Higher taxes will not reduce the deficit, except for a brief interval. They will simply increase government spending. That is the lesson taught by past experiences.

More Money, More Spending

There's something counterintuitive here that cuts against most political arguments you hear. When governments suddenly have more money, the instinct is to imagine it disappearing into deficit holes like water into sand. But Friedman's point—drawn from watching actual budget cycles—is stranger: new revenue tends to create new appetite for spending. It's like giving someone a raise; they don't automatically sock it away.

This shows up everywhere if you look. A business raises prices and suddenly marketing budgets appear. A city gets a grant and discovers ten "essential" projects that need funding. The money doesn't stay in reserve; it redistributes itself. Friedman's warning isn't that taxes are bad or good—it's that treating them as a deficit solution is naive. You're not really closing a gap; you're just shifting where the money goes.

The tricky part is that this doesn't mean the opposite policy (lower taxes, lower spending) automatically works either. Human nature cuts both ways. What matters is whether anyone actually commits to spending discipline, regardless of revenue. That's the harder conversation—and usually the one people avoid.