No, I was talking about what the whole economy produces.
N.B.: You still have not made a case for the undesirability of high government spending as such.
Actually $821 billion of that deficit was associated with Obama. Keep in mind also that much of the deficit was TARP, which was paid back, and thus did not add to the national debt until the repayments were spent by Obama and the Democratically-controlled Congress.
Regards,
Shodan
The other part of Keynesianism is to reduce the debt built up when stimulus is needed when times are good. To some extent spending cuts happen automatically as unemployment and welfare spending drops and tax revenues increase as more are employed. But the Republican position today is to cut taxes when stimulus is needed, and to not raise taxes back when it is not. That’s why the debt increased so much during the good years before the crash. Unfunded wars help also.
Indeed, and that’s the problem with the currently defined crop of economic conservatives: they’re not.
Sure, some will say they are and worship at the temple of others they believe are economic conservatives, but it’s really just lip service - at best - as they all still seem to believe only half the equation, the taxing controls. We never actually hear a real plan about denying spending, just in where the spending should go.
I don’t think the deficit is so much the problem, it’s the inability and having no confidence in our government to do anything about it. I think it can be fixed, I don’t think it will. It’s situation like this where having a dictator would be nice.
Total() government spending exclusive of transfer payments is now lower than it was at any time during the Reagan Administration, as a percentage of GDP. ( Total includes state and local governments: many previously state-funded programs are now federally funded.) Transfer payments have increased recently, primarily as a result of Baby Boomer demographics. Note that the biggest transfer program – Social Security – benefits the wealthy more than the poor, as they have longer life expectancies.
The three main reasons for the present deficit are
[ul][li] Tax cuts during the Bush-43 administration,[/li][li] Tax cuts during the Bush-43 administration, and[/li][li] Tax cuts during the Bush-43 administration.[/li][/ul]
I ask all those who call themselves “economic conservatives” to inform us where they stand on repealing the Bush-43 tax cuts. I also ask them how they feel about reducing Social Security payments for retirees and those nearing retirement age.
To be fair, that’s politics working. Hardly anyone supports tax increases, but each spending program has a set of dedicated advocates.
But you must give them credit for strongly supporting cutting the spending to pay for food and medical care for those who are likely to vote against them. The wealthy who fund their campaigns - not so much.
There is but one true economic conservative: Adam Smith.
If you actually read his works, he combined rational economic principles with a touch of humanism. He cared for the well-being of his fellow man while outlining the ways in which self-interest benefits all of us.
That capitalism has become a dirty word for the left is a shame. It need not be ruthlessly cruel.
The tax cuts should be repealed.
Social Security I’m a little more ambiguous on. I agree in principle that it’s grown too large but I can see the problems of shrinking it now. We’ve had a generation of people who have lived their lives and planned their retirements in the expectation that they would be collecting Social Security payments (and I’ll admit I’m one of them). To tell them now when it’s too late for them to change their financial situation that they won’t be receiving those payments would be catastrophic.
Smith was great at describing the economics of his time. But we can’t pretend we live in the same world he did back in the 18th century. We live in a world of multi-national conglomerates not pin factories. I doubt Smith anticipated there would come a day when a single business would grow so large it would be immune from the forces of the free market. The invisible hand no longer arises naturally - we now need to consciously create the effect of an invisible hand.
The invisible hand works in all scenarios outside of:
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Monopoly
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Government favoritism
Smith was well aware of these concerns.
To “consciously” create an invisible hand negates the purpose and effect of the invisible hand. You must let self-interest and competition do their work. Who is to choose the winner otherwise?
All of them, or just the ones on the rich? If you mean we should raise taxes on the middle class as well as the rich, I would agree, but only with much larger spending cuts, so that the bulk of the reduction of the deficit to manageable levels comes from reductions in spending.
Social Security should not be cut - it should be means-tested. These tests can be applied to future retirees, not those currently or shortly to begin receiving benefits. Yes, it is very unfair to those who bought the line that it was an investment. Too bad, but it can’t be helped.
It won’t happen, of course.
Regards,
Shodan
That is my position as well. Social Security is bad news in general except for every other realistic alternative but you can’t take it away from the people that were promised it for their whole lives. However, if we could scale it back just a bit to make it more sustainable for people my age or younger (I am 40), I would be for that. We could also take off the income cap for SS payments but cap the benefits to produce additional income into the system with no corresponding additional entitlements.
The problem with social security is that it straddles the line between being a part of an individual retirement account and a social safety net. It isn’t a horrible system but it would benefit from some clarification on its true goals for people at every income level.
There was a question above about whether it was a good idea to bail out the banks at the start of the latest financial crisis. I would would say yes because it is the true meaning of the term ‘moral hazard’. They created the problems themselves and should be allowed to fail completely no matter how many people are indirectly affected. They will know better the next time. It isn’t a binary choice either.
There were reasonably good banks still around that did not engage in the same type of behavior. Let them grow and fill the void because economies abhor a vacuum as long as their is a legitimate market. Just because a business has grown too large and influential isn’t a good enough reason for it to continue to exist if its entire business model was flawed in the first place. Taking that approach would be painful in the short to medium term but beneficial to almost everyone in the long-term.
The self-interest of a company is best served when there is no competition. So a rational company, unbound by outside forces, would seek to suppress competition whenever it could. And if you think this isn’t historically true, I’d suggest you read some economic history. So the government has to step in and act the part of the invisible hand and prevent companies from eliminating competition.
