Federal Deficit Reducing
Aug 27, 2011
- A basic economic FACT every story about the current budget deficit glosses over: All EVERY plan focusing on spending cuts does IS SLOW THE RATE OF INCREASE in the budget deficit. Unless the government takes in more money than it spends (what we call a “budget surplus”) not only is the budget deficit not reduced, it will continue to increase. Further, every cut in taxes or tax rates, if not accompanied by a larger spending cuts (or more revenue), only increases the deficit further. The model for this situation is not 1980 and President Reagan, it’s 1930 and President Hoover. In the face of a catastrophic stock market drop and pullback in business and consumer spending, President Hoover – following the “conventional wisdom” of the times – directed cuts in government spending to “balance the budget” at all costs. That’s exactly what’s happening worldwide today as cuts in consumer and business spending are matched by cuts in government spending. The best outcome in this situation is a generation of slow growth. The worst outcome is a depression matching that of the 1930s.
- The opposite of that is what we’ve got at the moment, blowing cash like it’s going out of fashion.
The other point about ‘austerity’ and living within your means is this – EVERYONE CAN STILL GET WHAT THEY WANT. All governments have to do is this -
1. By next month ALL budgets are cut my 10%. Now, tell me this everyone, if you were forced to cut your own budget by 10% could you a) easily do it, and b) chances are it would have little effect. See?
2. Tackle government waste. Hire crack teams of accountants and managers with REAL BUSINESS EXPERIENCE and pay them a damn FORTUNE. Also, publish their results to see how they earn their money.
Do both of those and like I said EVERYONE CAN STILL GET PRETTY MUCH EVERYTHING THEY WANT.
But don’t think it’s going to happen. Why? Because it’s common sense and government pricks don’t do that……
- Maybe there is some shred of hope for the field of economics afterall. With 2 trillion+ of revenue already coming in, but 3+ trillion of spending, you don’t need to be a rocket scientist to figure out that spending needs to come down. New revenue “growth” can’t be the answer to a drunken spending binge gone out of control. Yes, cut the military fat (F35s at 350Billion would be a good sacred cow to go after). Make foreign governments that are doing exceptionally well (South East Asian come to mind) pay for their US security….that would level the field a bit. Entitlements need to be adjusted as well. Find the balance. Adding more revenue might sound like a good idea, but the balance is all wrong. You’re not going to find 1 trillion more PER YEAR in revenue. Got to get this spending PIG back under control. Cut the credit cards and find a way to spend ONLY WHAT YOU TAKE IN.