Over in the United Kingdom, Alex Massie congratulates Tory Chancellor George Osborne for his probity. Here's Osborne talking about tax cuts:
Asked if he regards Britain as an over-taxed country, he hesitates: “That’s a good question. I would like to reduce taxes - so, in that sense, it would be good if we could bring taxes down. But I’ve always believed the only way to do that is to have sound public finances. I am a fiscal Conservative, I’m not a Reaganite deficit-funded tax cutter. I am actually in that sense more the model that Margaret Thatcher and Nigel Lawson pursued. That means sorting out the public finances - and if there is a surplus, then use that to reduce taxes. That’s what he did in the late 80s.”
But by the Treasury’s analysis, there will not be a surplus in this parliament. Does that mean no tax cuts either? “Look, as I say, once we can bring some stability to the public finances, we can look at reducing the tax burden on people. But it is a complete mirage to cut taxes one year, then have to borrow the money and put up the taxes later to have to pay for that borrowing. David Cameron and I for many, many years had this argument with the Conservative party.
A complete mirage indeed. Among American conservatives, this kind of stance would be tantamount to a betrayal of first principles, but by their own logic, unpaid tax cuts are just future taxes waiting to be collected. Right now a larger deficit is part of the economic prescription, so ignoring that logic is fine on a temporary basis, but ignoring it for the long term -- and it's a common blind spot -- will be disastrous.
-- Tim Fernholz