Lance T. Izumi - Contributor
[Courtesty of Pacific Research
Izumi is Director of Education Studies for the Pacific
Research Institute and
Senior Fellow in California Studies. He is a leading expert in
education policy and the author of several major PRI studies.
[go to Izumi index]
Advice for Mr. Bush...
[Lance T. Izumi] 2/10/04
The fiscal news out of the White House continues to be appalling.
Last week, the Bush administration admitted that the recently
enacted $400-billion prescription-drug program would actually
cost $534 billion. This week President Bush submits a record
$2.4 trillion budget proposal to Congress. Federal spending is
spinning out of control and a key reason is Mr. Bush's flawed
The president has been right on target when it comes to taxes
and their effect on the economy. Because of Mr. Bush's persistence,
federal income taxes have been lowered, the marriage penalty
has been reduced, the death tax is being phased out, and taxes
on capital gains and stock dividends have been cut. The economy
has responded with higher growth and increased productivity.
Yet Mr. Bush fails to tie his tax cutting to anything resembling
The president seems to believe that if something is a noble
cause, then it is worth spending the people's money on it. Besides
his costly prescription-drug program, Mr. Bush wants to spend
billions of tax dollars on new government initiatives ranging
from a manned moon mission to programs to strengthen marriages.
The president seems not to realize fully that taxation and spending
policies are more than just fiscal tools to improve economic
performance or address group demands, but rather determine the
extent of individual liberty in our society. In this regard,
Mr. Bush would do well to heed the advice of Milton Friedman,
who has always supported tax cuts for more than just their effect
on the economy. A few years ago, he wrote:
"I have long
favored cutting taxes at any time, in any manner, by as much
as possible as the only way of bringing effective
pressure on Congress to cut spending. Like every teenager, Congress
will spend whatever revenue it receives plus as much more as
it collectively believes it can get away with. Reducing spending
requires cutting its allowance."
Mr. Bush, however,
has not used lower taxes as leverage to cut Congress's allowance,
but has acted like the parent that gives
his child everything she wants. Looking back on past federal
budget agreements, Dr. Friedman pointed out that cuts in taxes
were not financed by cuts in government spending but actually
called for higher spending. He noted, "The hypothetical
balance is to be brought about by higher tax revenue, not by
lower spending." This supply-side effect, though, does not
address the impact of increased government spending on individual
For Dr. Friedman,
taxation and spending policies are not ends in themselves,
but rather, "are means to the ultimate objective
of increasing the freedom of the individual to use their resources
in accordance with their own values - as President Reagan put
it, to get government to get off our back."
To get government
off our backs, spending, in addition to taxation, must be curtailed.
Dr. Friedman's recommendation: "A real
cut in direct and indirect government spending as a fraction
of national income is required to achieve that basic objective."
Expansionist government, even if pursuing noble causes, reduces
our freedom. That is why the current federal spending spree is
not just a budget issue, but a freedom issue. Mr. Bush must rediscover
the importance of limited government to the maintenance of a
free people and the promotion of a free society.
2004 Pacific Research Institute