A Path to Higher Revenue

There is nothing in the theory or practice of fiscal conservatism that requires policymakers to rely solely on operating-budget cuts to close short-term deficits.

RALEIGH (By John Hood, Carolina Journal Online) – Be it in Raleigh or Washington, liberals have spent much of the past several months resisting budget-balancing deals that focus on reducing government spending. They argue that such spending-side solutions are “imbalanced,” and that conservatives ought to agree to support revenue increases in exchange for budget cuts.

Let’s take them up on the offer.

Recessions smack government budgets in two different ways. As unemployment increases and incomes stagnate, more residents turn to government programs such as Medicaid, food assistance, public housing, and jobless benefits. At the same time, higher joblessness, lower incomes, and (eventually) lower real-estate prices translate into lower-than-expected revenue to government.