That used to be generally true when we had low debt levels. Now interest payments on debt is crowding out other government spending.
Higher taxes are bad because they mean your taking more money away from the private sector. High borrowing is also bad, for the same exact reason.
The fact that higher government borrowing is bad, doesn't make tax cuts/low(er) taxes bad, there two methods of getting the same or a very similar, bad result.
The sum of those two facts, make high government spending is bad, because to spend money you have to tax it, borrow it, or print it (not necessarily literally, but increasing the money supply, and using that money to pay for the spending), the last of which is usually worse than either of the other two methods.
As for taxes vs borrowing. At least with a tax system like ours (rather than a simple, clear, easy to comply with tax system with few or no special breaks, and loopholes), taxes tend to be more distortive, and cause more immediate dead weight loss, but past a certain point too high of borrowing decreases confidence in sustainability of the government and the whole economy. High taxes can simply be cut. Sufficiently high borrowing (and for a country like the US it would have to be really high) makes people worry about defaults and/or severe future inflation. |
