Monday's interesting reads - 6/16/08

"Fiscal Poison Pill" NY Times op-ed by Paul Krugman (HT: RealClearPolitics):

"Anyway, back to my main theme: looking at the tax proposals of the two presidential candidates, it’s remarkable and disheartening to see how effective President Bush’s fiscal poison pill has been in restricting the terms of debate."

The basic idea is that the tax cuts have restricted what kinds of programs can be implemented by an Obama presidency because he'll have less money with which to do it. I actually agree with Paul Krugman. Not that I think this is a bad thing though, as he does. Milton Friedman said he was always in favor of tax cuts because they have the effect of constraining government.

Greg Mankiw had this to add:

"In other words, according to Krugman, the Bush tax cuts may well cause government under President Obama to grow less than it otherwise would.

Roughly the same story was told in Robert Reich's highly entertaining memior of the Clinton years, Locked in the Cabinet. Reich suggests that the Reagan tax cuts and resulting deficits constrained the Clinton administration from pursuing all the spending programs that Reich wanted.

Krugman and Reich view this situation as entirely negative, for they favor increased government spending. But for those classical liberals who prefer smaller government, their storyline supports the well-known and often maligned Starve the Beast theory."