More Starve the Beast Nonsense
Over the weekend, Sen. John Kyl, R-Ariz., asserted that despite the large budget deficit, tax cuts must never be offset, budgetarily. This view is consistent with a philosophy long held in Republican circles that tax cuts without any offsetting spending cuts are the epitome of fiscal responsibility because they will somehow automatically “starve the beast.” Starve the beast theory has been the subject of much recent academic research, all of it showing that there is no truth to it whatsoever. Indeed, the literature shows that the effect is actually perverse; leading to higher spending because the tax-cost is reduced by tax cuts. I provide links to a number of recent academic studies on this point in my Fiscal Times post today.