Why do bond market vigilantes and deficit hawks like tax cuts and credits?

[jpgray]

Why does a confidence fairy who revives to applause for deficit reduction seem to adore loss of revenue and despise increases in spending? If the economically-minded would help me out, I'd be grateful.

[izquierdista]

1. They live in a very confined reality

In normal times, with a balanced economy that employs people in manufacturing, and where government expenditures is in line with taxes collected, a tax cut puts more money into the hands of people/manufacturers/small business and when they spend it, the economy hums along. They not only long for the 1950s, they think we still have the economy of the '50s.

They continue to think that these axioms are in force and that the tax cuts and credits will operate as if the economy was ideal. Apparently they haven't noticed that China does all our manufacturing and Iraq and Afghanistan suck down huge expenditures. When you try to point this out to them, they stick their fingers in their ears and go "la-la-la-la-la-la".

[bbgrunt]

2. great explanation, but I think it's congenital.