Few economists of the 20th Century had as wide and substantive an impact on the political discourse as Milton Friedman. The 1976 recipient of the Nobel Prize, Friedman not only was a student of free-market economics but one of its great communicators, evangelizing the values of the free market in books, on television, and even on blogs. Friedman was a quintessential happy warrior for the cause of economic freedom, remaining active in the movement late into his life and providing clear, principled advice on tax policy to young politicos throughout his later years.
Although I could cite a host of Friedman literature on the subject of taxes, I’d like to just highlight one interview he did in 2003, at the age of 90, with John Hawkins. Asked whether “the Bush tax cuts” were the “right thing” to do, Friedman replied that he was “in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible.”
The reason I am is because I believe the big problem is not taxes, the big problem is spending. The question is, “How do you hold down government spending?” Government spending now amounts to close to 40% of national income not counting indirect spending through regulation and the like. If you include that, you get up to roughly half. The real danger we face is that number will creep up and up and up. The only effective way I think to hold it down, is to hold down the amount of income the government has. The way to do that is to cut taxes. [Emphasis mine.]
Creep, indeed. Ten years later in Missouri, supporters of Gov. Jay Nixon’s tax cut veto have delivered a parade of horribles about what will happen if the legislature overrides the governor’s veto and Missourians get tax relief. They claim (among other things) that the state will have to leave bills unpaid and cut education, its bond rating will decline, dogs and cats will live together… in short, mass hysteria. No, public education funding won’t be eviscerated by giving the People back their money, and as to the bonds, of course it wasn’t a tax cut that imperiled Missouri’s rating earlier this year. It was … the prospect of new government spending, specifically in the Medicaid program. That’s an inconvenient fact which, in all the bluster about credit ratings, veto/Obamacare supporters hope you forget.
That’s because it’s all interconnected. Missouri’s tax cut opponents don’t want taxes cut because less tax revenue would prevent them from maintaining and growing the size of state government — whether they say it explicitly or not. It was spending, not tax cutting, that imperiled our bond rating this winter. And if I might repeat Friedman’s words here, “The only effective way I think to hold [the government's size] down, is to hold down the amount of income the government has. The way to do that is to cut taxes.”
Friedman was right. If you support smaller government, you support tax cuts. And in my view, if you support bigger government but don’t want to say so, you make excuses instead. I think Missourians are tired of excuses.