Every larger city in this country is bankrupt b/c politicians can’t stop thinking of great things to do with other people’s money. “The natural progress of things is for liberty to yeild, and government to gain” said Thomas Jefferson and that is certainly what we see in this country. Bush spends more money than any previous president. Now Obama has outdone Bush. A few more presidents like this, and we will know what Greece now knows.
FTR, the context of this quote is a conversation about whether the constitution should include term limits for the president (roughly speaking): he was worrying that we’d end up with a leader-for-life if we didn’t have such limits. It had nothing to do with taxation; indeed he talks earlier in the letter about the benefits of direct taxation.
This is mistaken. Citations on request.
The last Bush budget was for the 2008/09 fiscal year. Here are the budget deficits for that last Bush year, and the subsequent Obama years, in constant 1983 dollars:
2008/09 - $933 million
2009/10 - $694 million
2010/11 - $310 million
2011/12 - $424 million
2012/13 - $214 million
Source for above:
http://home.adelphi.edu/sbloch/deficits.html
So Obama has not outdone Bush – just the opposite. Pres. Obama would have preferred the decline in the deficits to be more gradual, but he certainly favors reducing deficits by a combination of higher taxes and lower expenditure.
One factor – certainly not the largest – pushing deficits down is the Affordable Care Act. This is of course per the non-partisan Congressional Budget Office. As a fiscal hawk, I hope you are appalled at the Republicans who lie about the fiscal effects of the Affordable Care Act and want to abolish the Act without an offsetting rise in taxes.
Correction for my last post – substitute “billion” for “million.”
Congress creates the budget. The budget shift downward reflects a shift from a Democratic house to a Republican House as well as the influence of Tea Party elections.
10/2012-9/2013___ R___$213,982
10/2011-9/2012___R___$424,094
10/2010-9/2011___D/R_$310,330
10/2009-9/2010___ D___$693,824
10/2008-9/2009___D___$932,561
10/2007-9/2008___D___$261,615
10/2006-9/2007___D/R_$127,731
10/2005-9/2006___R___$202,396
10/2004-9/2005___R___$104,539
10/2003-9/2004___R___$223,105
Reflecting on our current problems, I have to feel the problem is the people currently in office and is not a flaw in the system itself.
Some people have suggested we should assign specific revenue sources to specific programs. Enact a law, for example, saying that the Navy will build a new aircraft carrier, and you have to include a passage in the law that says the construction will be financed by a one percent tax on cigarette sales.
That seems impossible to me. The federal budget has thousands of individual items in it. Trying to pin a specific tax on each one would be mind-bogglingly difficult. And all future tax revenues are estimates - what happens when a specific tax doesn’t reach its goal. If smoking drops off, do you stop construction on the carrier when it’s ninety percent completed? If smoking increases, what do you do with the extra money - buy some extra planes?
What would happen is that you double (or triple or more) the current political mess. On top of congressmen battling over what programs get enacted, you’d have a whole new series of battles over getting access to the best revenue sources.
It’s a lot better to keep things simple. Enact individual programs and combine the total cost for all of them into one budget. Enact various taxes and other revenue sources and combine the total revenue from all of them into one general fund. Then use your general fund to pay for your total budget without trying to match every item with its counterpart.
So what happens when the total budget is bigger than the general fund? You have three alternatives: stop paying for items in the budget, increase revenue, or borrow to make up the difference.
We’ve just seen what happens when we stop paying for items in the budget and that was just a little taste. We had a similar crisis in 2011. We can’t keep going on like that; promising we’re going to pay for something and then reneging at the last second. It’ll ruin our financial reputation and that’ll permanently damage the economy. We need a government that can be relied upon.
So when we need more money than we have, we’re reduced to the two expedients of getting more money: taxing or borrowing. Our current policy is a mixture of these. Congress has had control of both of them and I think that’s best. I would be hesitant to hand over the power to raise taxes or the power to sell bonds to the executive branch without congressional oversight.
So my conclusion is that flawed as it appears, out system is better than any alternative. We just need to put more responsible people in charge of it.
