Texas A&M researchers reject 'starving the beast' theory
"Starving the beast" was a notion embraced by conservatives in the 1980s: Cut taxes and a cascade of spending reductions would follow as the lifeblood -- money -- for spend-happy politicians evaporated.
But despite major tax cuts under the presidencies of Ronald Reagan and George W. Bush, the U.S. is now $15 trillion in debt and political intransigence is preventing even the first steps toward addressing what both parties agree demands urgency.
A pair of Texas A&M researchers now have a theory about the behavioral mechanism that has led the U.S. into its current hole. And the researchers say starving-the-beast policies have not only been unhelpful, but hurtful.
The researchers -- Joseph Daniel Ura, an assistant political science professor, and a doctoral student, Erica Socker -- say the theory seems to make intuitive sense: Cutting taxes naturally has to lead to reduced spending.
But it hasn't worked that way because of deficit spending and the "fiscal illusion" that it creates. This spending, like putting a purchase on a credit card, obscures the true price of government services, making them seem cheaper and, perversely, increases demand for even more government spending, the researchers say.
"The paper doesn't have a dog in the fight about what the right level of government spending is," said Ura, who specializes in mass political behavior. "It just says we will do a better job of making an intelligent choice about what level we want when there's a more clear connection between revenues and outlays."
Instead of corresponding cuts in spending when revenues are decreased, the U.S. instead has racked up deficits. Each year since 1970, save 1998 to 2001, the U.S. has spent more money than it has taken in (a deficit refers to the U.S. yearly budget, whereas the federal debt is the sum of all federal deficits).
The political dynamic feeds a vicious cycle. Elected officials jack up the debt because it has less political consequences than cutting spending, the researchers say. This further reduces the perceived price of government in the public eye, and creates yet more demand for government.
"The situation is a little depressing," Ura said.
Ura gathered data about the federal debt and matched it with the year-to-year change in the Stimson's mood index. The measure gauges the national mood for liberalism -- demand for more government.
"As the deficit goes up, the mood -- demand for more government services -- also goes up," Ura said.
The findings were released in a paper titled "The Behavioral Political Economy of Budget Deficits: How Starve the Beast Policies Feed the Machine" that appeared over the summer in Volume 9, Issue 2 of journal The Forum.
