At the same time, the implicit proposition underlying the Republican case is that public spending amounts at best to money down the drain and, more often, to an albatross around the economy’s neck, discouraging work among beneficiaries of government largess. The evidence for that is even weaker. Under such assumptions, the return to Vermont’s additional Medicaid spending would shrivel to nothing. That is, pretty much, how the budget office scores Medicaid spending today. That truly misjudges the role of government in the long-term health of the American economy. “Of course there are positive returns to spending on health, education, nutrition,” said William Gale, a tax expert at the Brookings Institution. “They are saving a lot of money and generating revenues. The macro effects are big relative to the expenditures.”
We always hear about the laffer curve or supply side economic principles that tax cuts solve everything. It should be noted that not all general welfare spending is a waste. Or that type of spending is a waste at all. If the CBO is going to account for the multiplier effect of tax cuts, it should also account for the multiplier affect of welfare spending.