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I was watching CNN during lunch and they were talking about the Bush tax cuts that are due to expire. Some economists and members of Congress want at least the ones for the upper class to expire not so that it can go towards the deficit reduction, but so that they can have 70 billion more to spend. We are running North of the trillion dollar deficits for the past two years and will be for the foreseeable future so doesn't it make more sense to reduce spending instead of increasing spending and getting rid of tax cuts so you can increase spending even more?
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- 1 decade agoFavorite Answer
One of the cruel ironies we face is that spending may be necessary to avoid economic depression or further economic recession.
Reducing spending when we need money to circulate through the economy could be counterproductive.
The bad news, of course, is the spending now means borrowing now. Optimists are saying that, as the economy improves, as money from non-government sources picks up and circulates, the government can cut back spending then. We hope we can do so without triggering more recession. Pessimists, of course, are saying that we cannot borrow now to spend now, since things will not be getting substantially better in time to pay off the debt.
Our current situation has been exacerbated (if not caused in part) by waging two wars without increasing taxes. No nation does that and gets away with it economically. Those wars total almost $1 trillion so far, with long term obligations (e.g., for wounded veterans) that will greatly increase the total costs of war.