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There is great debate on the best economic approach to a depression. Foremost in this debate is the economic philosophy of John Maynard Keynes, the brainchild behind Roosevelt's "New Deal," and the father of macroeconomics. Under "Keynesian economics," we actually loosen our belts during a depression, deficit spend, stimulate the economy, and very importantly, tighten our belts and pay off the deficit when the economy is going well. Keynesian economics became so widely accepted from the Roosevelt Presidency to the era of Reagan/Thatcher, that Richard Nixon is widely quoted as having said, "We are all Keynesians now."

And then you have the "Chicago School" or "Austrian School" of economics, with notable leaders Friedrich Hayek (the famed Austrian who went to the University of Chicago) and Milton Friedman. These conservative economists railed against government intervention in the market place. While Keynes believed, as Time Magazine once explained his philosophy in 1965, that "the modern capitalist economy does not automatically work at top efficiency, but can be raised to that level by the intervention and influence of the government," the Chicago School believed that massive government spending only ultimately inhibited economic growth by reducing consumer spending.

But the debate always was, whether to (1) deficit spend in a depression with high spending and low taxes [Keynesian], or (2) to keep taxes and government small in order to stimulate the free market with low taxes and low spending and not mortgage the future [Chicago School]. But now the Massachusetts legislature has a new approach to handling depressions: keeping spending high and keeping taxes high. It is an approach that no bona fide member of the Keynesian school of economics or the Chicago School of economics would adopt. It is the Boston School of Economics, more commonly called insanity.

This truism apparently needs explicating: depressions are caused (at the most basic level) by an extreme lack of purchasing of goods and services thereby causing businesses to have to downsize, reduce pay or benefits, and/or layoff employees. Because people have been laid off or have reduced salaries, they lack purchasing power and there is a feedback effect whereby the new lack of purchasing power and reduced sales causes further layoffs, the cycle repeating ad naseum. Obviously, if you increase the cost of goods and services through taxes, you will decrease purchase of those goods and services and slow down the economy even further.

The Massachusetts Senate yesterday voted to increase the sales tax from 5% to 6.25%, a 25% increase. The justification is that we cannot afford to cut "essential" government services. At the new 6.25 percent, Massachusetts would have the second highest sales tax rate of the six New England states and would be higher than neighboring New York. Nationwide, only eight states have a higher rate.

As State Senator Steven Panagiotakos put it on the Senate Floor, "We cannot cut our way out of this problem, we cannot reform our way out of this problem, and we cannot tax our way out of this problem." Just what is "the problem," however, is the problem. We must understand what is essential, fundamental, and what must be preserved at all cost in times of difficulty. No doubt, many of the programs our government offers is important. But government is not what is most important.

At the end of the day, what is absolutely essential is not that governmental services be maintained, but that that the economy improves so that we may obtain the means to provide ourselves with food, clothing and shelter. That is the problem. If one thinks there is a big "but" to follow this axiom, whether it be this government program or that one, one really has it wrong. Making exception for times of war for the defense of the nation, nothing is more important than the preservation of the economy so that we can provide ourselves and our family the necessaries of life.

The non-partisan Beacon Hill Institute (BHI) has recently released a study indicating that a 25 percent increase in the state sales tax would wipe out around 12,000 jobs in the private sector but save more than 6,000 jobs in state and local government, for a net loss of 6,000 jobs. According to their website, "the average person would lose approximately $457 per year in wages."

According to BHI, the increase in the sales tax would not result in expected revenues. "The actual increase, given the dynamic effects would be $649 million not $900 million." Tax revenue is the tax rate multiplied by the tax base. When you raise taxes on goods, the tax rate may go up, but people lose jobs and purchasing power, eroding the tax base.

To boot, the sales tax is regressive, a highly un-Democratic thing to do. According to BHI, "The sales tax would continue to be regressive with the increase falling disproportionately on low income earners. A 20 percent increase would represent 0.51% of the household earning less than $10,000 while only 0.26% of the income of a household earning more than $70,000." (To read the report, got to BeaconHill.org).

Keynesian economists believe that tax cuts should be used to increase demand, and should be targeted at cash-strapped, lower-income earners, who are more likely to spend additional income. Massachusetts not only raised taxes on consumers rather than lower them as Keynes would do, but raised them to disproportionately affect the cash-strapped lower income earners, the very people most likely to inject income into the economy.

THE WRITER IS A LOCAL PRACTICING ATTORNEY WHOSE COLUMNS HAVE APPEARED IN NEWSPAPERS ACROSS THE COUNTRY.