A False Equivalence

I know we're not supposed to trash right-wingers when they take on right-wing myths, but this article by Kevin D. Williamson is getting a lot of play in liberal blogs, and it's wrong.

Both are rooted in magical thinking: Naïve supply-siders believe tax cuts pay for themselves, naïve Keynesians believe spending pays for itself through the magic of the multiplier effect.

Well, it may be technically correct: naïve Keynesians may believe that "spending pays for itself through the magic of the multiplier effect." However, Keynesians who understand its theoretical underpinnings do not believe this. They believe that, during a severe downturn in demand, government can increase demand by spending money (stimulus). This spending must be temporary, so that as the recession ends, government spending returns to its previous level. As a result of the stimulus, the recession is shallower and does not last as long. As GDP returns to the pre-recession trendline, the country is richer than it would have been had the stimulus not occurred. Remember, however, that the country borrowed money to finance the stimulus. In the future, therefore, the government has to raise taxes to pay off that debt. Fortunately, the increase in taxes owed due to the stimulus is less than the increase in GDP due to the stimulus, so the country is richer than it would have been had the stimulus not occurred.