Problem: The synthesis was also ever-increasing government spending. Bartlett concluded that the Republicans had to change their antithesis if they wanted to return to power.
The damage started with Milton Friedman, who said, “I would far rather have total spending at $200 billion with a $100 billion deficit than a balanced budget at $500 billion.” Friedman thus declared that the deficits were harmless, and the true evil was government spending. This gave the intellectual green light to the Republicans to blow the roof off the deficit with “supply-side economics.”
The theory was that if we “starved the beast” with low taxes, then the public would demand cuts to government spending — the true evil. It never worked. There was little demand to cut spending, since the public wanted the programs. The profound error the supply-siders were committing all along was assuming that if we give out government for free, people will demand less of it.
The Friedman sanctioning of deficits undermined the functioning of the American political system by breaking a feedback loop from the public to elected officials. Previously if the spending ever got too high (while being fully paid for with taxes), then the overtaxed public would demand spending reduction. But Republican anti-tax fanaticism now prevented the taxes from going up to pay for the government the public voted for. The Republicans dished out something for nothing. This is why we are $16 trillion in the hole.
Friedman was not a supply-sider, but his anti-government, anti-tax fanaticism has dominated the Republican Party since the 1980s and is responsible for piling trillions of dollars of debt onto young Americans. Friedman profoundly altered the functioning of the American political system by declaring deficits harmless. His legacy is that the primary obstacle to repairing our country’s economy and finances is the irresponsible anti-tax fanaticism of the Republican leadership.