The New Age of Big Government

Abstract

Both the supporters and opponents of President Bush's 2001-2003 tax cuts assert that the cuts are steps toward smaller government. That claim appears to misunderstand the notion of the size of government and rests on spending illusion - confusing the amount of the nominal dollar flows between individuals and government with the actual size of government. In fact, the 2001-2003 tax cuts probably are steps on the road to larger government because their main effect will be to increase wealth redistribution from younger to older generations.

Keywords: Tax cuts, fiscal policy, Bush Administration, Bush tax cuts, size of government, redistribution of wealth, future cuts, budget, fiscal gap, generational imbalances, tax code, spending, national debt, budget deficit

JEL Classification: E62, E60, H11, H20, H55, H60, H61, H62, H21