Spending cuts or tax increases - which hurt more?

[Peter1469]

This article argues that spending cuts cause economies to heal faster than tax increases..., with citations to lots of real studies.

Link (http://www.nationalreview.com/corner/333447/which-would-hurt-more-tax-increases-or-spending-cuts-veronique-de-rugy#)

In the debate over the fiscal cliff, and beyond the politics, the president and Congress should be asking the following question: Between the choices of tax increases and spending cuts, which measures will hurt the economy the most?

Over at EconLog, George Mason University’s Garett Jones provides the answer: Tax increases. He looks at an IMF paper, often used by anti-spending cuts advocates to say that spending cuts hurt the economy, to show that actually fiscal adjustment based mostly on tax increases will hurt the economy the most. Here is Jones:

Read more at the link above.

[Chris]

This graph from the study makes it easy to see...

http://i.snag.gy/lFNH9.jpg

I would argue on purely rational grounds that this has to be so. Spending cuts leaves more money in the hands of those who generate wealth, wealth shared by producers and consumers alike in a free market. Taxes takes money from those same people and puts it in the hands of government which serves the interests of special interests whereby wealth is liberal redistributed or conservatively kept in the hands of the rich, and that money is lost to those who would generate wealth.

The basis of this argument is Bastiat's That Which is Seen, and That Which is Not Seen (http://bastiat.org/en/twisatwins.html).

[Ivan88]

Here's a case where spending helped quite a bit:
Sanitation in England was so bad in the mid to late eighteen hundreds that, "In 1858, when the Queen and Prince Albert had attempted a short pleasure cruise on the Thames, its malodorous waters drove them back to land within a few minutes. That summer a prolonged wave of heat and drought exposed its banks, rotten with the sewage of an overgrown, undrained city. Because of the stench, Parliament had to rise early."

Another story describes Queen Victoria gazing out over the river and asking aloud what the pieces of paper were that so abundantly floated by. Her companion, not wanting to admit that the Queen was looking at pieces of used toilet paper, replied, "Those, Ma'am, are notices that bathing is forbidden." 23 (http://www.weblife.org/humanure/references.html#4_23)


The wealthy folks, including the Tories or "conservatives" of the English government still thought that spending on social services was a waste of money and an unacceptable infringement by the government on the private sector (sound familiar?). A leading newspaper, "The Times," maintained that the risk of cholera was preferable to being bullied by the government into providing sewage services.
http://www.weblife.org/humanure/chapter4_4.html

998

[Chris]

Ivan, the topic is spending cuts vs tax increases. No one's arguing whether there aren't some uses for the evil we call government. So, please, stick to topic as already warned in another thread.

[Ivan88]

Ivan, the topic is spending cuts vs tax increases. No one's arguing whether there aren't some uses for the evil we call government. So, please, stick to topic as already warned in another thread.

Don't you think spending money on sanitation to prevent disease is better than tax increases?

[Chris]

Don't you think spending money on sanitation to prevent disease is better than tax increases?

Start your own topic or get thread banned again.