One of the most frustrating things about arguing with one’s liberal friends is that many of the things they believe so fervently appear to be self-evident: higher taxes=deficit reduction.


Sounds like unbeatable logic.


Of course, if you’re reading this blog, you already know that this just isn’t the case. Wall Street Journal economics writer Stephen Moore and the American Enterprise Insitute’s Richard Vedder, who also is an economics professor at Ohio University, recently penned a piece that explains why this seeming truth is not true at all. The point of departure is a research paper Vedder and Lowell Gallaway of Ohio University wrote in the 1980s for the congressional Joint Economic Committee that found that every new dollar of new taxes caused more than one dollar of new spending by Congress. Revisions of the paper over the years have produced similar results.


Vedder and Moore recently updated the work, using variables to account for different conditions such as war or inflation:  “But no matter how we configured the data and no matter what variables we examined, higher tax collections never resulted in less spending.”


 They write:



This is exactly the opposite of what the tax-increase lobby in Washington is preaching today. For example, Erskine Bowles, co-chairman of the president’s deficit reduction commission, suggested at a briefing several months ago that there will be $3 of spending cuts for every $1 of tax increases. Sound familiar? Reagan used to complain that he waited his entire presidency for the $3 of spending cuts that Congress promised for every dollar of new taxes he agreed to in 1982. The cuts never came.


The U.S. is at a tipping point. Its government must stop the spending or face dire consequences. I hope people in Congress realize this and perform better in the 112th than they did yesterday when the earmarks ban went down in flaming defeat.