Let’s face it. A government doesn’t accidentally spend $15 billion more than its revenue while cutting billions in taxes. The unsustainably high deficit is intentional policy, not happenstance.
In good times and bad, National’s answer is always to cut taxes:
Economic good times and record surpluses? ‘Hardworking Kiwis are being overtaxed by that greedy Michael Cullen’
Recession and record deficits? ‘We need tax cuts to boost the economy’
It doesn’t seem to make sense that your answer to two diametrically opposite situations would be the same. Unless, of course, your objectives aren’t those stated.
The rightwing wealthy elite hates public services. They believe that if you aren’t worthy enough, as measured by the market, to afford something you shouldn’t get it. And they especially hate paying the taxes to buy these public services. Being narrow-minded they can’t see that they benefit from living in a society where the less well-off get education and healthcare and a minimal income safety net.
The problem, rightwingers discovered, as they fought the creation of the welfare state in the middle of last century, is that poor people get to vote too. And they love public services. The social wage is as valuable, if not more valuable, than the market wage for many people. For the poor, public services provide some relief from the massive inequities created by the market.
But, by and large, the poor pay taxes too. And few people enjoy it. So, the Right hit on a strategy. Rather than decrying public services as inherently wrong as they had, they focused on persuading people that, rain or shine, they need tax cuts. It turns out that it’s quite easy to convince people that they should have more money in their pockets, if you don’t make them aware of the consequences. Polls regularly show big support for tax cuts but big opposition to the statement ‘would you support public service cuts to pay for tax cuts’.
But the Right knows there’s no such thing as a free lunch. The objective of the tax cut mantra is to create huge deficits that then need to be ‘fixed’ with spending cuts. This is what American conservatives call ‘starve the beast’.
Grover Norquist put it colourfully when he said “I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.”
This is what is happening all over the world. During the boom years, governments everywhere cut taxes, even Left ones like Labour, who at least cut them to the bottom end more. It seemed like they could afford to, with the massive surpluses they would otherwise have been running (except the UK and US, which ran deficits even in the boom years). Along came the great recession and more tax cuts, this time to stimulate the economy – even though the evidence is that greater government spending is more stimulatory.
Now, the deficits are out of control here and abroad. Does anyone say ‘hey, lets just return tax levels to where they were when we didn’t have a structural deficit?’ No. Because the Right has been very very successful, with the centre-Left’s meek acquiescence, in making raising taxes nearly impossible. Instead, the ‘only solution’ is austerity cuts to public services.
There’s no crisis without opportunity, and this crisis is playing perfectly into the right’s hands. We’ll be told that ‘extravagant’ public services are no longer affordable and health and education will get big cuts. We’ve already been softened up for welfare cuts. And asset sales will also become ‘necessary’ to pay off our debts.
We’ve been here before – 20 years ago. Starve the beast worked then, and it’s working now.
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