Voting in better politicians is the most practical idea for the next few years. But it won’t hurt to realize that a presidential system with fixed terms in office has been shown by world history to be disaster-prone compared to responsible parliamentary government. Maybe, one day, Americans will get in mood less rah-rah-our-way’s-the-best-way, and there’s no harm in push that way here.
I’d say, and have said, that today’s GOP is fiscally irresponsibility because of being unwilling to raise taxes in the upcoming period when we have to care for a mass of elderly baby boomers. And of course some of the deficit decline is because of a moderately improving economy. But the cause of budget aggregates is always going to be a matter of opinion. I was responding to a sky-is-falling post (#61) stating that “every larger city in this country is bankrupt” and, to paraphrase, that “Bush spends more money than any previous president. Now Obama has outdone Bush.” The first statement has no basis in fact, and the second one misleadingly ignores the context where the numbers of employees and the deficit is going down, with expenditures at near-record levels because of:
– Not controlling for inflation, because of the direct effects of the great recession (more people unemployed)
– Growing number of people eligible for Medicare, and higher number of social security beneficiaries, despite gradual increase in full retirement age
There are arguments to be made for a Parliamentary system. But I’m talking about the more immediate swings some people have that are caused by election outcomes. They’re the ones who’ll argue that the President has become too strong and we need to give Congress more power to check the runaway power of the executive branch. Then ten years later, the parties will be reversed and these same people will be saying that Congress has become too strong and we need to give the President more power to check the runaway power of the legislative branch. These people aren’t really seeing any fundamental flaws in the balance of power; they’re just reacting to wherever their party is currently out of office.
[QUOTE=Little Nemo]
It’s a lot better to keep things simple. Enact individual programs and combine the total cost for all of them into one budget. Enact various taxes and other revenue sources and combine the total revenue from all of them into one general fund. Then use your general fund to pay for your total budget without trying to match every item with its counterpart.
So what happens when the total budget is bigger than the general fund? You have three alternatives: stop paying for items in the budget, increase revenue, or borrow to make up the difference.
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Side-bar, please I’m puzzled , because what you’ve described is exactly how government funds and budgets are organised in Canada. Is that not how it’s done in the US? I’ve been having trouble following the debate, and I think I may not have a clear factual understanding of the US federal budget process.
That pretty much is the way it’s done in the United States. (At least on a federal level; most states are prohibited from deficit spending.) I was arguing against suggestions for change that I’ve seen proposed lately.
Here’s where I have a problem with all of this. According to most of the people on this board*, we agree that we cannot continue to have deficit spending (at least at current levels). However, these people also say that during bad times the government has to spend our way out and during good times since government spending is such a major part of the economy that reducing spending would tank our economy. So assuming we can’t continue to run a deficit of this magnitude indefinitely:
- Is there any point at which the Keynesians would agree to a significant reduction of spending?
2a) If we continue to spend, what is the gameplan to increase revenue?
2b) And if we raise revenue, will it perseverate or increase the burden on those paying personal income taxes? I believe personal income tax in the US accounts for 4.5X the revenue as corporate tax. And that doesn’t even account for (rich) people living off long-term capital gains which is taxed at a lower rate than “regular income”. - Or is it just lip service to say that we can’t run a deficit forever but we’ll worry about that tomorrow (and tomorrow never comes).
- Is it honest to compare our debt to GDP when the deficit contributes to a significant part of the GDP; it seems a bit circular to compare our debt to the GDP when part of that debt is increasing the GDP itself? And how exactly does that comparison work? If we hit 100% does the US confiscate all of the GDP for that year and pay off the debt? Do we start reducing the debt at some magic percentage of GDP?
- I’d have to find the thread I started on this but I remember that left and right wing alike agreed that our level of deficit spending needed to eventually be curbed.
While the GOP does share some responsibility, it also belongs to those (Democrat and Republican alike) that have over the years grown government spending so much that economists (including Paul Krugman) believe that a record deficit couldn’t do much to stimulate the economy during bad times (cf. Keynes original work on this). It was like being unable to bail out your boat with a cup so you get a slightly bigger cup.