It has become clear to me that as long as the government can finance its spending through borrowing, a tax-cut policy does not lead to 'starving the beast,' but rather to fattening it. The idea is simple: if the government is deprived of resources, it will have no choice but to cut its spending and shrink into a smaller entity capable of living on small amounts of revenue. When the government keeps taxes below the level of spending, it is in fact financing a large part of its current spending through debt. Donald Boudreau*For a long time, I believed that one of the most effective ways to limit the growth of government in the United States was to 'starve the beast'—that is, to keep tax revenues at the lowest possible level. But I no longer believe in the validity of this theory.
