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Responsible Conservatism
As one of the 6% of registered Republicans who voted for John Kerry, I feel it is my duty as the new Clio Editor of the Soap Box to explain my reasons for doing so. As someone who can appreciate the logic of sound fiscal policy I was taken aback by the rampant flouting of the conventions that define a good conservative. In order for Bush and the Republicans to rightfully uphold their claim to the title of “most fiscally disciplined party,” they must demonstrate a break from the policies of Bush’s first term. In this article I will outline two key parts of Bush’s economic policy from both terms and express my grievances with each. Taxes While a key aspect of fiscal conservatism is the reduction of taxes so as to allow greater efficiency within the free market, there are crucial constraints that even the most basic of intuitions tells us must be held. The first intuition is that given a decrease in taxes, in order to maintain a specific level of debt, an equivalent cut in spending must be made. However, President Bush’s first term policies do not match this simple formula, the end result being fiscal deficits. In the year 2000, Clinton’s last year in office, the government took in $1,004.5 billion in income taxes, while in Bush’s last term, the government took in $809 billion in income taxes [Source: Congressional Budget Office (www.cbo.gov)] which amounts to a difference of $195.5 billion. Between those same two years, discretionary spending did not decrease—-in fact it grew by $282.2 billion. This means that, in those two areas alone, the government has to account for a loss of around $475 billion. Bush took a budget surplus of $128 billion in 2001 and turned it into a $412 billion deficit in 2004 (Source: CBO). While some may contend that commitments to fight the war on terror necessitated the increase in spending (even though there are a wide array of other government programs that increased their spending), this still does not explain the lowering of taxes. The argument then follows with the claim that lower taxes are what spurred a sluggish economy to recovery. Despite the empirically difficult task of proving such a claim, the debt incurred by the government continues to appreciate at a rate of interest above inflation, to the point where it will take very strict long term spending plans to ensure it is repaid. I am skeptical of any further reduction in taxes given the fact that in an ideal world, with tax levels as they are now, it will not be until after the year 2011 that the budget will finally show a surplus. Part of the reason I voted for Kerry was his proposal to tax the upper income brackets at a higher rate than Bush (though still lower than Clinton). When companies are reluctant to hire workers fearing an impending loss of profit, it makes little sense to give breaks to those individuals who are directly responsible for the hiring. That is money better spent on the training of unemployed workers from structurally inefficient industries like the steel industry in America. Social Security Next to Healthcare, Social Security is the biggest ticking time bomb waiting to devastate the government accountants in D.C. Little to nothing was done at all in Mr. Bush’s first term in office, much to the chagrin of most economists. Democrats (and some irresponsible Conservatives) point out that the program will remain solvent until the 2050s with the pay as you go system. Even granting the astronomically generous estimates they make regarding Social Security tax revenues, this paints a blatantly misleading picture of the actual situation. The analogy here is that of the leaky bucket. The bucket is leaking at rate that, given the water it has in it and the water that is periodically poured in, it will not fully empty until 2050 (under the most extremely optimistic predictions). By that year, there is no way the bucket can ever be refilled at a sustainable rate. That, ladies and gentlemen, is the beginning of a crisis if you view the water as money and the leak as the money devoted to Social Security benefits. Mr. Bush’s solution, however, is highly suspect given the nature of society’s behavior. His plan of privatizing one-third of a worker’s Social Security revenues has two major negative impacts. First, and certainly most overlooked, is the special interest lobby of pension fund managers that would be created; this lobby benefits off of the guaranteed commission it charges workers who do not know how to properly invest their Social Security money. Second, this plan provides no insurance for money that is lost to the market. Given that your average worker lacks the hours spent in classes understanding relevant economic indicators and the hours spent glossing over the market on a daily basis, the potential for loss is great. This is privatization at its worst, because a freeing of the Social Security system cannot possibly be matched by a decrease of the barriers necessary to make that money profitable for the average worker. To Bush’s credit, he proposed an increase in the maximum level of wages that can be taxed for Social Security revenues. This essentially results in making the tax more progressive by taxing the higher income levels that were not previously taxed. However, the fiscally irresponsible wing of the Republican Party shot this idea down saying it hurts the American worker and businessman. Of course, they left out the fact that the only Americans that this affects are those who receive wages over $90,000 dollars a year, and even then, they are taxed no more than the worker who earns $20,000 a year. Conclusion Mr. Bush must demonstrate a willingness to curb the massive spending he permitted in his first term (namely by scrapping useless money drains like the Missile Defense System and reforming Social Security and Healthcare). I am pessimistic as to his ability to stand up for conservative economics in the face of partisan politicking. His unwillingness to run under a fiscally responsible platform in favor of catering to the voracious demands of all sectors of the polity is a large cause for concern, especially since his Democrat opponent ran under such a solid budget proposal. Time will tell how wisely Mr. Bush uses the political capital he received from his “mandate from the people.” Fiscal responsibility—-finally a banner both Conservatives and Liberals alike can rally behind. Luis Argüeso is the Clio Editor for the Soapbox and an active member of the Princeton Debate Panel. |
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