More on the US Budget Deficit and Tax Debate

…the government’s income is different from a households. The government has powers that households do not have, the power to change taxes. An increase in taxes will raise the government’s income and help to solve the problem. The right has tried to convince us with Laffer curve nonsense that this margin cannot be adjusted, i.e. the false claim that tax increases will not increase revenues, and they have also made arguments about employment and economic growth. Or they have simply proclaimed, without justification, that tax increases are off the table.

None of those argument withstand closer scrutiny, but they are an easy sell due to the willingness of households to project their own troubles with balancing their budgets onto the government. Deficits mean spending cuts.

But like or or not, tax increases are going to be part of the solution. Spending cuts alone are not going to be sufficient.

via Economist’s View: Confusing the Size of the Deficit with the Size of Government.

About Stephen E. McGaughey
International consultant in economic development programs and projects

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