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Reducing Spending > Raising Taxes

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Here’s a letter that I sent last week to the Washington Post:


Robert Samuelson is correct: the national debt is out of control [2] (May 11). But he’s incorrect to suggest that this problem can be addressed with equal effectiveness by both tax increases and spending cuts.

In their meticulously researched 2019 book, Austerity: When It Works and When It Doesn’t [3], Harvard economist Alberto Alesina, along with Carlo Favero and Francesco Giavazzi, report that cutting spending is far more effective at reducing debt burdens than is raising taxes. As put by the blurb offered by the publisher, Princeton University Press: “Looking at thousands of fiscal measures adopted by sixteen advanced economies since the late 1970s, Austerity assesses the relative effectiveness of tax increases and spending cuts at reducing debt. It shows that spending cuts have much smaller costs in terms of output losses than tax increases.”

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030


I’m pleased to share the news that Austerity is the winner of the Manhattan Institute’s 2020 Hayek Book Prize. [4] Congratulations to the authors for this well-deserved prize that acknowledges the high quality and deep importance of the research that they report in this superb book.