I'm far from expert on economics, or on government spending, but even my basic level of understanding lets me observe that the vast majority of voters are woefully ill-equipped to understand how taxation and government spending are inter-related. Sure, they understand the simple precept that nobody – not even the government – can forever spend more than they take in. But when the discussion wanders around to cutting programs (especially entitlements) versus raising taxes, flights of sheer fantasy are more the norm than sober analysis.
I've long noted that a very high percentage of voters (including the majority of those who could be characterized as conservative, or fiscally-conservative liberals) instinctively believe that there's always another source of tax revenues to tap (generally it's some group of evil, money-grubbing people who are somehow escaping the tax man). The most recent example of this was in the healthcare bill, which establishes new taxes and cost controls on the medical insurance industry. These were clearly motivated by the desire to curb excesses there – but equally clearly (and unarguably) there have been no such excesses – the profit margin of medical insurance companies is quite low by comparison to other industries.
Where does this belief in magic come from? Megan McCardle takes a look at a recent poll and attempts to find some answers...
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