Tax Collector for the Welfare State

That used to be Bob Dole’s informal moniker, because he favored a balanced budget, even if it meant raising taxes to fund the welfare state. It seems that Megan McArdle is stepping into Dole’s shoes. She endorses Standard & Poor’s downgrading of U.S. government debt from AAA to AA+, and S&P’s reasons for the downgrading, including these:

Standard & Poor’s takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.’s finances on a sustainable footing.

The act calls for as much as $2.4 trillion of reductions in expenditure growth over the 10 years through 2021. These cuts will be implemented in two steps: the $917 billion agreed to initially, followed by an additional $1.5 trillion that the newly formed Congressional Joint Select Committee on Deficit Reduction is supposed to recommend by November 2011. The act contains no measures to raise taxes or otherwise enhance revenues, though the committee could recommend them. (Emphasis added: ED.)

In other words, as far as McArdle is concerned:

  • It doesn’t matter that the federal government’s long-term fiscal path is unsustainable.
  • It doesn’t matter that the path is unsustainable because of present commitments to “entitlement” programs.
  • It doesn’t matter that Republicans have succeeded in pushing the “debate” toward recognition of these facts.

This is not only unprincipled but also stupid.

It’s unprincipled because it means that McArdle — who sometimes calls herself a libertarian, but often talks like a big-government stooge — is willing to sacrifice the financial future of unborn Americans on the altar of a AAA credit rating.

It’s stupid because the debt of the U.S. government will become worthless — AAA rating or not — if it tries to stay the unsustainable course and drives America into the poorhouse by taxing its most productive citizens for the sake of its least productive ones.