Arthur Laffer warns about tax hikes. He's half right.

Everyone knows that tax rates going up, at least for the rich, after the Bush tax cuts expire at the end of this year. Even Mr Laffer has weighed in with a provocative article in the Wall Street Journal, under the title: "The high taxes, and economic collapse of 2011."

"We have always amazed me how tax cuts do not work to take effect," he wrote in his June 6 article. "The Obama's experience with the increase in deferred tax rate is the opposite. The economy will collapse by 2011."

Laffer long experience in this area. Theories in the 1970s helped Bina Republican political argument for Reagan tax cuts in the 1980s. Presents the economy after that.

The problem with his argument is that tells the story only in the short term. How to contact the Americans and the Laffer companies will become as much income as possible from 2011-2010. Thus, the tax revenue next year less than they would be otherwise.

This is all true. But the American economy will not crash because of government revenues go up or down in one year. The real question is what the policy of long-term effect of tax increases will be.

No doubt it will have a negative impact on growth. However, this effect will be much less of an impact on the short term - and perhaps a third of the size and experts say economists who have studied the previous tax increases. (See the story of an observer in a search.)

This is not to be underestimated. But the developed world is embarking on a campaign of austerity and start providing budgets back into line. Governments can only do this in one of three ways: reducing public spending, increase taxes, or both.

One can be about this scene, and the payment of any option, and only one or two. Given the size of this deficit, however, the third option is going to look more attractive to most governments, including the United States.