The 2001 and 2003 Tax Cuts Should Not Be Allowed to Expire

Simon Johnson is a professor at MIT and a former IMF official. With that kind of resume, you won’t be surprised to learn that he is much too sympathetic to big government.

For instance, we both testified to the Ways & Means Committee last year about the value-added tax, and he sided with all the other witnesses and favored adding a pernicious European-style national sales tax on top of the income tax.

He also wants the Bush tax cuts to expire. All of them.

That’s the topic we debated on Larry Kudlow’s program. I didn’t get much air time in this interview, but I’m glad that I got out the key point about the real problem being big government rather than red ink.

Prof. Johnson vaguely acknowledges that a huge tax increase might hinder the economy, but his proposed solution is a repeat of the Keynesian payroll tax holiday. I’ve previously explained that temporary tax gimmicks don’t generate long-term job creation, so I obviously don’t see why a policy which hasn’t worked the past two years will magically start working next year.

As with the debate I posted yesterday, I tried to sneak in a final comment (making up for all those years when I was married and never got the last word). In this case, I said Congressman Ryan’s entitlement reforms are the solution, though I’m not sure how many people heard.

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