NO! Your 1980’s taxcuts were UNPAID FOR and put on credit, they should be repealed and the savings used toward debt reduction. Period. Also, Reagan increases taxeson the Middle Class while decreasing taxes for the rich; haven’t you wondered why the brackets mysteriously jump from 10%, 15, then 25%? I would’ve blame common core math but it wasn’t invented yet.
- Honesty
Here’s my short condensed list:
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A government that consumes no more than 25-30% of GDP.
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Taxes commensurate with that, with sales and excise taxes increased and income, corporate and dividend taxes decreased.
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A comprehensive cost-benefit analysis of existing regulations with an eye towards simplified rules and outright elimination of regulations that are too expensive for the benefits they bring.
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A target of 25% of GDP for the debt, to be achieved within 20 years.
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Simplification of the tax code - elimination of loopholes, incentives and other social engineering disguised as revenue programs.
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A government focus on stability. Stability of regulations, stability of finances, etc. Enforce the requirement that congress produce a proper budget every year. Move off-budget items on-budget so everyone knows what’s going on. Institute a waiting period for new regulations to give businesses and individuals time to adjust to them. End the practice of giant ‘omnibus’ bills that no one understands and that are are so complex that they require delegating way too much power to unelected bureaucrats and lobbyists.
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Education reform. End the requirement that your kid go to a designated school, and let parents send their kids wherever they want to go.
Lest you think this is some kind of libertarian fantasy, I’d point out that this is basically the path Canada has been on. We reduced our government size from nearly 50% of GDP to 32% before the crash, and though it went up as a result, we’re now trying to get it back down again. In the early 90’s our debt was 70% of GDP, and we were running massive deficits. We are forecasting surpluses next year, and our debt target of 25% of GDP is only 2-3 years away.
We also instituted sales taxes and cut our corporate, dividend, and capital gains taxes dramatically. We also lowered top marginal tax rates for individuals.
On the regulatory front, it’s a mixed bag. Our regulatory burden overall is higher than in the U.S., but it’s also more stable so there’s less regulatory uncertainty.
Canada’s education system gets significantly better results than does the U.S. system - but we allow parents to choose which public school to send their kids to. The only thing you lose by going out of your neighborhood is free transportation. We send our own kid to a public school halfway across the city to avoid the lousy school in our own neighborhood. If schools lose too many kids, we simply shut them down. That one little reform would go a long way towards making U.S. schools better - and it would also end all the bizarre distortions in the real-estate market and would help to end income stratification of people into ‘good’ and ‘bad’ school areas.
Right on as always Sam Stone. Canada has a good model that is right next to us. It isn’t perfect but is a better than example of economic conservatism than thus U.S. can currently hope to be. Our conservatives are not true fiscal conservatives except in a few small states like New Hampshire and Vermont and our liberals might as well live on Mars based on their understanding of the way basic economics works. I have no idea why itr is so hard to get people to accept basic principles like you describe. You might as well be arguing against gravity but some people insist the fundamental points are debatable and optional.
That is not true at all. Modern companies understand that competition helps build market share and keep people inside the companies focused on what they do best. Now, they might like an oligopology, but those are usually constructed by governments anyway.
The ability of companies to gain predatory market control is wildly overstated by the left. In a truly free market it is extraordinarily hard for one company to hold even 50% market share. Most of the corporate monopolies are enforced by government action. Internet ISPs, cable networks, in the old days the railroads, etc.
I don’t mind if there is an anti-trust statute on the books, but it needs to be very carefully limited to only potential extreme cases, and not hauled out and used as a whip against anyone who is ‘too competitive’. That makes it a handy tool for cronies and a huge temptation to bribery or provincialism or for the punishment of companies that do not toe the party line of whichever party is in power.
I also don’t mind some limited amount of regulation when it comes to resource monopolies or other areas where the market can’t function.
But in general, the left seems to believe that left to themselves markets will tend to evolve towards monopoly control, and there’s just no evidence of that and plenty of evidence to the contrary.
Just for fun, go see how many of the original Fortune 500 companies are still in existence. Or pick any basket of goods, and go look at who had the biggest market share in each market 20 years ago. Then look at that same basket today and see if the same companies are at the top.
Your comment that you don’t want to turn this into a health care debate is duly noted, but I do want to respond to that one explicit question because health care costs are such a huge part of both the public and private budgets.
And the answer is this. Why would a true conservative not embrace the most efficient possible system for funding and administering essential services? I would argue that anyone who rejects an efficient funding model for health care is neither rational nor a true conservative, but some sort of ideological hack whose real motivation is some abstract fear that someone “undeserving” might get something for nothing and that it’s therefore the leading edge of impending socialist doom.
The fact is that either a true single-payer model (as in Canada) or a de facto single-payer model comprised of tightly regulated multiple payers (as in Germany) offers the only system capable of systematically controlling costs while providing guaranteed universal coverage, and its per-capita costs are about half of what Americans have to pay while being at constant risk of denials or unpredictable cost increases. This is not a “conservative vs. liberal” issue, this is an issue of calmly observing the worldwide evidence. The central issue with adopting traditional conservative business principles in health care is that health care is not a business like any other. It deals with life, death, and human suffering, and various provisions like EMTALA requiring hospitals to care for the indigent reflect that understanding, but they reflect it very poorly and ineffectually, combining the worst of incredible waste with incredible cruelty.
I acknowledge your point about the NHS, however. While I think the UK has generally been very successful in their health care implementation, I would prefer to see health care providers generally operating in the private sector, albeit with regulated fee schedules. Health insurers, however, should be dispatched to the seventh circle of hell. They add no value whatsoever. What they add is enormous cost and roadblocks to care.