The High Cost Of Heresy

Bruce Bartlett takes Republicans to task:

The conservative position on taxes is both wrongheaded and myopic in the extreme. It’s wrongheaded because it ignores the fact that a poorly designed tax system imposes a heavy deadweight cost on the economy over and above the revenue raised. A 2005 survey of research on this subject by the U.S. Government Accountability Office found that the cost could be as high as 5 percent of Gross Domestic Product. It’s myopic because most economists think that technological innovation plays a much bigger role in growth than the size of government. And it goes without saying that there is not one iota of evidence that starve-the-beast theory works; all it accomplishes is to increase the budget deficit, a fact just reconfirmed by a new International Monetary Fund study.

Yet despite the obvious failure of Republican tax policy during the George W. Bush administration, Republicans are still as dogmatic as ever about opposing a VAT. Those that enforce the party line on taxes, therefore, responded to [Republican Indiana Gov. Mitch] Daniels’ mild support instantly and viciously. 

In my view, Daniels is one of the few established Republicans who could win the presidency in 2012. And yet he is being cast out for thinking.