Most everyone is familiar with one of the basic differences between Republicans and Democrats in the fiscal policy arena. Democrats, we all know, want to raise taxes. Republicans desire nothing more than to cut them.
That kind of framing is not untrue, but it is overly simplistic. For the last 15 years — and especially for the last eight of them — most of the discussion about tax rates has been with regard to economic stimulation.
Speaking broadly, Democrats, led in these years by President Obama, believe that to make an economy recover from a “bust,” it is necessary to spend your way out of a recession. That theory is based on the writings of John Maynard Keynes, a British economist from the early 20th century.
Keynes believed that the best way to stimulate growth is by the government spending incredible amounts of money, which in turn would stimulate the rest of the economy. According to Keynes, it doesn’t even really matter how they spend the money. He said that the government could even bury money in abandoned mines and pay unemployed people to dig them up, and that would be “better than [doing] nothing.” And “better than nothing” seems to have been what Obama was gunning for with his now-infamous $787 billion stimulus package.
Republicans (in recent years) tend to dismiss Keynes’s approach, instead favoring economists more closely aligned with the “Austrian school.” Paul Ryan, who has done more to shape the Republican approach to economic and fiscal policy than anyone today, has said that Friedrich Hayek, perhaps the best-known anti-Keynesian economist, inspired his ideas. Ryan is also said to make staffers read The Road to Serfdom, in which Hayek writes at length about what he calls “the danger of tyranny that inevitably results from government control of economic decision-making through central planning.”
As such, they believe the way to respond to a bust is to pull the government’s involvement back. It’s why they oppose the kinds of stimuli the president had pushed, as well as all sorts of bailouts. Busts will happen naturally, they argue, and they will naturally correct themselves as well. Overinvolvement of government will only make things worse.
It’s also why you hear them speak of tax reform as economic stimulus. Cutting taxes means scaling back government’s control over the money of citizens — resulting in growth. It’s the point which is central to how President-elect Trump is selling his tax package as well. His tax plan will unleash the economy, he says, so it can reach its true potential.
But there’s more to tax policy than how to deal with economic stagnation. The government needs money to run, after all. And if there is a need to cut taxes when things aren’t doing so well, where should the government get the money to pay for its expenses in the meantime? After all, the government has been deficit spending for years now, and there’s only so long this can continue before it becomes entirely untenable — if it hasn’t already.
This week’s parashah teaches us what I believe is the answer to that question. Yosef Hatzaddik interprets the dreams of Pharaoh, and gives him an idea to survive the seven years of famine. Collect food during the seven years of plenty, he said, and use that food to feed the people of Mitzrayim when the hunger begins.
Pharaoh immediately responds by recognizing Yosef Hatzaddik as the wisest and most brilliant person in all the land, and gives him the responsibility of implementing his suggestion by appointing him viceroy.
But from where did Yosef Hatzaddik get this idea? And why did he advise Pharaoh at all? Wasn’t he only there to interpret the dreams?
The Ramban explains that the idea was a part of the interpretation. Since he saw the skinny cows (symbolizing the years of famine) swallowing the fat cows (symbolizing the years of plenty), he understood that the way to survive the hunger would be by eating the food they had from the years of plenty.
Most people would not be able to approach years of plenty this way. Human nature is that when faced with a surplus, people tend to find new things on which to spend their money. This is why, explains the Rosh Yeshivah of Slabodka, Harav Moshe Hillel Hirsch, shlita, Pharaoh insisted that Yosef Hatzaddik was uniquely wise and qualified to run this initiative. To be in times of plenty and still think forward enough to worry about the upcoming times of famine, means that “ein navon v’chacham kamocha — there is nobody as wise and smart as you.”
Back in 2001, President George W. Bush addressed Congress, on a mission to pass his package of tax cuts. “We have funded our priorities,” he said. “We paid down all the available debt. We have prepared for contingencies. And we still have money left over.”
What should be done with money in that case? President Bush had an answer. “The growing surplus exists,” he continued, “because taxes are too high and Government is charging more than it needs. The people of America have been overcharged, and on their behalf, I am here asking for a refund.”
If we were following the wisdom of Yosef Hatzaddik, the money would be kept in reserve for a future rainy day. That rainy day came, and now, with the national debt having more than tripled since that day, we need to question whether that rebate was, in retrospect, really worth it.