America’s Great Depression Quote of the Week: How to Reduce Deficits
From the Introduction to the Fourth Edition (1982) of America’s Great Depression
While deficits are often inflationary and always pernicious, curing them by raising taxes is equivalent to curing an illness by shooting the patient. In the first place, politically higher taxes will simply give the government more money to spend, so that expenditures and therefore deficits are likely to rise still further. Cutting taxes, on the other hand, puts great political pressure on Congress and the administration to follow suit by cutting spending.
Deficits, then, should be eliminated, but only by cutting government spending. If taxes and government spending are both slashed, then the salutary result will be to lower the parasitic burden of government taxes and spending upon the productive activities of the private sector.
No “balance” of revenue enhancements combined with reductions in the rate of growth of spending, no ten year plan to bring budget balance in 10 years based on only mild reductions in the rate of spending increases and expected revenue enhnacements for higher growth rates. No revenue neutral tax “reform”. Real cuts in spending made believable by cuts in tax rates actually intended to shrink, not grow government revenues. Government austerity or economy is the path to private sector prosperity.