In the latest Capital Commerce, James Pethokoukis questions whether supply siders will support the McCain tax plan’s inclusion of a doubling of the dependent exemption, which
creates “tax relief” instead of new incentives for working, saving, and investing…[and] would mean even fewer people paying any income taxes at all—already more than 50 million households pay none—further unbalancing the tax code and breaking the connection between personal income taxes and government spending for more folks.
Supply siders who don’t like the expanded exemption should think twice. Anything that creates or expands the political will to support tax cuts is supply side politics, if not directly supply side economics.
Like Milton Friedman, I never met a tax cut I didn’t like. In 1988 as a young Libertarian-leaning Republican, I had a meeting during the GOP Congressional primary in Missouri’s 7th District with Congressman (then candidate) Mel Hancock. He told me that the best way to attack a too powerful government was to cut the purse strings. Of course, when marginal rates are still well on the right side of the Laffer Curve, that’s hard to do with marginal rate cuts that only end up increasing revenues. From a supply side perspective, McCain’s non-supply side tax cuts should be seen as part of a package that creates the political will to drive the entire package (by electing the man pushing it). From the perspective of expanding liberty, the very reason government’s are instituted among men in the first place, the pro-growth, supply side effects of the total package are at best a bonus that could help reduce the debt and lead to more tax cuts in the future.
When it comes to restoring the country to a less regulated, less taxed condition, a choice for any politician is going to involve compromise. Even the puritanical zeal of the Libertarian Party has been watered down by National Committee member (and now Presidential candidate) Bob Barr who, until he apparently walked into a room filled with the wrong kind of smoke at a Libertarian event, was very anti-liberty on a number of issues. And Mike Gravel? Seriously? (Barr has always been a staunch defender of civil liberties and economic freedom, so the compromise makes sense, though it will be surprising if the anarchist contingent that can barely bring itself to vote in the first place goes along.)
For those of us willing to compromise enough to actually change the government instead of belonging to a meaningless debating society, McCain is the right choice. The central policy proposals of his campaign are a package of pro-growth, pro-freedom tax cuts, a package of spending cuts that will reduce federal power and interference with free markets and lead to further tax cuts down the road, a pro-free trade package and a strong national defense. With all volunteer armed forces, the worst that can be said of his defense policy is that it’s too expensive, but when spending for Social Security, Medicare, Medicaid and “income security programs” are more than twice the budget for securing our liberty against foreign aggression even that is a hard case to make – there are plenty of places to cut before defense.
The alternative? Hillrak Obinton will raise taxes, raise spending, impose trade barriers and gut the national defense, attacking the primary Constitutional and rational reason for the federal government’s very existence. Would it be great if John McCain suddenly embraced expanded civil liberties, had a change of heart on campaign finance restrictions and passed the peace pipe with Bob Barr and NORML? Sure, but compared to the threat of foreign aggression, high taxes, a Smoot-Hawley style trade war and vastly expanded federal bureaucracy, the “threat” of spending vetoes, lower taxes, free trade and the status quo in other areas seems like the way to go. I’ll take a somewhat freer country with an expanding economy over a less free country heading into deep recession (the contraction is de’pr’ession) any day.