Fiscal irresponsibility 9: ATR and the soul of limited government

There is an on-going protracted debate whether to raise taxes in the US to reduce the fiscal bleeding of the US federal government each year, caused by past and present fiscal irresponsibility by the occupants of the White House and the leaders in Capitol Hill. But such debate is not so much between the Republicans and the Democrats, but within or among Republicans themselves and their supporters.

Dan Mitchell of Cato wrote today a good article, Tax increases are political poison for the GOP, about the debate between Sen. Tom Coburn (R-Oklahoma) and Grover Norquist, the head of the Americans for Tax Reforms (ATR). The former is arguing that Republicans should accept some tax hikes and compromise with the Democrats to reduce the budget deficit, the latter is arguing that such compromise will result in even bigger government, not smaller, in the future. Dan Mitchell wrote,

From an economic perspective, there are all sorts of important issues:

1. What is better for the economy, lower spending or higher taxes?

2. Is it possible to balance the budget without higher taxes?

3. Would tax increases be used for deficit reduction or more spending?

The US federal government is projected to have another double-digit budget deficit this year after a similar deficit of more than 10 percent of GDP last year. Chart is from The Economist, Buy now, pay later, April 13th 2011 issue.

Politicians, even from a political party that is supposed to advance limited government, fiscal responsibility and free market, are generally easy to be hoodwinked into believing that more taxes, not more spending cuts, will promote more economic growth and more job creation (and reduce poverty) over the long-term. It is important, therefore, that independent and private think tanks and citizen pressure groups which are not organizationally part of any political party -- like the ATR -- exist and do their work of reminding elected politicians of their pledge to the voters when they were still campaigning.

There is no way that more taxes, more transfer of money from the citizens' pockets to the state and politicians' whims, will promote fiscal and personal responsibility. Where there is fiscal irresponsibility, personal irresponsibility would quickly follow. When government for instance, would subsidize healthcare even for unhealthy lifestyle-acquired diseases, then more people will become less watchful, less responsible, about their personal health.

Grover and his staff at ATR are doing their job well. But even their best effort will not be enough to block politicians' populism and its slow slide towards more statism, more welfarism, and ultimately towards the "big bang" of a real fiscal crisis. Ordinary citizens -- Americans, Europeans, Asians, and so on -- should realize that surrendering their personal freedom to state or collective freedom will be counter-productive.

Independent and free market-oriented think tanks like ATR and Cato can only help provide the philosophical guideposts and economic studies. The ordinary people, aware of the limits of government and their individual potentials, will have to put the future into their hands now.
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Related topics here will be

Fiscal irresponsibility 4: US public debt, and

Fiscal irresponsibility 5: US entitlement spending.