Saturday, November 21, 2009

Tax Cuts vs Stimulus Spending

Imagine that: the People are/were right. It turns out that it's tax breaks that make a bigger difference to economic growth: "Fiscal stimuli based upon tax cuts are more likely to increase growth than those based upon spending increases." From Harvard's Alberto Alesina and Silvia Ardagna via Greg Mankiw.

They even go further, pointing out that to reduce debt and deficits, spending cuts are more effective than tax increases.

Update: I just don't get it sometimes. 56% of New Yorkers believe the state will be broke by year end (RasmussenReports). So far not so surprising. But then there's this: "An overwhelming 81% of say the bigger problem in New York State today is not that voters are unwilling to pay enough in taxes but that politicians are unwilling to control government spending. Just eight percent (8%) think the bigger problem is voter unwillingness to pay enough taxes." Do these people vote?

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