There are a couple of great articles in the June Atlantic Monthly, which I picked up on my recent trip to Key West.

In 'Stoking the Beast', Jonathan Rauch explains new findings from William Niskanen, of the libertarian Cato Institute.

The Republicans, starting with Ronald Reagan, have long said that the road to smaller government is paved with lower taxes. That is, if there is less tax revenue, the government will be starved of funds, and forced to decrease spending.

Niskanen's findings turn this notion on its head. In reality, decreasing taxes artificially lowers the apparent cost of government to the public. As the cost of government appears to be inexpensive, the demand for government services increases. As the demand for government services increases, the government responds to demand by engaging in deficit spending, not by cutting vital services.

On the other hand, raising taxes appears to decrease the size of government, as it creates the perception that government services are expensive, thus lowering demand.

Niskanen found that over the past 25 years, on average, a tax cut of 1% of GDP increases the rate of government spending by about 0.15%, while a comparable tax hike reduces spending by a comparable amount.

Reagan must be rolling over in his grave to see a libertarian debunk his long-cherished supply-side myths!