A Spending Cut is a Tax Cut

Distinguished Harvard University Professor Robert Barro writes an interesting piece on macroeconomic policy, taxes and long term deficits.  It is well worth reading from start…

One of the many things I learned from Milton Friedman is that the true cost of government is its spending, not its taxes. To put it another way, spending is financed either by current taxes or through borrowing, and borrowing amounts to future taxes, which have almost the same impact on economic performance as current taxes.

to finish…

Indeed, it is nonsense to think that cuts in government spending should be avoided in the “short run” in order to lower the chance of a recession. If a smaller government is a good idea in the long run (as I believe it is), it is also a good idea in the short run.