Unsolicited Advice for the Obama Administration
Posted: 16 May 2009
Date Written: May 19, 2009
Current handwringing about projected federal deficits is overblown. Unlike the deficits of 2001-2008, which were used largely to pay for consumption, much of the projected borrowing will pay for long- neglected infrastructure investments with high rates of return. If the alternative were to forgo those investments, our children and grandchildren would actually be richer, not poorer, if we made them with borrowed money. But they'd be much richer still in the long run if we paid for the investments with our own money. There’s actually a relatively simple and painless way to do that. Once the economy has again reached full employment, we should adopt a new tax system focused on behaviors that cause injury to others. Because taxing such behaviors curtails waste, it creates new revenue essentially out of thin air.
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