We can’t continue to have a cycle of spending binges, tax cuts, and debt denial.

In the debate between Mark and Dominic, I fall somewhere in between the two. We all want small government and lower taxes. We all agree that the debt is the most existential threat we face. I share Mark’s moral outrage about Americans wanting to kick the can down the road for future generations to handle. Unlike Dominic, I can’t support additional tax cuts, no matter what’s happening on the spending side anymore. But raising taxes (other than closing loopholes), as Mark suggests, is a counterproductive exercise.

I will start where Charlie left it. He is right to highlight the behavioral consequences of higher taxes and the limits of viewing tax policy as a simple numbers game. The idea that we can just hike rates and reliably boost revenues as if nothing else will change in the real economy is profoundly misguided. It also ignores decades of economic evidence.

As I’ve written many times, the U.S. tax code is already highly progressive and fiendishly complex — and yet, remarkably, federal tax revenue has hovered around 17 to 18 percent of GDP for over 50 years, through high rates, low rates, and every combination of credits and deductions in between. That’s not a coincidence. It’s a reflection of how people adapt by working less, saving less, investing elsewhere (or less!), and otherwise spending more time and effort avoiding and evading taxes. It is also a product of the political economy under which, when politicians increase a tax on a given group, they tend to reduce taxes elsewhere to placate the effect (and political backlash) of the higher tax burden.

Mark is also right to raise the moral question. If Americans truly want a massive government, with benefits and subsidies for everything from seniors to farmers to corporations, they should be honest enough to pay for it up front. The problem is they don’t want to pay. What they seem to want is Scandinavian government spending and Hong Kong–level taxation. This fantasy is indulged only by borrowing from future generations or printing money. It’s fiscally reckless and morally indefensible. Borrowing doesn’t make the cost go away; it merely shifts it forward, often in more damaging ways.

I guess, with age, that’s where I may now part with Dominic. In the past, I would have always preferred lower taxes, even without spending cuts. I don’t anymore. First, there is the question of what it means to cut taxes. I am for lower marginal tax rates with a broader tax base — basically, tax reform. There is plenty of room to do that (and TCJA did a decent job of it). But I am against the distribution of tax subsidies (tax credits . . .), which narrows the tax base with no real growth upside (there is a ton of that with OBBBA). There is also the fact that people may not deserve a reduction in their tax burden if they refuse to scale down their spending. Tax cuts today with spending increases mean taxes tomorrow and all that jazz.

Opposing tax cuts for those seeking increased spending, however, is a distinct issue from advocating for tax hikes. While I agree with Mark that it is wrong to keep kicking the can down the road, I also know that raising taxes opens many cans of worms. (Again, here I mean creating new taxes, raising marginal tax rates, and such.)

Indeed, even if Americans suddenly agree to pay higher taxes to match their desired level of spending, the math still doesn’t work — that’s Charlie’s point. The structure of our tax system, combined with economic feedback effects, makes it exceedingly difficult to raise the long-term revenue share above that 18 percent level. And in the rare cases when we do temporarily collect more revenue, such as in boom times and during sudden tax windfalls, Congress rarely devotes the revenue to deficit reduction. Congress spends most of it.

In addition, the fiscal literature is clear: Durable debt reduction comes from spending cuts, not from higher taxes. In fact, when countries adopt fiscal adjustment packages primarily based on tax increases, they fail to reduce the debt-to-GDP ratio precisely because special interests continue to get their way with the revenue.

Additionally, there is the question of whether a higher price for government consumption can persuade people to demand less government. First, as Dominic notes, Americans do feel the cost of big government. It’s not the whole thing, but it’s something heavy. Second, France, my native country, has incredibly high taxes, especially on labor, and yet it still runs persistent deficits and debt and suffers from chronically low growth. Worse, the regressivity of those taxes, especially the heavy reliance on taxes like the VAT, fuels anger while failing to discipline spending (in part because so much revenue turns, as I noted, into more spending). Somehow, despite paying dearly for their bloated government, the French people still want more from it. Look at them swarm the streets of Paris each time anyone whispers, “We are going to implement some reform.” It could be a feature of the entitlement mindset: the more you get, the more you feel entitled, and the bigger the government, the less the economy grows, and the more people want government to help.

So, where does that leave us? Stuck between two unpalatable truths. One, the American people need to choose: small government and lower taxes, or big government and the honest tax burden to match. But even if they choose the latter, it won’t work as advertised. Revenues will disappoint, spending will climb, growth will slow, and deficits will grow. Soon we will be back where we started, with people demanding even more government to help as they feel poorer as a result of higher taxes. But doing nothing means that, short of a growth miracle, we will face a debt crisis down the road.

That’s why the real path to fiscal sanity can come only from the spending side, including all the spending we do through the tax code. We must instead seek genuine, structural reductions in the size and scope of government. (Economic growth can help, but we can’t put all our eggs in the growth basket.) But it also requires telling people, “No, you don’t deserve lower taxes if you won’t pair them with significant spending cuts.” But we must also reject gimmicky tax credits like the seniors’ tax giveaway and focus on genuine tax reform. We must also reject higher taxes on some imagined pot of rich people’s money, an idea that the left and some on the right have embraced.

Until we confront this reality and convince politicians that it is in the country’s and their interest to start telling voters “no” instead of promising them more, we’ll stay locked in this dangerous cycle of tax cuts, spending binges, and debt denial.