It appears there are four types of “economic conservative”:
(1) Those like myself who oppose the “economic liberalism” of the Starve-the-Beast spenders like Reagan, Bush Junior … and now by self-admission “liberals” like puddleglum.
(2) “Economic conservatives” willing to answer my questions. This included puddleglum whose answers were unsatisfactory and led him to change his stance into an “economic liberal” of the Reagan type.
(3) “Economic conservatives” who have declined to answer my questions. Here are some more questions for you: Do you approve of deliberate Starve-the-Beast deficits? Do you agree with puddleglum that non-discretionary spending is discretionary?
This discussion has failed to change my belief that a self-avowed “economic conservative” is usually just someone who doesn’t like paying taxes, but adds the “economic” qualifier to show he doesn’t oppose smoking pot.
Oh, my. I should have asked the Mods to stickify my thread where this meme was debunked.
Didn’t we start this little tangent with you saying that Reagan was the best because he cut taxes and so forth? That’s as categorically plain a statement as can be written.
But now it’s Tip O’Neill as well? Why the change? It can’t be ‘Reagan is the greatest’ AND ‘Reagan and Tip are the greatest’. It’s got to be one or the other.
Why are deficits inherently bad? Say that Sage Rat is right and Reagan’s deficits helped defeat the Soviet Union. Hundreds of millions of people were freed from oppression and billions from the threat of nuclear war. Isn’t that worth a few years of deficits?
All policies must be weighed for pros and cons. The cons to deficits are future taxation that must pay for that debt. The cons to large government are the opportunity costs that all that money would have created.
It seems to me the height of being an idealogue to say deficits bad always and forever and ignore the real costs of large government which are almost always higher than the costs of deficits.
Why does it need to be one or the other. Reagan had to deal with O’Neill, he had to deal with the Soviet Union, he had to deal with stagflation. No president has faced those same challenges. Each president faces his own challenges. The question was which president was best?, not give a nuanced an accurate account of the economic policies of each of the last six presidents.
Note that I don’t - and never have, I believe - claimed that all deficits are bad. Deficit spending has it’s place, just as most do. But long-term, endless deficit spending is a bleeding sore on the budget. Yes, it can promote economic growth but not endlessly, especially if the deficit exceed economic growth.
It’s easy to get caught in a ‘we can’t control the deficit because it’ll hurt growth’ trap when that opens the door to endless deficits. So such should be used wisely and not as a standard part of the budgeting process.
I certainly concur that all policies must be considered for pros and cons, but our current budgeting system (note my earlier post about ‘baselining’) is not subject to any regular review but instead simply assumes that deficits don’t matter. That’s not rational and is something that should be discouraged.
Note, also, that your argument contains an enormous unsupported assumption in saying that, “the real costs of large government which are almost always higher than the costs of deficits”. I won’t gainsay you, here, but I’d love to see the back up to that statement.
With respect, this strikes me as a bit of backpedalling and goalpost-moving. Your original statement was:
You mention nothing about O’Neill, nor the soviets, nor prevailing economic conditions either in discussing Reagan or Obama. Obama had to deal with the worst fiscal and economic crisis since the 1930s, a congress that was recalcitrant far more than anything Reagan got out of O’Neill, and various national security issues. Why don’t you credit him for that?
Frankly, Obama has faced far more headwinds as a president that Reagan ever did. And he’s managed to begin cutting the deficit as a percentage of GDP (a far more honest figure that just raw dollars). One can’t simply say that ‘Reagan was the best’ without giving context, certainly, but one also can’t say that ‘Obama was the worst’ without giving equal context.
Unless, as you later said, you based your assertion on raw tax and spend numbers. But any rational analysis would need to be far more subtle and context-sensitive to make a real judgement.
Some economic conservatives emphasize low or zero deficits. You now specifically endorse high deficits (at least for spending which you approve of).
Let’s at least agree on the terminology. I’ve been using “conservative” to denote those who dislike deficits, and “liberal” to denote those like Reagan, Bush Junior (and puddleglum?) for whom high deficits are a key part of their agenda. Do I have it backwards?
You know, I hate it when people say there are four things and only list three. Bugs me, especially because I - considering myself an economic conservative - truly hope I don’t fall under any of those three definitions.
For purposes of economic stimulus, certainly it is the level of government spending that is important, not the size of the deficit; but that would seem to go against your point.
The fixed-dollar-amount spending cap is terribly ignorant, since it’s a sure thing that as long as the population and the economy grow, we’ll hit the limit. So all it does is produce a roadblock at irregular intervals. Do we really need repeated political roadblocks?
Instead, we should have a debt ceiling that’s a percentage of GDP. I realize that would politicize calculating the GDP, but it may be a price worth paying.
Furthermore, whenever Congress doesn’t pass a budget by some deadline, the previous year’s budget should automatically apply. Perhaps adjusted for inflation, so that it’s a 1% cut after inflation.
