Ron Paul's Libertarian Lesson for John McCain

A focus on the "inflation tax" could be a big winner in the fall.


During the Republican presidential debates, John McCain seemed to show as much disdain for Ron Paul as he did for Mitt Romney. But while McCain certainly has no use for Paul's antiwar views, he might want steal Paul's oft-stated idea that Americans are being hit hard by an "inflation tax." This from Paul's website (bold is mine):

Today, the federal government burdens us with one of the most dangerous taxes it can impose—the inflation tax. When the federal government finds that it cannot afford its out-of-control spending, and is unwilling to directly tax the public, it resorts simply to creating the money out of thin air.... We cannot possibly expect the government to control spending when it has a blank checkbook.... This greatly benefits the politicians and special interests—they are able to finance the massive welfare-warfare state. But how does this inflation affect you?... Day by day, every dollar you have is being devalued. You pay an inflation tax without even realizing it because you are forced by a falling dollar to pay more for goods and services.... The disastrous fiscal policies of our own government, marked by shameless deficit spending and Federal Reserve currency devaluation, are some of the greatest threats facing our nation today.

My take: Whipping inflation was every bit as important as cutting regulation and taxes in creating our quarter-century economic boom. (And talk about a "tax cut" that more than pays for itself.) Although it's pretty unlikely that McCain would endorse one of Paul's edgy libertarian solutions—legalizing competing currencies—this idea does certainly play into one of McCain's main themes: cutting the size of government. And by connecting government spending to the "inflation tax," McCain would turn a kind of no-fun, root-canal economic plan into pro-growth economic plan and identify with a problem that certainly concerns many Americans today.