...(2003) summarized perspective as follows:



How can we ever cut government down to size? I believe there is one and only one way: the way parents control spendthrift children, cutting their 'allowance. For governments, this means cutting taxes. Resulting deficits will be an effective--I would go so far as to say, the only effective--restraint on the spending propensities of the executive branch and the legislature. The public reaction will make that restraint effective.

Becker and his colleagues Ed Lazear and Kevin Murphy (2003) described this effect as "the double benefit of tax cuts." (Lazear is the recently appointed chairman of the Council of Economic Advisers.) This argument has been effective in unifying the Republican Party in favor of reducing federal taxes, but at the cost of undermining the more traditional Republican concern about fiscal responsibility.

Problems with Starve the Beast

There are three major problems with the starve-the-beast argument: (1) it is not a plausible economic theory; (2) it is inconsistent with the facts; and (3) it has diverted attention away from the political reforms needed to limit government growth.

The Implausibility Issue

It is most implausible that reducing the current tax burden of federal spending would reduce the amount of federal services that voters demand. Orthodox price theory, of which Friedman and Becker are among the leading exponents, is unambiguous in concluding that reducing the price of...

NOTE: All illustrations and photos have been removed from this article.



More articles from The Cato Journal
Does "Starve the Beast" work?(tax reduction to reduce government spend..., September 22, 2006
Tobacco control programs and tobacco consumption.(Centers for Disease ..., September 22, 2006
Independent central banks: new and old., September 22, 2006
Why I, Too, Am Not a Conservative: The Normative Vision of Classical L..., September 22, 2006
The Case for Democracy: The Power of Freedom to Overcome Tyranny and T..., September 22, 2006

Looking for additional articles?
Search our database of over 3 million articles.

Looking for more in-depth information on this industry?
Search our complete database of Industry & Market reports by text, subject, publication name or publication date.

About Goliath
Whether you're looking for sales prospects, competitive information, company analysis or best practices in managing your organization, Goliath can help you meet your business needs.

Our extensive business information databases empower business professionals with both the breadth and depth of credible, authoritative information they need to support their business goals. Whether it be strategic planning, sales prospecting, company research or defining management best practices - Goliath is your leading source for accurate information.