Sunday, November 19, 2006


Supply-side web site TCS Daily continues with their budget deficit boosting ways in a new article by Jerry Bowyer.

Since his position is invalid, his arguments are of course extremely weak. What he really seems to be saying is that some wars according to him have had good results, so borrowing to finance them is a good deal. But given how lousy the war in Iraq, that is hardly an applicable "logic" now.

Moreover, even had military spending been beneficial, 80% of federal spending goes to non-miltary projects. And what's more noteworthy, he doesn't at all touch upon the question of how given a certain level of government spending, what does most damage: taxes or borrowing. Both will have negative effects (deficits will harm the economy through the crowding out effect on investments and the income effect, taxes will harm the economy through the substitution effect), but Bowyer makes no attempt at all to weigh them against each other.

In the beginning of the article, Bowyer quotes Ronald Reagan's response to a reporter asking him whether he would like to defend his budget deficit, to which he replied "No, they're big enough to defend themselves." . While that certainly wasn't a valid defence of deficits, at least Reagan was funny, which can't be said about Bowyer (except for his inclusion of that quote).


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