Arcanis wrote:The issue here is you are using increased taxes = increased revenue. This can be the case but isn't always. The problem I see is that every time someone looks at a tax cut or tax increase they put it in isolation. They ignore the implications of that tax change on spending and just assume that whatever spending happened or will happen during that time would be the exact same if the taxes changed or not.
I agree with you. And both sides are prone to ignoring it, yet at the moment, I don't believe that cutting taxes at the moment will do anything to generate revenue. It seems like the right is married to the idea that tax cuts will always generate more revenue, which is patently ludicrous. Some invoke the Laffer curve without ever demonstrating where we are on the curve or how they've arrived at this number.
And it is basic economics that an increase in taxation and government spending crowds out private investment and charity donations. But centuries have shown that you can't provide anything approaching a safety net that will benefit the populace as a whole.
Economics is as much a social science as a mathematic one. The same actions taken even a decade apart will result in very different reactions from the populace. That's why there are studies on consumer confidence. And at this point, even though the government tells us that the recession is over, the job and housing markets are still bad enough that most people don't consider this to be over.
A private sector recession is just the time we need the government to even out the bumps, not cut them to the quick. Unfortunately, when times are good, no one wants to take the leadership role to pare back the government role on the other side.
Credit cards exist to help you out when times are tough and you can't make ends meet. You don't cancel them all when you're laid off, as you might need them to get groceries that month. And you pay them off once you're back on your feet and days are sunnier. Unfortunately, too many in the government want to use those salad days to ignore the debt that we accrued in the dark days, and go buy new TVs and consoles while we ignore the debt and keep paying the interest when we would be better served paying it off.
Tl;DR version - The government needs to get smaller in the long term, but when the country is still suffering is not the time to do it.
It's almost as if people are the problem.