+1. I’d add that the spending cuts must include entitlement reform. Both Medicare/Medicaid, and Social Security, are larger than all of the rest of the non-defense budget put together (the part the ‘freeze’ is supposed to affect). If you aren’t willing to touch those third rails, then there’s no hope of avoiding the disaster.
Also, to those who try to blame Bush for this situation (and Obama, if you’re listening, I count you among that number…)
How many of those programs did the Democrats vote against? How many did Obama vote against while he was in the Senate? Even OEF and OIF were passed with Democratic votes, in same cases a lot of them.
It’s bipartisan political malpractice. Maybe that’s what fueling the rise of the indy’s.
A lot of spending, especially at the state level, comes from supporting those in trouble. More people with good jobs means less money spent on unemployment, welfare, and food stamps. At the same time revenue increases both from income taxes, sales taxes, and capital gains taxes on a rising market.
One of the many reasons California is screwed is that Prop. 13 reduced the amount of tax revenue coming from stable property taxes, and increased the reliance on sales and income taxes, both of which crashed when unemployment increased and consumer spending flatlined.
You want to fix the deficit? Then raise income taxes and corporate taxes. Close loopholes and get enough revenue to fix the mess. And of course. cut Defense spending in half just for a start.
How about eliminate corporate taxes entirely (there are so many loopholes its not really clear what the corporate tax rate is anyway) and then tax capital gains as income.
A single payer system isn’t the only solution–and I suspect wouldn’t work very effectively, as well as causing other problems–but I’ll agree that our number 1 solution is to cut spending on health care.
Let’s say we do nothing until 2020, by which time the national debt is expected to hit 80% of GDP. In 1950 it was 90% of GDP, but economic growth over the next decade meant that by 1960, even though government borrowing had increased between 1950-60, the debt: GDP ratio was down to 56%, or lower than it was in 2000.
Tax rates are irrelevant to this particular discussion. Tax Revenues vs deficits vs future spending are what we’re talking about.
My point is that government revenue gains are met with increased spending rather than debt service. Obviously there is going to be a lag time - increased revenue translates into smaller deficits, which translates into less pressure to contain spending.
Look at your last graph. See the big revenue bubble Clinton got? Look at what happened - a long trend of declining expenses reversed and government expenditures increased until there were big deficits again.
The other part of what I said was that the problem is government spending, not government revenue. Looking at your last graph, if the size of government had been held to 2001 levels in terms of GDP, the budget would have been balanced in 2006 and there would have been a surplus in 2007.
I will grant you that there was a drop in government revenue in the first years of the 2000’s, due to the double whammy of Bush’s tax cuts and the recession. But had the growth of government been held in check, fiscal sanity would have been restored with no increases in taxes. Or looked at another way, if Bush had never cut taxes, but the growth of government had continued as it did, the U.S. would still have been running deficits
Actually, the only thing that has really worked is to put Republicans in the Legislative Branch and Democrats in the White House. Divided government, with the purse strings controlled by Republicans who oppose Democrat policies, is the only thing that’s ever caused the growth of government to slow down. Recent history has taught us that whenever either party gains control of all branches of government, the stops come out and the spending goes wild.
Here’s a graph for you, showing the growth of government spending over time:
U.S. Government Spending as % of GDP. Notice that the only time the government actually shrank as a percentage of GDP was during the Clinton administration, when the Republicans controlled Congress and the ‘peace dividend’ came in.
You also didn’t address my point that in many other countries, taxes have been raised repeatedly, to much higher levels than the U.S., and almost always with the promise that they would be used to cut the deficit. And yet, governments around the world are awash in red ink.
There is an exception: Canada. We got our budget under control. We’ve been running surpluses for quite a long time, until the latest recession hit. So, did we solve our problem with major tax increases? Nope. We held the size of government to just slightly below the level of GDP growth, and slowly shrank it. Revenues stayed the same, so our deficits withered and became surpluses. We used the extra money to shore up our Social Security system, which is now actuarily sound. We then paid down our structural debt rather than spending the money on new programs.
The fact that fiscal responsibility starts with spending control shouldn’t be a controversial position. The idea that you can let spending do whatever it does and solve your problem by simply taxing more money out of the economy is a fantasy.
Now, I could accept doing both at the same time. In fact, at this point it’s probably the preferable way to go. If I were American, I would support a policy that included tax increases, so long as the tax increases were coupled with one-for-one spending cuts, and a bill with real teeth were passed forbidding the government to grow more than the rate of GDP growth until the budget was balanced.
Obama’s budget is an example of the worst of what government does. He’s got lots of tax increases, big and little, in this budget. But his non-discretionary spending increases eat it all up, so he has a budget in which there is no end in sight for huge deficits. And that’s with the added revenue from the expired Bush tax cuts and the supposed new revenue from Cap and Trade thrown in.
The current government has a big spending problem. It currently also has a revenue problem, but that will fix itself as the economy recovers and the Bush tax cuts are retired. No more tax increases are needed or desirable. He just needs to get spending under control.
This is increasingly important in a globalized world, as other governments are discovering. You simply don’t have the luxury of hiking taxes on manufacturers and business any more. Capital is too fluid, and competition too fierce. Punish your productive sector any more, and you’ll find your export market crumbling.
Let’s start by reining in our out-of-control MILITARY spending. Right now our defense budget is larger than the military spending of the rest of the world combined. That sort of extravagance is what broke the back of the Soviet Union and it will break our backs unless we’re willing to do something about it.
