As Catholics we are called to actively participate in civic life.  In the United States the platforms of neither political party accord perfectly with the Magisterium, and so we are left to use our prudential judgment in forming our consciences and deciding for which party or candidate to vote.

In many areas – such as the sanctity of life and religious liberty – Church teaching is clear and leaves no room for legitimate dissent among faithful Catholics.  This is not so in the economic realm.  Though Church teaching provides guidance in setting the appropriate economic goals for our elected officials, it typically does not make specific policy recommendations or endorse particular parties or candidates.

Based on Jesus’ exhortation of “Whatever you did not do for the least of these, you did not do for me” (Matthew 25:40), Catholic social teaching emphasizes the dignity of each person, particularly the unborn, the infirm, and the poor.  Church teaching therefore calls on voters and politicians to support and enact policies that promote the common good and provide for the material well-being of all citizens, especially the disadvantaged.

Liberal Catholics have interpreted the Church’s “preferential option for the poor” as a “preferential option for government.” Many liberal Catholics cite their faith in supporting a large and far-reaching government, with redistributive tax policies, heavily regulated markets, and a strong and unwavering social safety net.  I have no reason to doubt the sincerity of their goal to use the government to promote the common good and the welfare of all.  I do have reason to doubt that these types of policies will achieve their stated objectives.

Two central and related lessons in economics are that there is “no such thing as a free lunch” and that policies often create incentives that lead to unintended consequences.  It is useful to keep these two lessons in mind as organizing principles when thinking about economic policies and how they relate to Catholic teaching.  Two of the more recurrent platforms on the left are the desire for a strong social safety net and income redistribution from the well-off to the disadvantaged.  In a vacuum, these are both noble goals.  A social safety net has to be paid for, and redistribution creates incentives that reduce the size of the overall economic pie.  At the very least these countervailing forces make such policies less desirable.  In the extreme they may mean that redistributive policies are counterproductive to the goal of helping the least well-off among us.

The most pressing longer term economic issue facing our country is our burgeoning debt.  Outstanding federal debt relative to our GDP has recently surpassed 100 percent.  This debt is a burden on future generations, who will one day have to pay for our profligacy through some combination of higher taxes, lower government services, or higher rates of inflation.  These future generations are voiceless, and must therefore be counted among the “least of these.”  Our debt is not just an economic issue, it is a moral issue.  Indeed, Pope Benedict recently described our “living at the expense of future generations” as “living in untruth.”

A 100 percent debt to GDP ratio is not only an important psychological threshold, it also puts us in dangerous historical territory.  Recent research has documented that countries with debt levels of this magnitude experience growth rates that are significantly lower than countries with more sustainable levels of debt.  These differences in growth rates compound to make for significantly lower levels of standards of living over the long haul.  The only proven way to effectively eliminate poverty in the long run is to grow the size of the economic pie.  To do so we must bring our debt back down to sustainable levels.

The Republicans and Democrats offer starkly different visions for our economy and for how to address our debt problem.  The Democratic plan promises ever more entitlement spending and higher taxes on the wealthiest Americans.  The only way to pay for more entitlements is higher revenue, and here the numbers do not add up.  Even if there were no disincentivizing effects of higher taxes, there simply are not enough wealthy people to tax to fund these obligations.  In reality, taxes distort decisions and reduce incentives to work, save, and invest.  Higher taxes on the wealthy will reduce job creation and work to slow capital accumulation and productivity growth.  This will not only make the wealthy worse off, it will make all of us worse off.  Fewer jobs, less capital, and lower productivity will manifest themselves in the form of lower wages and more poverty among the disadvantaged.  Economic life is not a zero sum game.  Taking from Peter to give to Paul may make both parties worse off.

The Republican Party recognizes that failing to reform entitlement spending now will result in the ultimate demise of beneficial programs like Medicare and Social Security.  To save our social safety net, we need to reform it, not make empty promises of ruinously higher taxes on the privileged few.  One example of a concrete solution is Paul Ryan’s Medicare plan.  The plan proposes to take existing average Medicare payouts and give those to seniors in the form of a voucher; with this voucher seniors can choose among different insurance plans that best fit their needs.  The hope is that the introduction of choice and competition will keep healthcare costs from rising at the clip we have recently witnessed.  This plan strikes a balance between offering a safety net for our seniors while taking a concrete step to control rising healthcare costs.
On the revenue side, the Romney tax plan promises to cut marginal tax rates, which distort incentives for productive activity, while eliminating deductions and loopholes.  Cutting marginal tax rates will help the economy grow, while eliminating deductions will raise revenue and keep our debt from growing.  The deductions and loopholes primarily accrue to the very rich, so the Romney plan balances the desire to help the less well-off while not disincentivizing productive activity among job creators.

Many on the Left characterize conservatives as callous and uncaring for the poor.  This is an unfair caricature. Conservatives view a large and overreaching government as an impediment to economic progress, not a solution.  In 2012, Catholics can choose between this vision or the alternative one which views large government as the answer to our problems. The choice is clear.

 

Eric Sims is the Michael P. Grace II Assistant Professor of Economics at Notre Dame, and a member of The Rover’s council of advisors.