worried about debt?

Robert Frank:

Few subjects rival the federal budget deficit in its power to provoke muddled thinking.

It’s a pity, because there are really only three basic truths that policy makers need to know about deficits:

  1. It’s actually good to run them during deep economic downturns.
  2. Whether deficits are bad in the long run depends on how borrowed money is spent.
  3. Eliminating deficits entirely would not require any painful sacrifices.

To eliminate deficits, we need additional revenue.

The encouraging news is that we could raise more than enough by taxing activities that cause harm to others. Called Pigovian taxes [wiki] … such levies create a burden that is more than offset by the reductions they cause in costly side effects of everyday activities. …

  1. When producers emit sulfur dioxide into the atmosphere,… the resulting acid rain harms others. As the … Clean Air Act demonstrated, the most efficient … remedy was to tax sulfur dioxide emissions. …
  2. When the transactions of financial speculators fuel asset bubbles, they increase the risk of financial meltdowns. A small tax on those transactions would reduce this risk. …
  3. Carbon dioxide emissions contribute to global warming. Here as well, taxation offers the most efficient and least intrusive remedy.

Anti-tax zealots denounce all taxation as … depriving citizens of their right to spend their hard-earned incomes as they see fit.

… nowhere does the Constitution … grant us the right to harm others with impunity.

No one is permitted to steal our cars or vandalize our homes. Why should opponents of taxation be allowed to harm us in less direct ways?

Found at Economist’s View