The Problem is Spending, not Deficits
by Dan MitchellReckless spending increases under both Bush and Obama have resulted in unprecedented deficits, which is the reason for boosting the nation’s debt limit by an astounding $1.8 trillion. Government borrowing has become such a big issue that some politicians are proposing a deficit reduction commission, which may mean they are like alcoholics trying for a self-imposed intervention.
But all this fretting about deficits and debt is somewhat misplaced. Government borrowing is a bad thing, of course, but this video explains that the real problem is excessive government spending.
Fixating on the deficit allows politicians to pull a bait and switch, since they can raise taxes, claim they are solving the problem, when all they are doing is replacing debt-financed spending with tax-financed spending. At best, that’s merely taking a different route to the wrong destination. The more likely result is that the tax increases will weaken the economy, further exacerbating America’s fiscal position.
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307 Comments
Great article. Spending is most definitely the issue here. Deficits are a by product of the asinine, addictive spending habits of the established Washington politicians.
and thank you so much for pointing out how massive spending increases started with Bush. I really hated it then, and i can't stand it now that the pace is accelerated.
[...] This post was mentioned on Twitter by Debbie , Big Tweeting. Big Tweeting said: BigGovt: The Problem is Spending, not Deficits: Reckless spending increases under both Bush a.. http://bit.ly/76rIFG #BigTweet [...]
Simple math 101 says that if you cut spending you can cut the deficit. Libs NEVER get that lower taxes equal higher revenues, but it doesn't serve their interests which is to create a dependant class that will re-elect them.
When a private business gets in a hole, it stops spending and custs costs, like layoffs. Why don't we hear anyone in Washington say what we all know? It is time cut back this bloated bureaucratic leviathan. A libertarian would say it, a tea party member would say it… How about it Republicans? Government Layoffs it's easy to say, now, who has the cajones to say it?
I've contacted my Illinois crooks and all I ever get back is the usual democratic rhetoric that never answers my questions. LYING CROOKED BA5TARD5!!
I've never understood how government is run. It should never borrow money, and never spend more than in the coffers.
If you're a business or an individual, i think you accept the risk of borrowing money. We should never ask government to do this on our behalf.
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This post was mentioned on Twitter by texasmimi2: The Problem is Spending, not Deficits http://biggovernment.com/2009/12/21/the-problem-is-spending-not-deficits-2/...
Heres a simple start even an air-head democrat can understand…cut spending 10% at the state local and federal level. right now!!!!!!!!
We need to stop giving away money on symbolic, useless gestures. I used to think 'Fortress America' was a joke. Now, I'm beginning to think we need it to protect us from ourselves. We have amazing resources in our country, both natural and human. Lifting oppressive taxes and regulation while focusing on our internal energy needs (nuclear, North Slope, etc.), and restoring the dignity of the CO2 molecule could be the basis for a recovery.
Exactly, someone's nailed it.
Stop Spending – Start Resigning.
http://rightwingstuff.com
Didn;t Obama say he saved 100 million in Office supplies ??? (Yes, let's all laugh together)
No one will say it because they are too afraid of losing their seats next election. We (the royal "we") are who we elect. Until a majority of us live a fiscally conservative lifestyle, it'll be a tough sell. Remember, entities of every stripe are on the entitlement bandwagon: state governments, local governments, citizens and corporations.
I'd prefer tax incentives for saving and investment on the personal level. Don't tax my interest, dividend and equity earnings at all. The more I keep, the less the government has. And the more I can purchase with CA$H when warranted.
Because they know no one would work then. They would never let that happen, no matter how sinister they are. Think Dagney Taggart.
Amen! Or just cut state-level entitlements outright. Mainlining funds from the feds to the states does not help.
Bailouts, monetizing debt, call it what it is… Money Laundering! Well maybe folks in DC and at the Fed watched "Lethal Weapon 2" and had a lightbulb go off in their empty heads!
http://www.youtube.com/watch?v=I4jnsSDRepo
America your headed in the wrong direction and in many Americans eyes we are in fact in a fight, a battle, a war for our lives. Time has come to give corrupt politicians, bias fringe media and special interest groups a "lethal" dose of their own medicine through http://www.savingtherepublic.com
[...] here to see the original: Big Government » Blog Archive » The Problem is Spending, not Deficits By admin | category: debt problem | tags: bad-thing, debt problem, debt-problems, [...]
washington has virtually eliminated the concept of smaller government. it's not even an option brought to the table. the entire argument has been reframed, and we're all suckers!
my senator (Bayh) had the audacity to send me a note where the topic was 'fed up with spending' – my response to him was to the effect that he had some chutzpah to even suggest he stood for fiscal discipline.
have you contacted your senator today?
The government enacted legislation that says they can dismantle any company that proves harmful to the American economy. Why don't we use the same rule to dismantle the crooked politicians that are ruining our economy now? I think the democraps received those credit card applications we all receive in the mail that promises "low introductory rates", and their all using them to spend this country into a debt-hole so big our great-great grandkids won't be able to dig out of.
