I encourage you to read Garth's entire response ( Starve the Beast a different phenomenon than Gorge the Beast?) I will, however, concentrate on the following two paragraphs:
One of the arguments in favor of a gas tax hike is that it will produce additional government revenues, and that there is little evidence that more taxation leads to more government spending. In other words, to proponents, a tax increase can essentially be deficit reducing...
It seems to me, especially in today's climate that starving the beast (especially given evidence), does not hold for precisely the same reason that gorging the beast does. That is, in times of high 'demand' for government services (be they military or other discretionary spending), a reduction in taxes has no effect on government spending. Why? well it makes sense that if an event is ongoing that requires a substantial outlay (like, oh i dunno, a "war") any reduction in taxes is unlikely to stop the need for government spending.
Why is this the case? I believe the tax cuts are to blame. Recall the Gale and Kelly quote from Will Higher Taxes on Gasoline Lead to Higher Government Spending?
- Policymakers go through periods of fiscal restraint and fiscal largesse and the restraint or largess occurs simultaneously on both the tax and spending sides. That is, periods of fiscal largesse tend to generate declines in taxes and increases in spending (as shares of GDP). Periods of fiscal discipline tend to provide declines in spending and increases in taxes.
Consider the language used in the media when describing policy changes. It is always in terms of dollars, such as "A tax cut which will cost the government 5 billion dollars" or "A school-lunch program which will cost the government 5 billion dollars". This use of language suggests that spending increases are complements and not substitutes. I believe that this how things operate in Washington and in Ottawa. If Gary received the 500 million dollar tax cut he wanted, then why shouldn't Mark get 400 the million dollar farm aid package he's been lobbying for and Diane get 300 million dollars for upgrading college libraries? Because tax cuts are popular with voters, they are seen as government largess, just as a new stadium or bridge would be.
If we want to reduce spending, the only way to do it is by instituting a culture of debt reduction and fiscal restraint. The last six years has shown us that we cannot simply reduce taxes and hope spending will take care of itself.