(Hat tip Washington Policy Blog)
With unemployment at 10.2%, the third quarter economy growth being revalued down, and multiple states looking to make up budget shortfalls due to decreased revenue, what is the best way to stimulate the economy and increase tax revenue?
Well, according to two Harvard economists (Harvard, that bastion of right-wing thought), the answer is: cut taxes and spending. In their paper (pdf file) from October of this year, Alberto Alesina and Silvia Ardagna argue:
Fiscal stimuli based upon tax cuts are more likely to increase growth than those based upon spending increases. As for fiscal adjustments those based upon spending cuts and no tax increases are more likely to reduce deficits and debt over GDP ratios than those based upon tax increases. In addition, adjustments on the spending side rather than on the tax side are less likely to create recessions.
In other words, cutting taxes and spending will cause the economy to grow and cutting spending and not increasing taxes is more likely to shrink deficits. And cutting spending is less likely to cause recessions than increased taxes.
Which is sort of what a lot of right wingers (like me) have been sayingall along. In fact, this was the basis of Reaganomics. Compare and contrast to Obamanomics which spends until deficits are in the trillion dollar range and threatens tax increases. Now even Harvard is saying Obama is wrong.
Unfortunately, we're stuck with him for three more years.
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