Wax and Wane

Government spending and/or increased taxes are not bad in and of themselves. What matters in every situation where a politician proposes these things is not only what the change will do to the individual and the company but what it will do for the economy as a whole and whether expanding or contracting these things is the right move given the current state of the nation.

In general, you can have some situations where taxes are needed to fuel government spending and some where they are not. In times of deficit there are not enough funds to cover spending, so you have two options. You can either raise taxes or you can cut spending. Cutting spending is the obvious first choice but will only work to an extent before you start losing control of the basics that our government provides, such as police forces, legislative branches, etc. The only option that remains when cutting spending is not viable is to raise taxes. Conversely, if the nation is in a surplus then raising taxes and reducing government spending don’t really make a lot of sense.

Likewise, government spending can be both a blessing and a burden. In times of economic stagnation government spending, when applied judiciously, can help to stimulate growth within the economy. However, overspending by the government can have the counteractive effect of helping to ramp up inflation, which then has a trickle down effect on unemployment and the general welfare of the economy.

The point I am driving at here is simple: government spending and taxes are only bad in the situation that they are used inappropriately. If you hear that a given senator, mayor, or city official wants to raise taxes, don’t immediately shut them out. Listen to why they want to raise them then judge whether their reasoning is flawed or not. Many times this exercise will reveal that the individual isn’t making the choice that is in the best interest of the people. However, many other times this will prove to be the right choice. Some praise Reagan for operating the country very well in a deficit while others praise Clinton for doing the same with a surplus. The ultimate goal is a zero state where spending exactly equals taxes, however in the inevitable absence of this near mythical zero state, increases and decreases in both government spending and taxes will be warranted in certain situations.

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Jason McDonald

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