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.
It is not true that Congress spends money like a drunken sailor. Drunken sailors spend their own money. Congress spends our money.
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.
And you can't have a prosperous economy when the government is way overspending, raising tax rates, printing too much money, over regulating and restricting free trade. It just can't be done.
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.
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.
There are 11 states in the United States that in the last 50 years instituted an income tax. So I looked at each of those 11 states over the last 50 years, and I took their current economic metrics and their metrics for the five years before they put in the progressive income tax... Every single state that introduced a progressive income tax has declined as an overall share of the U.S. economy.
Let me just try to give you sort of the intuitive one here on the stimulus funds. If you have a two-person economy - let's imagine we have two farms, and that's the whole world, just two farms. If one of those farmers gets unemployment benefits, who do you think pays for him? Am I going way over your heads today?
If you like the post office and the Department of Motor Vehicles and you think they're run well, just wait till you see Medicare, Medicaid and health care done by the government.
People can also change the timing of when they earn and receive their income in response to government policies.
And just remember, every dollar we spend on outsourcing is spent on U.S. goods or invested back in the U.S. market. That's accounting.
Sound money is the sine qua non of a prosperous society.
It has always amazed me how tax cuts don't work until they take effect. Mr. Obama's experience with deferred tax rate increases will be the reverse. The economy will collapse in 2011.
The zero-income-tax-rate states have far faster growth in tax revenues than did the states with highest income tax rate over this period.
There are lots of other things that affect state growth besides state taxes. However, the reason I look at taxes is because these are policy variables that can be changed by state governments in order to get better results than they otherwise had.
You want to prove that Milton Friedman is a fascist? It's easy. Quote him.
