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Politics : PRESIDENT GEORGE W. BUSH
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To: TimF who wrote (746997)8/4/2006 2:45:01 PM
From: DuckTapeSunroof  Read Replies (1) of 769670
 
Re: "I explicitly mentioned that you have to pay interest on the debt and that you have to tax more or borrow more to pay that interest."

So you understand the Treasury's point... and how failing to cut spending has sabotaged the benefits we should have received from lower tax rates....

Re: "If you are considering "government economic policy as a whole", than you can't draw any meaningful conclusions about the effects of tax cuts based on your considerations."

Sure I can: Tax cuts (as a rule) are always good things. But running unbalanced budgets can easily throw away the expected economic benefits of low rates.

Because, there are no 'free lunches'. Deficits are always 'paid for' one way or another: either through higher taxation down the line (as you mentioned), or through devaluation of the currency, or through enforced spending cuts (when the 'borrow window' closes because the financing becomes exorbitant).

Cutting taxes (thus: revenue), while maintaining & even *increasing* the rate of deficit-financed spending, is a losing proposition if the goal is to maximize long-term economic growth.

On the other-hand, lowering taxes and lowering spending is a winner.

(Too bad the politicians haven't the guts for it, and too bad the public is so gullible as to accept pleasant fantasies offered by the government that they wouldn't accept in their own private lives.)
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