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It would be nice to have a chart like this that is extended to show the projected rate under Obama. The liberal meme that "Reagan almost bankrupt the nation" is a joke, once the facts become apparent.
Posted on 04/14/2009 6:57:06 AM PDT by sickoflibs
Oh, deficits do matter, from a monetarist, keynesian or international balance of payments perspective. And even from an austrian perspective.
Monetarists and keynesians essentially both believe in counter-cyclical policy - loose (inflationary for monetarists, budget deficits for keynesians) when the economy is in a downturn, tight during growth. But both agree that perpetually loose or perpetually tight policy is by definition not counter-cyclical.
From an internation perspective, the current global financial system requires US trade deficits and budget deficits. Nixon & Kissinger moved to world from gold-backed dollar reserves to dollar reserves based on a promise of US trade deficits (instead of dollars being convertible to gold, they are convertible to the ability to export to the US and invest in the US), US budget deficits (providing a safe investment vehicle for sovereign funds and foreign investors) and US oil imports (propping up the demand for dollars by requiring dollars in order to buy oil).
The essence of the Triffin Paradox is the unsustainability of the system. Ongoing growth in US budget deficits, trade deficits and energy imports make the US economy vulnerable. But any reversals in US budget deficits, trade deficits, and energy imports makes the entire global system and the dollatr’s value vulnerable.
Exactly right.
Most government expenditures replace superior private expenditures. When the government provides charity, it replaces more effective private charity. When the government provides insurance, it replaces more effective private insurance. Of course, I could go on and provide a long list.
One common element is moral hazard. Government programs, in their legislative and administrative simplicity and inflexibility, create faulty incentives. For example, government charity encouraged out-of-wedlock births. Women only received aid if they had children and no father to support them. More children, more aid.
Another common element is that people spend their own money best. For starters, only you know your true desires. How much do you really want that make and model of car? How much do you want particular features? You are the only one who knows.
Spending someone elses’ money, on some elses’ behalf is not as effective. When people in government spend the taxpayer's money, they are not frugal or wise. It's not their savings they are depleting; they have no alternative uses to consider. When their department gets a bigger budget, that indicates that they are doing more "good" and are more important - a faulty incentive within government. Government spending on defense, justice, and (probably) roads, is unavoidable. The government should be restricted to its proper role. The government which rules least, rules best.
I call it the MAD (Mutual Assured Destruction) global economic system. Loan us back our money for nothing or you will have no jobs.
Under Obama next year it will go to almost 27%!! That is higher than at any time since WWII.
I would think that the % will accelerate in it's increase as more anti private sector legislation is passed and govt grows. As the govt portion of the GDP grows it will reach a point where it is impossible for it to be funded. IIRC, the highest % the govt has been able to take of GDP in taxes is 19.5%.
True, but there is another ting going on. Obama is gaming the system. He has loaded all the expenses he can for next year, creating a truly horrific budget, so that in later years he can tout the improvement in deficits. He has a lot of gall talking about 'cutting the deficit in half' when his 2012 deficit will be twice the 2008 deficit. The 'half' is half of the huge $2 trillion deficit he created for this year and next.
I learned from this that Irwin M. Stelzer is as deluded as Cheney was.
Good post. And I hadn’t seen the Triffin Paradox used outside of its relation to the Kennedy-Johnson era.
Thanks for the chart. A liberal I know recently stated that Reagan “almost bankrupt the nation!” I asked him what he thought Obama was doing now. It would be interesting to see annual deficits as a percentage of GDP for the last 30 or so years.
It would be nice to have a chart like this that is extended to show the projected rate under Obama. The liberal meme that "Reagan almost bankrupt the nation" is a joke, once the facts become apparent.
See my chart in #20. I looked but cannot find a similar chart that has %age of GDP deficit, but it sure can be constructed from the CBO budget estimations.
It would also be good to have the chart show spending and taxes both... a chart like this that extends into Obama years ...
http://www.heritage.org/research/features/BudgetChartBook/fed-rev-spend-2008-boc-C1-Federal-Spending-Is-Growing.html
More on Obama’s budget from Heritage:
http://www.heritage.org/Research/Budget/bg2249.cfm
Link to the chart from #20:
http://blog.heritage.org/wp-content/uploads/2009/03/wapoobamabudget1.jpg
Deficits matter if they increase the public debt to unsustainable levels. However, this data point justifies the Cheney view somewhat, as public debt remained tame under Bush:
I was genuinely surprised to see that public debt is only 38%, or below the 50 year average.
How can that be with all this talk of huge deficits and fiscal recklessness?... the answer lies in 2 facts. #1) Under bush the economy grew fairly well from 2002 to 2007. Depite the current recession, we are larger economy than in 2002.
#2) the fact that a lot of the debt is in the Soc security IOUs. The USA is a bit like GM was back 10 years ago. Our debt wasnt bad but we have a large pension liability coming due. For USA thats the boomer retirements.
The coming wave will drive huge spending increases unless it is stopped:
http://www.heritage.org/research/features/BudgetChartBook/fed-rev-spend-2008-boc-P4-Entitlements-Alone-Will-Eclipse.html
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