16 Feb 2009

Cut Taxes for the Right Reason

All Posts No Comments

I explain here. The intro:

In their zeal to oppose the lunacy of the so-called “stimulus” plan, many radio talk show hosts and other pundits have fallen into the Keynesian trap. Rather than the politicians spending nearly a trillion dollars, they argue, it would provide much more stimulus if the government gave massive tax cuts. This would “put money back in the pockets of average Americans” and they would go to the mall and “get that money into circulation and boost the economy.”

Although the instincts behind such arguments are sound, they often betray an underlying Keynesian mindset. By justifying tax cuts on the grounds that the taxpayers will go out and spend the money, these critics actually concede the entire case. After all, why take a chance on those fickle taxpayers, who might selfishly decide to pay down some debt or to stick the extra cash under the mattress? If buying stuff is the way to promote recovery, then nobody can top the DC politicians.

Comments are closed.