Last Wednesday night, Bruce Bartlett spoke to George Washington University students about his new book, The Benefit and The Burden: Tax Reform-Why We Need It and What It Will Take, and experience on capitol hill. The guest lecture was for a class on Public Budget and Tax Policy taught by two highly esteemed economists, Marvin Phaup and Diane Lim Rogers. I took the course last year and absolutely recommend it for any GW students interested in the topic.
Bartlett’s path to capitol hill and into the world of budget and tax policy is a fascinating tale. After dropping out of grad school, he went to work for a Texas congressman that had just won a special election (Ron Paul). When Paul lost the next election, Bartlett decided to apply for a position on capitol hill researching budget and tax policy for Congressman Jack Kemp. Despite having no formal economics training, Bartlett got the job and has spent the rest of career working and writing on these topics.
Moving to the present, Bartlett discussed his ultimate transformation from Republican to Independent after Medicare Part D was passed without any intent of recouping a penny of the massive long-term expenses. A separate part of this change was recognizing that ‘supply-side’ economics may have worked for a time but was not applicable in the current situation. Bartlett argues that the current troubles are largely due to insufficient demand and therefore requires further stimulus now, with plans to tackle structural issues later on.
As the lecture moved to the current potential for tax reform, the outlook (from my perspective) became very pessimistic. Bartlett noted that despite acknowledging failed tactics, such as trying to “starve the beast”, many dogmas remain embedded in our system simply because of the political advantage provided. Another example of this was recalled from an old article by Jude Wanniski: Taxes and a Two-Santa Theory. The basic theory was that Democrats were the party of government spending, which everyone enjoyed, therefore the Republicans should become the party of tax cuts to improve their popularity. While this proposition has been very successful politically over the past 35 years, the budgetary effects have been quite the opposite. Both parties are now so intent on maintaining their roles that tax reform is increasingly unlikely.
A specific topic of interest, stemming from Dr. Phaup and Dr. Rogers, is potential reform of federal tax expenditures. These tax cuts, effectively spending programs, account for approximately $1 trillion per year. Bartlett recognized that this was a serious issue for tax reform, but suggested that voter support for the largest programs is too high to expect any changes in the near future. I find it surprising that support is so high, given how regressive many of the programs are, and wish Bartlett had been pushed to offer his thoughts on altering support.
On the whole I thought Bartlett painted a good picture of many necessary reforms to our current budget and tax policy. Given his experience on the hill, I think he could have provided greater insight on potential ways to change public perception in this arena. My main takeaway was that, unfortunately, progress is unlikely as long as politicians election or re-election chances are improved by holding to falsified dogmas and supposedly offering a ‘free lunch’.
(Note: I have not yet read Bartlett’s book, but here are a couple reviews from other bloggers I follow: My Review of Bruce Bartlett, Bruce’s New Book)