Unless you reduce the long-term spending burden, you cannot cut taxes in any lasting way, but can only shift the burden of taxes from the present to the future.
Interpretation
Sustainable tax cuts require addressing long-term spending obligations.
The quote emphasizes that in order to implement lasting tax reductions, it is essential to first manage and reduce long-term spending commitments. Without addressing these underlying financial burdens, temporary tax cuts only defer the financial responsibility to future generations rather than resolve it.
In practice
During a town hall meeting discussing fiscal policy, one might use this quote to illustrate the importance of budgeting sustainability.
The Fed was largely responsible for converting what might have been a garden-variety recession, although perhaps a fairly severe one, into a major catastrophe. Instead of using its powers to offset the depression, it presided over a decline in the quantity of money by one-third from 1929 to 1933 ... Far from the depression being a failure of the free-enterprise system, it was a tragic failure of government.
One of the most powerful insights in economics is this idea of a division of labor. You do the thing you're good at. Other people do something else that they're good at. The net effect is better for everybody.
What an extraordinary episode in the economic progress of man that age was which came to an end in August, 1914!
The unions might be good for the people who are in the unions but it doesn't do a thing for the people who are unemployed. Because the union keeps down the number of jobs, it doesn't do a thing for them.
There's a long list of investments that governments could and should be making. There is strengthening infrastructure, such as transport and communications; there is investment in education; there is investment in families, particularly putting measures in place that free women from having to make the choice between raising a family and work.
Global capital markets pose the same kinds of problems that jet planes do. They are faster, more comfortable, and they get you where you are going better. But the crashes are much more spectacular.
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