Friday, December 14, 2012

"Starve the Beast"

Since the 1970s, the Republican Party has fallen increasingly under the influence of radical ideologues, whose goal is nothing less than the elimination of the welfare state — that is, the whole legacy of the New Deal and the Great Society. From the beginning, however, these ideologues have had a big problem: The programs they want to kill are very popular. Americans may nod their heads when you attack big government in the abstract, but they strongly support Social Security, Medicare, and even Medicaid. So what’s a radical to do?
The answer, for a long time, has involved two strategies. One is “starve the beast,” the idea of using tax cuts to reduce government revenue, then using the resulting lack of funds to force cuts in popular social programs. Whenever you see some Republican politician piously denouncing federal red ink, always remember that, for decades, the G.O.P. has seen budget deficits as a feature, not a bug.
The New York Times | Opinion
The G.O.P.’s Existential Crisis
Paul Krugman | Professor of Economics, Princeton University

David Stockman admitted this back in 1985, as reported by Tom Wicker in "Stockman leaks 'real' reasons for budget deficit." now appears that the deficit was created by Reagan to do away with Democratic social programs dating back to the New Deal.
Who says so? David Stockman, the departing budget director, at second hand, and Friedrich von Hayek directly....
(h/t JK via email)


David said...

When the government of the United States borrows a large part of the savings of the world, the consequence is that capital must become scarce and expensive in the whole world. That's a problem.

Even though Hayek had a set of presidential cufflinks (just like Jamie Dimon) given to him by Reagan and God knows what given to him by Maggie Thatcher, he was firmly in the moron camp. The U.S. had absurdly high interest rates before Reagan ever came in and started "borrowing a large part of the savings of the world," whatever that means. I thought Hayek was supposed to be the "good Austrian."

Matt Franko said...

I guess Krugman's short lived anti-Peterson meme got shot down by the NYT and he's back to his typical usual self ... advocating for deficit reduction here again...