. There's a symbiosis at work, as each side blames the other for the bleak state of affairs, in which too much of the public budget is squandered on interest payments.

Monty Hindman

Riverside

*

What Bartlett conveniently ignores is that Ronald Reagan, in eight years, ran up a larger deficit than all the previous presidents in 191 years, combined. Supply-side economics is just another name for "trickle down," a term that described the disastrous policies of Herbert Hoover: Pump money into the top of the economy and the benefits will filter down to the general population. Unfortunately, after the corporate rich take what they perceive as their share, there's little left. As economist John Kenneth Galbraith described it: If you feed the horse enough oats, he will leave something in the road for the sparrows. And voters will continue to fall for the conservative claptrap, confirming George Santayana's maxim that those who fail to learn from the past are condemned to repeat it.

Forrest G. Wood

Bakersfield

*

Gene Sperling (Commentary, May 23) writes that the currently proposed tax cuts would trade away future resources needed to address Social Security, Medicare and other challenges. Past experience, however, shows that tax cuts help return idle economic resources back to usage. An economy with more output and more debt is certainly preferable to one with less output and less debt. The tax cuts of the '60s, '80s and 2001 were all promptly followed by increases in real gross domestic product.

The proposed cuts would amount to about 3% of GDP, and the ratio of the national debt to national income would be declining. The economic stimulus that lower tax rates would provide is very much needed. A higher economic growth would increase the volume of funds flowing into the Social Security and Medicare trust accounts.

Of course there should be no such thing as a 10-year cut in tax rates. Economic shifts are too unpredictable. For the present, however, economic theory, economic experience and common sense clearly indicate that current tax rates should be lowered.

Theodore A. Andersen

Professor of Finance

Emeritus, UCLA

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