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Date: Fri, 24 Feb 1995 01:19:54 -0500 From: damartin@ampere.mit.edu To: libertarians@MIT.EDU >Does your program account for the beneficial effect of tax cuts on the >economy, which affects the tax revenue for the next year? After all, >the federal budget is something like 20% of the economy. I think >Libertarians would find it even easier to balance the budget if you >took this into account, and also the effect of eliminating regulation. >Of course, I'm probably asking for too much. The problem with this is that : GOVERNMENT_INCOME = TAXES + GOVERNMENT_BORROWING If you cut taxes but don't cut spending, you aren't providing any extra money for productive investment because it is all spent buying government bonds. Changing your income stream from taxes to borrowing may provide psychological incentives which might make people work harder, but I don't see any way to measure/predict it. -David
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