Krugman Breathes New Life Into "Starving the Beast"
Despite some skeptical colleagues (not mentioning any names, Alex!), I’ve never doubted the wisdom of “starving the beast” – opportunistically cutting taxes whenever possible in order to reduce spending eventually. Now Mankiw presents some new evidence in favor of the theory, from an unlikely source:
[A]ccording to Krugman, the Bush tax cuts may well cause government under President Obama to grow less than it otherwise would.
Roughly the same story was told in Robert Reich’s highly entertaining memoir… Reich suggests that the Reagan tax cuts and resulting deficits constrained the Clinton administration from pursuing all the spending programs that Reich wanted.
Krugman and Reich view this situation as entirely negative, for they favor increased government spending. But for those classical liberals who prefer smaller government, their storyline supports the well-known and often maligned Starve the Beast theory.
Nice. Alex Tabarrok may call this “cynical” – but in politics, that’s basically a synonym for “true.”