What I'm not saying is that all government spending is bad. It's not - far, far from it, but there is no free lunch, as a former colleague of mine used to say. There is no public tooth fairy. Father Christmas does not work on the Treasury staff this year. You can never bail someone out of trouble without putting someone else into trouble.
Government spending is taxation. When you look at this, I've never heard of a poor person spending himself into prosperity; let alone I've never heard of a poor person taxing himself into prosperity.
You know, without China there is no Wal-Mart and without Wal-Mart there is no middle class and lower class prosperity in the United States.
And let the Fed sell bonds to bring bank reserves back down to required reserve levels, so we have restraint on bank lending and bank issuances of liability.
People can change the volume, the location and the composition of their income, and they can do so in response to changes in government policies.
Tax rates aren't everything with regard to incentives to work. I would probably work at a 100% tax rate next to a nude modeling studio. I'm joking, but you know what I'm saying. There's a lot more to it than just tax rates. It's economics that I do; I don't do nude modeling studio economics. People do respond to taxes.
Sometimes, tax rate increases create the very problems that the spending is intended to cure. In other words, the tax rate increases reduce economic growth; they shrink the pie; they cause more poverty, more despair, more unemployment, which are all things government is trying to alleviate with spending.
Over the past 100 years, there have been three major periods of tax-rate cuts in the U.S.: the Harding-Coolidge cuts of the mid-1920s; the Kennedy cuts of the mid-1960s; and the Reagan cuts of the early 1980s. Each of these periods of tax cuts was remarkably successful as measured by virtually any public policy metric.