We had an budget surplus in 2000 but this has been turned into a record deficit by huge tax cuts and two unfunded wars along with an economic collapse brought about by eight years of pro-growth business-friendly policies. We’d still have a surplus or at least a balanced budget if we’d avoided the pro-growth policies, been less business friendly, avoided the tax cuts, hadn’t started two wars without raising taxes to pay for them. Here are the causes of the budget deficit according to the CBO :
When Clinton raised taxes back in 1993 the GOP, the Wall Street Journal etc. warned of impending economic collapse. Of course that didn’t happen. At the same time as taxes were raised spending was also kept under control too due to PAYGO laws brought in in 1993 also, and the combination of the two turned a record deficit into a record surplus in eight years. In 2001 the GOP cut taxes and scrapped PAYGO, allowing them to go on the biggest unfunded spending spree in history, creating the situation we have today. So really it’s down to prudent management of the economy versus insane ideologial management of the economy.
The U.S. raised taxes in the early 90’s and very soon we were awash in surplus. Temporarily, yes, but see my next point.
In this case, the lag time was 8 years. I believe this had more to do with the change in administrations than with some automatic property of expenses to outpace revenue.
But I’m really not sure we disagree all that much.
I don’t think the Republican congress during the Clinton administration deserves as much credit as you seem to give it. The graph shows spending starting to come down in '91, and Republicans didn’t gain the majority in Congress until 1995.
I don’t think we do, on the points raised. However, I still believe that simply raising taxes will not fix the deficit in the long run, as history has shown repeatedly around the world. The countries which have gotten their fiscal houses in order have generally done so through spending cuts.
Have a look at this graph, which breaks government spending down into domestic, military, and mandatory. You can see exactly what happened in the first years of the Clinton administration - domestic spending rose a little bit, but military spending collapsed. That was the ‘peace dividend’. Domestic spending started to be reduced after the Republicans took control of Congress.
But really, we’re almost picking nits, because the devil is in the big blue line at the top - entitlements. They’re exploding out of control, and they’re about to get much worse. And frankly, both parties are to blame for this - we’ve known for decades that entitlement spending has to be controlled or the government will be in a world of hurt. And yet what does George Bush do? Create a new prescription drug entitlement. Democrats and Republicans have always pandered to old people, because they have a ton of political clout. And there’s about to be a lot more old people.
This is the biggest problem facing the world - not global warming, not terrorism. The big problem is the demographic collapse in the developed world, leading to aging populations, exploding entitlements, a reduction in the number of working age people supporting retirees, and the requirement for destabilizing levels of immigration to prevent a complete demographic meltdown.
The U.S. is in better shape than Europe, despite the entitlement crisis. Europe’s very nature is about to change over the next 50 years, due to the demographic collapse of indigenous populations and the overly generous social programs and retirement benefits they give the citizenry.
Japan is a disaster waiting to happen. Because it has relatively little immigration, it is on the verge of a population crash the likes of which we haven’t seen in the modern world.
But getting back to government spending, the obvious solution is to cut mandatory spending. That means raising the retirement age and means-testing social security. It also means some type of Medicare reform. If these things aren’t done, the amount of taxes that would have to be levied on the young to pay for the retirement of the old will be massive.
We have our hands in the till to the tune of $40,000 for every man, woman and child, and we don’t seem to care. And Duckster and company, this is truly a total problem, not a republican or democrat one. Both parties, when they were in power, cranked up the money machine. Both of them.
According to thissite in 2007 Canada’s govt expenditures were 48% of GDP. By comparison, in the US Federal spending is < 20% of GDP. Of course the US does spend more as a percent of GDP than the economic powerhouses of Cameroon, Armenia, the Philippines, Brazil, Haiti, Cambodia, and Bangladesh.
Cite? There are certainly some changes occurring in European society and some adjustments that European economies will have to make (and in many cases have already made) to deal with them, but I’d like to see some hard evidence to substantiate the level of panic you’re trying to peddle.
It doesn’t. Here’s an analysis of the fiscal policy of the Clinton years, from one of the libertarian gurus at Sam Stone’s favored Cato Institute, no less:
Not equally, though. Republicans and their apologists try to paint the budget crunch as a bipartisan problem, but the fact remains that since at least the 1980’s, Republicans have been much more reckless about deficits than Democrats have. They’ve also been more aggressive in pursuing nnately expensive activities such as risky deregulation and war.
And so they finished up in 2008 dumping a big load of economic morning-after on the Oval Office desk for Obama to deal with.
Frankly, while I as a Democrat am quite willing to admit the fact that Democrats have in many cases been fiscally irresponsible, it’s purest hypocrisy these days for any Republican (or anything that oinks like a Republican) to make that accusation. Let’s see Republicans and their apologists showing some real contrition first for the catastrophes that they were primarily responsible for, and then we can talk about how both parties need to work together to recover from them.
Again, I’d like to see a cite specifically substantiating the level of hysteria you’re advocating here. While the developed world definitely has some demographic issues to deal with, the shrillness and cloudiness of your doom-laden predictions does not inspire confidence in your assessment of the threat level.
Your MO in these discussions, Sam, is to combine a superficially grave and sober tone with large vague claims of terrible danger, intended to scare people into thinking that your assessment and your proposed solutions must be reasonable. You gave us quite an impressive spiel along those lines when you were stumping for the Iraq invasion on the grounds that we couldn’t afford to risk the threat from Saddam Hussein’s WMD. I don’t think you can wonder that the credibility of your courageous-Churchillian-realism-in-the-face-of-looming-disaster shtick is a little bit impaired at this point.
