Via Greg Mankiw:
Large changes in fiscal policy: taxes versus spending
We examine the evidence on episodes of large stances in fiscal policy, both in cases of fiscal stimuli and in that of fiscal adjustments in OECD countries from 1970 to 2007. Fiscal stimuli based upon tax cuts are more likely to increase growth than those based upon spending increases. As for fiscal adjustments, those based upon spending cuts and no tax increases are more likely to reduce deficits and debt over GDP ratios than those based upon tax increases. In addition, adjustments on the spending side rather than on the tax side are less likely to create recessions.
So, more evidence that we should be cutting taxes instead of spending if we want to grow the economy. And more evidence that cutting spending is more effective than increasing taxes, both for controlling the debt and for combating recession.
Seems clear we should be cutting taxes and reigning in spending, no?
Yet Obama has spent as much in 11 months as Bush did in seven years. And he’s just getting started. He’s pushing tax rates up to levels we haven’t seen in decades, and promising more taxes on top of those.
So, is Obama a fool? Or is he knowingly sacrificing the economy in order to pursue a different agenda?