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May 31, 2012

A Note on the "Fiscal Cliff"

The fiscal cliff is the combination of tax increases and government spending cuts set to take place on January 1st. According to the CBO, if these automatic adjustments occur, the economy will slip into a recession in the first quarter. What I find particularly interesting is people seem to be using this to justify more government spending! In a free market economy, when the government cuts spending, the economy tends to grow. In a socialist economy, when the government cuts spending, there tends to be a short term recession. What type of economy are we living in? Besides, the "cuts" aren't decreases in actual government spending, they are decreases from forecasted government spending. Spending is still going to increase year over year, as is debt.

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