While I think Jan Brewer – Arizona’s governor – should be made to pay for signing into law SB1070, the horrific immigration law, her support of
Proposition 100 is commendable. Fiscal restraint during weak aggregate demand is generally bad economics but state governments often are forced into such measures by their requirements to annually balance their budget. If the choice is between reducing government purchases versus a temporary tax increase, then on Keynesian grounds the latter is the least undesirable move as it likely has less of an impact effect on aggregate demand. Then again – state governments would not be faced with such Draconian choices had we decided to increase Federal revenue sharing by more than what barely got through the Senate.