Last week I sat across a table from President George W. Bush in the Roosevelt Room of the White House. He told me and a dozen fellow economists that “the American economy is a theatre in the war on terrorism.” With steely conviction he told us that he intends to win the war to liberate Iraq, and he intends to win the war to liberate the American economy….Nonplussed by opposition in Congress–from those who just can’t seem to see how all this will work–Bush said, “Sometimes I think some of these guys just don’t like capitalism.” … Capitalism means economic liberty, and Bush understands that you can’t run a war of political liberation abroad without economic liberation at home….

The president is very sensitive to the question of whether these tax cuts will increase government deficits. But he thinks that some of the opposition in Congress–particularly in his own party–is taking the concern over deficits too far. Speaking like the Harvard MBA that he is, Bush argues that deficit financing is entirely appropriate when it is for the sake of a valuable long-term investment. What could be of greater long-term value than simultaneously making the world safe from terrorism and reinvigorating the growth prospects of the American economy?

And besides, even the too-pessimistic Congressional Budget Office forecasted deficits arising from the Bush’s tax cuts at less than 1% of GDP over the coming decade. I share Bush’s frustration when he talks of meetings with Republican deficit-hawks and explaining all this, only them to hear then say, “Well, yes . . . but I just don’t like deficits.” [Don Luskin, Capitalism Magazine, 4/12/03]

Real economic liberty doesn’t mean cutting taxes–it means cutting government spending. The wealth the government spends comes from us one way or the other; it cannot be wished into existence.

I am willing to grant that there are more and less destructive ways of the government’s confiscating our wealth to fund its projects. But borrowing is merely a claim on future taxation. The tax cutters’ position represents a bet–a bet that the economy will grow fast enough that the proportionate burden of future taxes, when they come, will be lighter than not borrowing and paying the taxes now.

Maybe it’s a good bet, maybe it’s a bad bet. I don’t know. What I do know is that it’s a nonessential, and merely shows the extent to which Bush is unwilling to confront opposition and deal with the real issue. When the leftists are convulsing with apoplexy in the streets over George Bush’s cruel and inhuman budget cuts, then you’ll know real economic liberty is in the offing.

Voice of Capitalism

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