So it may not be often that I will agree with John Maynard Keynes, but like a lot of historical figures, his ideas have been twisted by modern interpretations for their own ends that when you really look at the original sources they mean different things. There is no doubt that Keynes believed the theory that government spending would increase demand in the economy which would lead to lower unemplyment, supply side economics. What progressives failed to learn from him though was that super high taxes were not the way to fund that spending.
“Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget.” – John Maynard Keynes
You see, Keynes there admits that there is a point at which rising taxes defeats its purpose of raising revenue;this is called the Laffer Curve. I will link some videos at the bottom that explains the curve better than I can.
The dangerous place we can fall into is thinking that tax cuts will lead to economic growth every time, there is a need to tax in order to fund the government operation, but there is a limit to the tax rate as the Laffer Curve demonstrates.
During a time of a recession when businesses need as much available funding you do not increase the tax rates on those with the income to create jobs. This is akin to slitting your wrist to get to the blood you need for a transfusion, when you’re the one that needs the transfusion. Neither am I saying that we should lower the tax rate during a recession, in fact we should continue the same tax level we had at the beginning of the recession until we are getting out of it, and then we can determine if a change is needed.
What conservatives are advocating for at this time is to lower the government’s burden on the public so that the public is free to create new jobs. Yes there are some responsibilities the government has and those responsibilities need to be funded, but there is plenty of waste that can be cut out. Until all the waste is cut out and the government is only doing what it is supposed to be doing it is necessary to look at raising taxes to increase revenue to the government.
Once the government demonstrates it is running on barebones we can then logically determine how much revenue is needed to maintain a healthy government.
I understand that progressives will ignore anything that comes from a Republican, Conservative or anyone that does not tell them what they want to hear, but I hope that John Maynard Keynes can get through to them.
Video Part 1: http://www.youtube.com/watch?v=fIqyCpCPrvU
Video Part 2: http://www.youtube.com/watch?v=YsB_rnzBA08
video Part 3: http://www.youtube.com/watch?v=Mw7LtVwDCbs