It has been fascinating, if saddening, to observe the political spinning around expiration of the Bush and Obama tax cuts this month. (Don’t forget a third of Obama’s $787 billion Stimulus bill was also a tax cut.)
My inner-Keynesian economist is afraid consumer demand will decrease if they are paying more in taxes, so the tax cut should be extended. My inner-Austrian economist is afraid of the mounting deficit and a possible attack by the bond vigilantes, so the tax cut should NOT be extended. My inner-Suppy-Side economist knows there is NEVER a good time to raise taxes, so the tax cut should certainly be extended FOREVER.
Maybe, we shouldn’t be so harsh on politicians when economists cannot even agree on an economic problem.