… is from pages 54-55 of my late Nobel-laureate colleague James Buchanan’s 1981 lecture “Constitutional Restrictions on the Power of Government,” as this lecture is reprinted in Choice, Contract, and Constitutions (2001), which is volume 16 of The Collected Works of James M. Buchanan:
[Government] spending rates would be lower if all programs were required to be tax-financed. Government, however, may have access to both debt issue and money creation as alternative revenue sources. These allow the government to spend without taxing, which is almost the ideal setting for elected politicians. By creating deficits, government is allowed to finance desired programs that provide benefits to potential voters without overt increases in rates of tax.
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