Thursday, August 2, 2012
The expiration of the Bush tax cuts and the automatic spending cuts slated to take effect in a few months offer a rare chance to do what policymakers have not, so far, been able to do - deal seriously with the 10-year budget deficits looming over the economy. Legislators should embrace that opportunity while also tending to the short-term needs of the economy.
- Start Making Sense: New Tax Policy Center Reports, by Dan Shaviro (NYU):
One could put this same point -- clearly correct, in my view -- as follows. Suppose we take allowing the fiscal cliff changes to take effect as the baseline. Against that baseline, we need stimulus. Of course, given the ongoing unemployment crisis, we already need stimulus today. But the changes would increase the amount of stimulus that is needed. Could anyone seriously maintain that, from the standpoint of optimally designing the extra stimulus, we would have it take the form of extending the Bush tax cuts, etcetera? That view cannot be seriously defended, unless one also favors them as long-term policy.