…because I’m an economist and a mom–that’s why!

Matt Miller Says “Feed the Beauty”

February 28th, 2009 . by economistmom

Kudos to Matt Miller for his explanation of how “Obamanomics” represents a major shift in fiscal philosophy that while “revolutionary” still won’t at all be easy to implement:

…Those of us who worked in Bill Clinton’s budget office thought we did a pretty good job cleaning up the mess we inherited, before the Florida debacle in 2000 gave the GOP a chance to play “Starve the Beast” for a decade more. But Clinton himself, who felt compelled after the GOP blowout in 1994 to declare that “the era of big government is over,” never really slipped the spiritual straitjacket off “Starve the Beast” in the first place.

With President Obama’s first budget we are therefore embarking on an epic new paradigm which deserves its own metaphor. Though it’s a little clunky, for symmetry’s sake we may as well call it “Feed the Beauty.”

In fiscal terms, the failed wager of “Starve the Beast” was that spending would eventually shrink to come in line with lower taxes. The tacit wager of “Feed the Beauty” is that taxes will eventually rise to come in line with higher spending. Why? Because Americans will, over time, come to realize that the government we want is actually worth paying for (as opposed to having our children borrow money from the Chinese to pay for it, the de facto “plan.”) The paradox of this revolution in governing philosophy is that its success relies on the same underlying political dynamic. Instead of fiscal sanity depending on pols doing something the American people won’t like (cutting popular programs), it will now depend on pols doing something the American people won’t like (raising taxes)…

And speaking of the Chinese and our children owing money to them, comedian Bill Maher has his own reasons for worrying about that… Watch if you want to know what the “Snuggie” has to do with fiscal responsibility.  (Warning:  not appropriate for younger children to watch due to language.)

One Response to “Matt Miller Says “Feed the Beauty””

  1. comment number 1 by: B Davis

    And speaking of the Chinese and our children owing money to them, comedian Bill Maher has his own reasons for worrying about that… Watch if you want to know what the “Snuggie” has to do with fiscal responsibility. (Warning: not appropriate for younger children to watch due to language.)

    Thanks for posting a link to that clip. I haven’t seen Bill Maher for a while and had forgotten how funny he can be. He certainly shows that you can mix fiscal responsibility and humor.

    Also, I found the blog on “Feed the Beauty” interesting. It mentions that the “Starve the Beast” idea originated with Milton Friedman and “held that the shrewdest way to restrain the supposed runaway growth of evil (and thus “beastly”) government was to cut taxes perennially”. In fact, I’ve long thought that “Starve the Beast” was the most cowardly way to restrain the growth of government. It’s politically simple to cut taxes, especially if one can fool people into thinking that it will magically pay for itself. Convincing people to give up their programs, especially when they get no benefit (like tax cuts) in return is very difficult. Hence, doing the first and leaving the second for future generations is just plain cowardly. It would be likewise cowardly to mindlessly increase spending with the hope that future rich people will pay for it.

    Fortunately, I believe that Obama is supporting the idea of PAYGO. The best way to get people to accept something unpleasant (like higher taxes or cuts in spending) is to connect to something pleasant (like lower taxes or increased spending). The current situation calls for some increase in spending so it seem that some increase in taxes is necessary. Also, the fact that the top marginal tax rate has decreased so much since Kennedy would suggest that there is some room for a modest increase.

    Speaking of the current situation, I just updated my graphs of the deficit and the debt with numbers from the just-released budget. They are sobering to say the least. On the deficit graphs, I had to radically modify the scales. Of course, the relative level of the debt is likely much more important. As can be seen, the gross federal debt is projected to jump from 70.2% of GDP to 89.2% of GDP in 2009 and reach 98.3% of GDP by 2011. As the graph shows, that is not far from the historic peak that we reached in World War II. On the positive side, these numbers are reportedly more realistic as the budget now includes an estimate for war costs, the AMT fix, and emergencies. Allowing people to see the true numbers seems like an important step in politicians gaining the support to make the tough decisions that need to be made.