In the run-up to this weekend's G-8 summit at Camp David, journalists have unfavorably compared European "austerity" with Barack Obama's economic policies.
European spending cuts, the argument goes, have hurt people and are arousing political opposition, while Obama's proposals to keep federal spending at 24 percent of gross domestic product indefinitely are likely to succeed.
Evil Republican spending cuts, in contrast, would deny the economy needed stimulus and wreak havoc on ordinary people.
But the facts undermine the storyline. Veronique de Rugy of the Mercatus Center at George Mason University took a look at what "austerity" in Europe actually means.
What she found is that government spending has increased or not appreciably declined in Britain, France, Italy, Spain and Germany. The only significant spending reductions are in Greece, where the bond market cut off funding.
In the other countries, the big adjustment has been an increase in tax rates. European "austerity" is an attempt to reduce government budget deficits largely by increasing taxes and only to a small extent by reining in spending.
Which, when you come to think about it, is the policy not of House Republicans -- who actually passed a budget -- but of Barack Obama.
Over the past three years, Obama has pursued the goal of higher tax rates as relentlessly as Captain Ahab pursued the great white whale.
Never mind that by some measures the United States, even with the "Bush tax cuts," already has the most progressive tax system in advanced economies. About 40 percent of federal income tax revenues come from the top 1 percent.
And we know from experience that when top rates are increased above Bill Clinton's 39.6 percent, the intake is always less than projected. Since World War II, federal revenues have never risen much over 20 percent of gross domestic product, whether the top rate was 28 percent or 91 percent.
The reason is that when rates get high enough, investors' animal spirits (John Maynard Keynes' term) are directed less at increasing productivity and creating wealth and more at avoiding taxes. And without increased productivity, you don't get robust economic growth -- which hurts everyone.
There's another problem. High tax rates mean a volatile revenue stream, as California Gov. Jerry Brown is finding out. When times are bad, revenues dry up just when government needs money. California's budget deficit has zoomed from $9 billion to $16 billion in a few months.
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