Two Santa Claus Theory

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1 History and Description
2 Criticism
3 References
4 External links

[edit] History and Description

Two Santa Claus Theory is a political theory and strategy developed by Jude Wanniski in 1976, which he promoted within the U.S. Republican Party.

The theory states that, in democratic elections, if one party appeals to voters by proposing more spending, then a competing party cannot gain broader appeal by proposing less spending. The "Santa Claus" of the theory title refers to the political party that promises spending. Instead, "Two Santa Claus Theory" recommends that the competing party must assume the role of a second Santa Claus by offering other appealing options.

This theory is a response to the belief of monetarists, and especially Milton Friedman, that the government must be starved of revenue in order to control the growth of spending (since, in the view of the monetarists, spending cannot be reduced by elected bodies as the political pressure to spend is too great).

"Two Santa Claus Theory" does not argue against this belief, but holds that such arguments cannot be espoused in an effort to win democratic elections. In Wanniski's view, the Laffer curve and supply-side economics provide an attractive alternative rationale for revenue reduction: that the economy will grow, not merely that the government will be starved of revenue. Wanniski argued that Republicans must become the tax-cutting Santa Claus to the Democrats spending Santa Claus.

[edit] Criticism

In 1999, Cato Institute founder and president Ed Crane published in a memo "When Jack Kemp, Newt Gingrich, Vin Weber, Connie Mack and the rest discovered Jude Wanniski and Art Laffer, they thought they'd died and gone to heaven. In supply-side economics they found a philosophy that gave them a free pass out of the debate over the proper role of government. Just cut taxes and grow the economy: government will shrink as a percentage of GDP, even if you don't cut spending. That's why you rarely, if ever, heard Kemp or Gingrich call for spending cuts, much less the elimination of programs and departments."