Reagan in Reverse
Obama's big government will run out of gas.
12:00 AM, Jun 11, 2009 • By GARY ANDRES
Finding fuel for new economic growth is Obama's larger challenge. Reducing the tax burden is more than just ideological symbolism; it's an important tool to propel economic growth. With an enlarged public sector, and tax cuts off the table, we run the risk of entering a fiscal death spiral: a sluggish economy means shrinking tax revenues, producing even larger deficits and debt. Financing these growing obligations also means higher interest rates, which hampers economic growth even more. It's hard to see how the current path doesn't lead to higher taxes to close budgetary gaps, which again, is a reverse Reagan outcome.
Reagan believed tax cuts served not only as a stimulus for economic growth, but as a tool to keep the size of the federal government in check. Obama is trying the antithesis. By growing the size and reach of Washington he makes tax cuts seem like an impossible dream--truly a nightmare for those who agree with Ronald Reagan's belief that a bloated federal leviathan is inconsistent with both fiscal stability and economic growth.
Gary Andres is vice chairman of research at Dutko Worldwide in Washington, D.C., and a regular contributor to THE WEEKLY STANDARD Online.