“Higher taxes never reduce the deficit. Governments spend whatever they take in and then whatever they can get away with.” Milton Friedman
Today’s policymakers see borrowing as a good thing to achieve short-term goals. Part of their logic is that borrowing is cheap so it’s no big deal. Isn’t that the kind of thinking that got people in big trouble with their borrowing; easy mortgages, interest only mortgages, ARMs and balloon mortgages and easy home equity loans … Live for today!
And here is a thought for Mr Obama. His ads say he wants to raise taxes on the “wealthy” to help “pay down the debt.” Well if that’s true I think he should pledge that any additional revenue from those higher taxes be placed in the Treasury Departments special account dedicated to reducing the Federal debt, that’s the same account that accepts voluntary additional taxes from people. Sounds reasonable to me.
Why can’t we go forward in the right direction?
- Paul Krugman: Money for Nothing (economistsview.typepad.com)