The debate should then focus on what’s a healthy amount of debt for the nation to carry. I doubt anyone thinks it should be zero, and I doubt anyone here thinks it should be hundreds of percent.
Cite?
Note that the stock market isn’t about buying a share and selling it 20 years later. It’s about funding the growth of companies by sharing ownership of those companies.
The problem with a national sales tax on every transaction (even at the wholesale level) is that it would distort market forces. It would encourage vertical monopolies so that companies could make their own parts, reducing costs by 5% per level. A competitor that makes just as good widgets would have to make them for 5% less to be competitive and get in the door. What’s the value of that?
I might be willing to take that, especially if there’s some sort of rolling incentive. Again, killing baselining!
Well, I hate to point out the obvious but that IS the real question. But setting a target assumes that the deficit is controllable and that some years will find surplus. We have some - a little - evidence that it is but far more than it isn’t as congress is currently constructed.
I know a little something about the markets and this I have to disagree with. Sure, the initial sale of shares funds company activities, but the vast majority of trades in the market benefits the company only in skewed fashion. Most are about enriching - hopefully - the shareholders. The company gets little benefit.
I can see your point, but that could either be a negative worth the positive or some form of value-added tax could be included. But either way, I think the long-term benefits outweigh the negatives and it would be enormously more useful that our current broken system of tax generation.
I’m not really an “economic conservative” but I tend to be far more conservative than a lot of people (and a lot more liberal than a lot of other people).
When it comes to government tax policy in general, I have a few core beliefs:
The government should strive for efficiency and cost reduction as a part of it’s mandate.
The deficit should have a hard cap of 100% of income (and hopefully some reserved for use in emergency situations.)
All regulations passed on the private sector cannot exempt the government sector with one exception: government offices inside the zone of another government only gets taxed at the rate of money flowing into that zone (purchases made, income to employees, etc)
All tax laws should be the same across all forms of income and graduated on the same scale. If you tax $0-1000 of income at 5%, it shouldn’t matter if that income comes from Wal-Mart, stock sales, or giving hand jobs in the local park.
All tax deductions should be eliminated except for money used to pay taxes (if you pay sales tax to your city, that should be income-exempted from the federal tax).
Anything that is “subsidized” must be a wholly owned part of a government entity. Mass transit, for instance, is often given a lot of money from local governments as well as being allowed to charge for fares. This shouldn’t be a privately run enterprise getting to double dip as it can be (which varied widely based on where you are in the US.)
As for actual spending policy, I’d eliminate anything meant to drive social change. Tax deductions for electric cars? Deductions for home mortgage insurance? Extra taxes for cigarettes or soda? I disagree. Direct discounted loans to “preferred” sectors of the economy? I also disagree. At the very least, I would require such policies driven by direct vote and not by politicians.
I did the math based on 2010’s income a year or so ago, and to match current revenue we’d need about 10% for all currently taxed goods (not adding service or stock transaction taxes as you advocated) for the feds and 15% on top of that to match all of the sales taxes currently for Local, County, State, and Federal (as a whole to the US. Some places would get more than, but it’s a good number to start from).
The reason I am fond of the idea of consumption based taxes is that it would boost our federal government’s revenues to encourage tourism. I believe Americans meeting people from outside the US more commonly would end up being beneficial to our society as a whole.
Additionally, while I’ve heard the counter argument that it’s regressive (because the poor would pay more of their checks to the tax) I think it’s better than the current system we have.
That is my position as well and the thing I most disagree with economic liberals about. A standard reply to this type of argument these days is ‘Government debt is not the same as your household debt’. Sometimes they will go even further and add ‘the U.S. government can always print more money’.
Those statements are partially true in a technical way that apply to emergency circumstances but we would all be better off if we did treat it like a household budget because they are still way more alike than different. The laws of economics do not change just because you scale up. Cities can and have gone bankrupt, some states have have effectively gone broke and rest assured that the federal government could in time too. Other countries have already both now and all throughout history. Why do so many people believe we are exempt from those consequences? Didn’t the last 6 years teach us just how fragile our economic system is?
The feds have more tools to deal with those scenarios like printing more money (therefore causing lots of unwanted side effects like high inflation) but that should never be the expected plan because it is bad economic management. The only way to have a sustainable economy on any scale over the long-term is to spend no more than you take in. You can adjust the time-scale of that to be more than a year or two but you can’t have indefinite deficit spending without eventual, dire consequences. You cannot justify continued deficit spending because of twenty years of recessions, emergencies or anything else. On that time-scale, those aren’t recessions or emergencies anymore, they are simply the new reality and the budgeting and tax systems have to be adjusted to that new baseline to maintain sustainability.
That is complete different than anything I was referring to. There is no scale in which any organization, no matter how large or small, can consistently spend more than they take in without suffering dire consequences up to and including extinction.
