Rand Paul Editorial in WSJ: The Real Danger From the Fiscal CliffSubmitted by Allegory on Thu, 11/29/2012 - 23:07
By RAND PAUL | WSJ
Americans are told that they face a "fiscal cliff" if automatic federal spending cuts and tax increases occur at the end of the year. I'm not in favor of jumping off a cliff, but the logic of the supposed threat needs to be questioned.
The fiscal-cliff narrative assumes that spending cuts are bad for the economy. It follows, then, that more spending (and therefore more government debt) are good for the economy.
Didn't we try that with President Obama's trillion-dollar deficit-spending spree? You remember the stimulus—the one that created or "saved" American jobs at a cost of $400,000 per job. The one that left the unemployment rate over 8% for 43 consecutive months, the longest span since the Great Depression.
So is it good for the federal government to borrow more and spend more, or is it good for the economy to spend less and borrow less? These questions might need to be addressed before we wring our hands in despair at the possible fiscal cliff.
Now let's consider the assumption that raising taxes could lead to "taxmaggedon." The implication here is that raising taxes—that is, extracting and confiscating more income from workers and businesses—is harmful to the economy. I am easily persuaded of this truism. As Milton Friedman said, nobody spends someone else's money as frugally or as wisely as they spend their own.