EconoMeter ponders whether a higher deficit is OK with a tax cut?
Question: Will it be acceptable to propose tax changes that increase the federal deficit?
Bobs Answer: YES
Tax reform must be enacted to increase capital formation; any budget deficit increase will only be temporary. We need to generate the kind of economic growth necessary to provide the federal treasury with enough revenue to pay down our debt. The net tax changes may increase the budget deficit in the short term but will increase growth and incomes in the long term. Gross domestic product growth of 3 to 4 percent per annum is achievable.
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