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Politics : Politics of Energy
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To: TimF who wrote (6116)3/13/2009 1:36:34 PM
From: RetiredNow  Read Replies (1) of 86355
 
That used to be generally true when we had low debt levels. Now interest payments on debt is crowding out other government spending.

So the new, more complicated question is this. For every dollar in tax cuts we give, is that providing more benefit to the overall economy than using that dollar instead to pay off government debt?

I would say the answer lies in the private sector's ability to get a return on investment that exceeds the cost of the government debt. If the government finds itself unable to borrow more, we may see government debt interest rise dramatically, which will make tax cuts less desirable versus simply paying off debt with a surplus, or even increasing taxes to pay off debt.

Then add on other debts like Medicare and Social Security and we begin to realize that tax cuts may not really be the best tactic for economic growth in the face of all of those government obligations.
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