Amid fiscal profligacy and fears of a looming debt crisis, Spending cuts recommended but is a tax increase necessary?

Posted on October 5, 2010 by


This video by prominent Washington DC based Economist Daniel Mitchell demonstrates that only spending cuts and not an increase in the tax burden are needed to balance the budget.  Although the video refers to an increasingly “big government” America, the same issue plagues most European countries and particularly the United Kingdom.  While the new UK conservative government has the good sense of cutting spending, they have also made the terrible mistake of raising taxes and introducing new tax schemes.  There is no shortage of economic research and real world evidence that show that taxation has a negative effect on consumer spending and on investment.  How could we climb our way out of a recession when public policy discourages consumption, and/or investment?  Taxation “squeezes” households and firms and so it seems obvious to me that persistent high unemployment rates and weak growth forecast are a direct result of BAD PUBLIC POLICY!