Les Jones

Stimulate with tax cuts, not spending

Tuesday, January 27th, 2009 | Misc |

U.S. News - 10 Reasons to Whack Obama’s Stimulus Plan

1) A 2005 study by Andrew Mountford and Harald Uhlig “analyzed three types of policy shocks: a deficit-financed spending increase, a balanced budget spending increase (financed with higher taxes) and a deficit-financed tax cut, in which revenues increase but government spending stays unchanged. We found that a deficit-spending shock stimulates the economy for the first 4 quarters but only weakly compared to that for a deficit-financed tax cut.” In other words, FDR vs. Clinton vs. Reagan, Reagan wins.

Previously

• Tax cuts may work better than spending to stimulate the economy

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