Tuesday, February 15, 2011

Improving the Budget Debate

Let the budget wars begin!  Reacting to the administration's proposed budget, the opposition seems solely focused on how much the government can cut spending. In their eyes, all spending is bad, all taxes are bad, and the deficit is bad. They have made no proposals to reduce spending sufficiently to cut the deficit much, however.  They can't put forward sufficient spending reductions to do that, because you would have to cut Medicare if you really want to cut the deficit, and you would also have to raise taxes.  Republicans have pretty much boxed themselves into a corner on taxes, and they can't reduce Medicare spending significantly without losing an important electoral constituency. So they have no real solution, and we will never see a politically saleable  proposal from the Republicans that cuts spending sufficiently to eliminate the deficit without raising taxes. (To my conservative friends who doubt that, I challenge you to specify a trillion dollars in budget cuts you could make this year, and still think you could get elected to any national office.)

The president's proposed budget doesn't do much about the deficit either, but makes some serious spending cut proposals,and proposes some new spending initiatives in the areas of infrastructure and education.  That should at least open up the possibility of having a more interesting debate about whether some government spending might actually be good, if it represents an investment in our future. What both sides should now openly acknowledge is that they don't really care about the deficit (if they did they would never have agreed to massive tax cuts in December).  Let's just admit that nobody really wants to reduce government spending enough to make a serious dent in the national debt because people actually support the programs that require all that spending. For anyone who reacts with horror to the idea that we should admit we don't care about the increase in the national debt, let me remind you how both Ronald Reagan and George W. Bush would react if anyone reminded them that their policies were leading to massive increases in the national debt. Whenever that happened, they would just shrug their shoulders and change the subject. We could stand to be a little more nonchalant about the deficit right now, talk about what investments might actually be good for the future of our country, and try to stop repeating the stale debate we are used to having, in which all spending is lumped together as bad, and raising taxes is always unmentionable.

We'll deal with the deficit later, when the economy improves enough so that reducing the deficit will not be as difficult as it seems now.

Here is the president taking questions about the budget and other matters:




And as an aid to anyone who wants to accept my challenge to fix the budget, this might be a helpful chart.  Remember the object of the challenge is to wipe out the approximately $1 trillion projected deficit without raising taxes, and then explain how you could still get elected to national office:

12 comments:

  1. The President set up a bi-partisan deficit commission and ignored their recommendations. Or did he? In his press conference he cautioned the media (and us) to let things unfold. That was good advice. As with the President, we should let the Republicans respond in due course. The key to tackling the largest part of the deficit (defense, taxes and entitlements) is finding a bi-partisan solution over time. It is too early to judge anyone. You said let the wars begin. That's seems a bit extreme. How about let the games begin? It's early first quarter. Get some popcorn and a beer!

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  2. I probably should have said let the games begin, because it is a game. Unless the Republicans manage to shut down the government or destroy the credit of this country, of course, and that would be a bit more serious. More likely we are just going to be seeing a lot of hot air expended over a few items that amount to a tiny bit of the federal budget. Things like subsidies for the Corporation for Public Broadcasting, which whatever you might think about the government doing that, is still a trivial amount of money. I think it's good to remember when Congress debates these items, that a billion dollars sounds like a lot of money, until you divide it by more than 300 million Americans, and then it's only 3 bucks apiece.

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  3. Actually Reagan would say the private sector would become more productive, hire more people who would pay taxes, and the economy would grow. He wasn't necessarily wrong, either.

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  4. Both parties and the Prez are doing a dance. Neither party wants to be hung out to dry. That is why I would like to see the President lead. I am still hopeful he will. He would win enormous amounts of respect from the middle. It might even secure his re-election in 2012. Recall the bump he got the last time he acted as a leader of the country and got flack from both sides!

    As it stands the current document he submitted may do him significant harm in that regard. In my view it is weak and that is how those he is dependant for re-election (independants) view it.

