So although cutting taxes is an attractive short-term stimulus tactic, it generally is more of a “placebo” effect on economic expansion…and the economy will almost inevitably swing in the opposite direction (i.e. contract) over time. Which means that, as a rather nasty amplifying effect when recession inevitably arrives, the government will abruptly be saddled with a massive debt burden that now costs more and more to service (again, as interests rates rise as a consequence of constant deficit spending) — the debt servicing will become more and more a preoccupation of future budgets, which will cast around for cuts to anything and everything else, thus further weakening the economy. Alternatively, the federal government can become insolvent — which may actually be the irrational aim of certain neoliberal conservatives who dislike government “interference” in markets, and seek a purer laissez-faire economy.
In any case this is why “procyclical” policy (i.e. what the Trump administration is engaged in now) is pretty reckless.
My 2 cents.
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