The American Bear

Sunshine/Lollipops

Starving the Beast | Matthew Bruenig

One interesting and behind-the-scenes strategy of American conservatives is to starve the beast. Under the Starve the Beast strategy, conservatives embed themselves into government and cut taxes as much as possible whether they can offset the tax cuts or not. The usually articulated goal of this strategy is to force the United States government to accumulate a massive amount of debt that will eventually force it to cut back on social programs and government spending.

The first time I heard this strategy articulated, it struck me as far-fetched and risky. After all, how can you be sure the country will react to a tax-cut-induced government debt by demanding cuts in social programs. They might just as reasonably (and I would argue more reasonably) demand that the tax cuts be rolled back instead.

But I realized later that my skepticism and confusion regarding Starve the Beast comes from an incomplete explanation of the strategy. For conservatives, it really does not matter one way or another whether the end consequence of the tax cuts is reduced social spending or not. Even if the public reacts by demanding a reinstatement of the tax cuts, the well-off still benefit.

The reason why the well-off still benefit is that tax cuts that are not immediately offset force the government to borrow money. It is generally the well-off who loan the government money because they are the ones with the money to invest in government bonds. When conservatives successfully cut taxes without reducing government spending by an equal amount, what they effectively do is swap taxing the rich with borrowing from the rich. They swap tax revenue from the rich with loans from the rich.

In the long run of course, this is beneficial to rich people no matter what. Even if taxes on the rich are reinstated later in order to pay down the federal debt caused by the tax cuts, the rich still benefit. In such a case, we will be taxing the rich in order to pay back the rich, with interest of course.

So really the Starve the Beast strategy helps conservative ends no matter what. If the response to the ballooning federal debt caused by tax cuts is to destroy social programs, then conservatives win. If the response is to reinstate the taxes on the rich, then the wealthy holders of government bonds still get a payday, and conservatives win. No matter what happens then, the Starve the Beast strategy redistributes money to the rich, which is the goal of many conservatives. In that sense, it is actually quite clever, even if nefarious and unjust.