All Republicans want to do is cut taxes and spending. All Democrats want to do is raise spending and taxes. Both are right - it is the timing that is wrong.
Republicans tend to cut taxes when times are good - makes sense, right? More money in people's pockets.
The only problem is when things are great, people HAVE more money in their pocket. This is the time for paying down the deficit (which Republicans seem to abhor - the deficit that is) You can spend a little more, but that tends to lead to inflation unless the spending is targeted.
When things are tough, cutting taxes and increasing spending seems to be counterintuitive, but actually it is something the government can do to help get the economy going again, provided as it gets better it eases off and slowly raises taxes and moderates spending.
Yes it is a balancing act. In the preceding case, raising taxes to pay for increased spending goes hand in hand. People have to see a value for their increased taxes. But we have been off cycle for so long, it would take either a massive change, which would be disruptive to the economy, or a long gradual adjustment, which would not satisfy the "we want the world and we want it now" crown on both sides.
The economy is not totally a zero sum game, but it has it's limits. Trying to stay within the limits is getting tougher every day.
No comments:
Post a Comment