Why Do Democrats Believe That Basic Laws Don’t Apply to Them?
September 30, 2008 by Cato
Filed under Democrat Campaigns, Fiscal Policy, Liberalism, Maryland, Maryland Politics, Taxes
In 1776 Scottish moral philosopher Adam Smith published An Inquiry into the Nature and Causes of the Wealth of Nations. For the first time someone laid out, in writing, the basic economic laws which have been in effect since there were enough people to trade among one another. Despite the indisputable fact that only God can violate the basic laws of our market, liberals continue to believe that government must be a god.
An excellent example is the administration of Maryland Gov. Martin O’Malley and his Democrat allies in the legislature. As Marc Kilmer points out in a piece published in the Baltimore Examiner, increasing taxes has the simple effect curtailing demand. Yet, liberals continue to claim that demand is unaffected by increased cost due to taxation.
Why would Democrats continue to believe that something so basic simply doesn’t apply to them? Again, Kilmer points to the answer. Government needs to control spending. There lies the root of the problem.
To acknowledge that spending needs to be controlled violates a basic tenet of liberalism. To admit that Democrats can’t simply spend to their hearts content would end the reason for their existence. Consequently, Democrats must continue to grow spending. It doesn’t matter that such a policy is simply unsustainable. Raise taxes and claim that the problem is solved.
When the truth comes out – as it predictably will – simply blame Bob Ehrlich and raise taxes again.
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I’m glad you enjoyed the article. Thanks for mentioning it. To elaborate, raising taxes affects demand in many ways, not just curtails it. It also shifts it. For instance, if you raise the cigarette tax from $1 to $2 a pack as the General Assembly did, you will have people who take steps to avoid that tax. Their demand won’t be curtailed, but how they satisfy that demand will be. When they are in Delaware, for instance, they’ll pick up a few extra packs. We see that happen a lot in this area. The whole furniture business in Delmar is predicated on this economic fact.
As to spending — in good economic times, politicians can get away with increasing spending. We saw it happen in the 1990s and the middle part of this decade. Tax revenue was increasing more than anticipated due to a good economy. If they don’t give it back to taxpayers as tax cuts it just means more money for them to spend. But when a recession hits tax revenue declines or rises at a much slower rate than anticipated. The only way to bring the budget into balance is to cut spending. It’s difficult to raise taxes in that type of economy in a way that will produce the anticipated amount of revenue. Maryland legislators certainly don’t know how to do this. The state’s budget problems will only be solved by cutting spending or with a dramatically improved economy. I don’t know which one is more likely.
Although I’m in favor of limited goverment, nothing I’ve said above is ideological. It’s just the facts about how government spending works. Politicians must face up to these facts if our state is to get its fiscal house in order.