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  5. I assume the time you are referring to that the President acted as a leader was when he pushed through a compromise on taxes. What that represented was a giveaway to both sides. And why wouldn't people in general be happy that the government decided to cut everyone's taxes? That was easy, and of course popular.

    What you are now suggesting that the president do is propose something bold on the budget, presumably to make a big reduction in the deficit. To do that, it would not be enough to make big cuts in discretionary spending, and it would be a bad idea for the economy, as well as a bad idea in terms of letting the government function properly and provide the services that people want. No, what they would have to do would be to propose big cuts in Medicare as well as pretty hefty tax increases. Both of those are political death. Or he could propose big cuts in programs for the poor like Medicaid and food stamps, and while that might work politically in terms of winning the center, it would require selling out the most important Democratic constituency, basically the party's most important reason for being. So I don't think the president would be helped in trying to win re-election if he does any of that. If you're talking about something else when you suggest he do something less weak, I would be interested in hearing it.

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  6. Harrison, I don't recall Reagan ever saying that running up a big deficit would cause the private economy to grow. What he actually said was that if the government cut taxes, the government would receive just as much and perhaps even more revenue. Those projections did not exactly pan out, however, and so he was forced to raise taxes a couple of years after he cut taxes, but was still running a pretty big deficit. I don't recall Reagan ever saying that a big deficit was a good thing.

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  7. I have been clear in other posts about my views on health care reform and the deficit. You haven't received my suggestions with positive review; nor does the right. Two things come to mind: I don't know what I am talking about or the far left and far right are emotionally involved in politics in a way that is not helpful and even unhealthy for our country. I am fatigued by the games from both sides.

    I am not talking about you specificall, as I enjoy your ability to reason on many issues:

    There is an old Star Trek episode where Kirk discovers a foe in another galaxy that is strengthened by arguement and anger. That reminds me of what politics is moving toward for ideolouges in this country.

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  8. The moral of the fable is that the defeat of the foe hinged on Kirk convincing the crew of the Enterprise (that was unwittingly being stoked by the foe) that a measured, intellectual, calm response would win out.

    Politicians and pundits should honestly determine if they are part of the problem or part of the solution. Our President needs to lead. If anyone thinks Republicans are not prepared to offer their own ideas -- stand by.

    I hope the two sides will deal. If not, I won't be surprised, just even more disappointed than I already am in both sides.

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  9. I love the idea of that Star Trek episode, and I don't remember ever seeing it. I think I need to see it, so that I could use that example for mediations. Thanks.

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  10. Anything for you, amigo. I figured you appreciated the genius of the original Star Trek. The episode is "Day Of The Dove". The seventh episode of the the third season in 1969. Stardate 5630.3. Have a read of the plot, then find the episode on line if you desire. It's a classic.

    http://en.wikipedia.org/wiki/Day_of_the_Dove

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  11. Joe, let's look at two facts regarding Reagan:

    Total federal revenues doubled from just over $517 billion in 1980 to more than $1 trillion in 1990. In constant inflation-adjusted dollars, this was a 28 percent increase in revenue.

    Revenues from individual income taxes climbed from just over $244 billion in 1980 to nearly $467 billion in 1990.5 In inflation-adjusted dollars, this amounts to a 25 percent increase.

    Regarding Reaganomics let's see that Kennedy and Reagan agreed:

    http://www.youtube.com/watch?v=aEdXrfIMdiU&feature=player_embedded

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  12. Harrison, how do you know whether revenues would have increased just as much or even more if Reagan had cut taxes less? Also how much of those revenue increases that you cite were due to tax increases under Reagan? Remember that after Reagan cut taxes, he then raised taxes because he realized he had cut them too much. And how much of those increases in revenue were due to inflation, and to the growth in population, and to the growth in the economy that might have occurred regardless of whether the government cut taxes or raised taxes? Remember that Clinton raised taxes significantly, and the economy had even stronger growth than under Reagan, and Clinton was also able to eliminate the deficit by doing that.

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