Starving the Beast

Those of us old enough to remember the Reagan years can probably remember hearing the phrase "Starving the Beast." What did it mean? From Wikipedia:

Starving the beast" is a political strategy employed by American conservatives in order to limit government spending[1][2][3] by cutting taxes in order to deprive the government of revenue in a deliberate effort to force the federal government to reduce spending. The short and medium term effect of the strategy has dramatically increased the United States public debt rather than reduce spending .

Those of us still around to see what happens when terms like "fiscal cliff" and "sequestration" enter the lexicon are able to see what will happen when the starvation takes hold:

Imagine that just before Thanksgiving a major retailer, say Nordstrom or Wal-Mart, announced it would furlough 10 percent of its sales, collections and accounts payable staffs.

The stock would tank. Indeed, it is hard to imagine the CEO or the board of directors keeping their jobs as customers switched to other retailers during the holiday buying season, costing the company revenues far in excess of the savings. Not only would the corporate overseers become everyday laughing stocks, they would surely be enshrined in a Harvard Business School case study as the worst of all corporate dunces.

Well, on March 1 — right in the middle of tax season — the IRS will be faced with cutting staff ten percent under the federal budget sequester…

Rational people would think that a law-enforcement agency which saved taxpayers more than 150% of its budget would get some support from Congress because its highly cost-effective. The operative word there is rational.

House Appropriations Committee Democrats on Feb. 13 offered these rational observations on what sequester would do to the IRS and to taxpayers: 

  • Sequestration will be particularly devastating to the IRS, since it will require furloughs to take effect during the 2012 filing season. Furloughs at IRS call centers equate to longer hold times on the phone for taxpayers, if the call is answered at all. Fewer enforcement agents will be available to investigate fraudulent claims, leading to an increase in the number of identity theft cases unresolved. Further, each dollar invested in enforcement actions returns $4 in additional revenue to the Treasury. Cutting investment in enforcement will lead directly to an increase in the deficit.

It's hard to generate any sympathy for the IRS, but if we must have an IRS (as we must) then we should make sure it has what it needs to complete its mission.

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