In an opinion piece in today’s Wall Street Journal, Martin Feldstein argues that “Tax Increases Could Kill the Recovery.” He harks back to the Depression experience and Japan’s in 1997. If Milton Friedman is correct, however, the tax increase has already occurred. For Friedman, government spending is the tax — the measure of the extraction of real resources from the economy by government. Tax finance, deficit finance, and inflationary finance are the 3 possible methods of financing the extraction. Each method has its own effects and certainly can create its own problems. Because of uncertainties regarding the effects of spending and future levies (tax, deficit or inflation) on their own incomes, citizens may not immediately adjust their spending. But the average citizen understands the government spending must be financed.