History illustrates the difficulties of keeping spending in check, especially in programs that are open-ended commitments, which too often have led to larger outlays than initially envisioned. Decisions to reduce taxes, however, are more likely to be contained by the need to maintain an adequate revenue base to finance necessary government services.
Unemployment has declined and is now at a low level, private consumption is increasing by leaps and bounds, and yet we have a current-account surplus and cash is flowing into the government coffers. It is almost too good to be true – and there is indeed reason to exert some caution. Demand is still strong – and perhaps a little too strong.