Keynesian reductio ad absurdum

Courtesy of the Secretary of the Treasury:

Treasury Secretary Timothy Geithner told the House Small Business Committee on Wednesday that the Obama administration believes taxes on small business must increase so the administration does not have to “shrink the overall size of government programs.”

The administration’s plan to raise the tax rate on small businesses is part of its plan to raise taxes on all Americans who make more than $250,000 per year—including businesses that file taxes the same way individuals and families do.

Believe it or not, Geithner’s position makes an amount of sense so long as you accept a failed economic model and then misapply it. After all, if economic growth is equal to the rate of increase of C+I+G and G is supplying all the GDP growth, then obviously everything that feeds G should take absolute priority over that which sustains C or I.

What is lost from C or I will be more than made up for by G, therefore higher rates of taxation that permit higher levels of G should be considered pro-growth policies. QED.