Entitlement nation, we need everything right now, and if we cannot afford it oh well just enslave the future.
That would seem sane and reasonable, if you tax at 100% who would bother.
They are not sane or reasonable. Remember the AIG bonus tax that Rep. Steve Israel suggested, 100% on anything over 100K? (not a statement about AIG, just their thought process)
Roosevelt proposed a 100 percent "supertax" on all income over $110,000 the equivalent of about $1.4 million in today's dollars for married couples filing jointly
It was somewhat tounge in cheek, but keep in mind these people really have no grasp of economic realities.
We should just declare bankruptcy. That way we can re-structure assets and make the government smaller all at once. We have to starve the beast people! No more taxes for the beast. No more new infrastructure on my dime!!!!!!!!!!
Tax cuts provide an economic stimulus that increase revenue in the short run, but the stimulus effect lessens over time. All things being equal (spending), you are typically back to running deficits in three to five years and people are screaming for more tax cuts. In the mean time the business of government goes on. There are wars to be fought, and even people who love their tax breaks demand government services. So deficit spending ensues.
The lie of supply side economics was exposed when Bush cut $400 billion out of the budget to give to his buddies with the promise of jobs and "trickle down" prosperity for the masses. It was going to pay for itself… remember? Sadly, we now live in a global environment where wealthy investors can invest their cash anywhere in the world to get the best return, which is rational behavior. So no one on the left was surprised when the jobs did not materialize. And as a bonus we watched productivity go up but wages remain stagnant. Billy Banker took his largess to the new "banks" who had created sexy new investment vehicles called derivatives. And… they were risk free because they were insured! What could go wrong? The new securities were backed by the housing market and the full faith and credit of the United States of America, even if we didn't realize at the time. Still many of us suspected that the relatively new (and unregulated) hedge funds were a $50 trillion time bomb.
Well, no one was watching the hen house. Alan Greenspan assured us that bankers only operate in their own best self interest, and the markets would punish the bad actors… regulation of the new banks was unnecessary and burdensome. But while Americans were busy fighting two wars on credit, the banks learned how to socialize the risk and privatize the rewards. As a result, they were able to take on risk totally out of line with the losses they were willing to accept. It was a win-win… until the scheme collapsed in on itself. It would have been a ponzi scheme if it had been against the law. But it was all done totally legal and right under our noses. There were warnings coming from faint corners of the industry. But no one wants to kill the goose while everyone is making money.
During an interview in 2008, Greenspan admitted he overestimated the ability of capital markets to regulate themselves. He didn't apologize, he as just making an observation.
Bill, your heart is in the right place but the timing is bad. Recessions happen when consumers stop spending, banks stop lending and businesses stop hiring. Some of it is a confidence thing…people are saving 10 percent of their money and that is the highest savings rate we have seen in decades. It is exactly what they should be doing… paying down debt and curtailing spending. But what is good for the individual is poison for a consumer economy. People put off purchases, business lays off workers, banks tighten lending standards and it becomes a viscous cycle. When this occurs the federal government becomes the spender of last resort. Were they to try and balance the budget now and we risk a depression that could last ten years and destroy trillions in wealth, and scar a generation of workers. In that context, a $1 trillion government stimulus is a bargain.
Don't kid yourself, if John McCain had won the election he would be doing the same thing. Not exactly the same, but his goal would be the same as Obama's… to get us back to a point where people are spending and banks are lending. At that point, it is important that spending be reigned in. We should never be running deficits when the economy is expanding. That is what got us into trouble during the Bush years. If Obama does the same thing he will suffer the same fate.
In my experience, it takes about 18 months for my stuff to wear out and I'm forced to start replacing high ticket items… appliances, TVs, maybe one of my cars. I suspect this is true for most folks and if so, it will provide an economic stimulus that will also become a viscous cycle and get us moving again.
And then all of those people you have thrown out of work stop paying taxes and start drawing unemployment causing a deeper downward spiral. Economies are complex and no action occurs without a reaction. Why else do you think spending wasn't cut when Conservatives were in charge of the budget?
Our economy is not in this predicament because of too much regulation. This is a man made calamity that finds its roots in the repeal of Glass-Steagall, the depression era laws that regulated the risk that tax payer insured banks can take with our money.
Bush cut taxes in the face of the war on terror. The tax cuts went mostly to affluent Americans who invested it in sexy new financial instruments like derivatives backed by mortgage securities and insured by unregulated insurance policies. How could that ever fail.
Your concern for the humble C02 module is … weird.
What are you talking about?
If I have mistaken a right wing knucklehead for a domestic terrorist I apologize. Dial it down a little…
Uhmmmm we are on the same side I think you are confusing me w/someone else……
I've done it before… hit the wrong reply button. Sorry.
No problem brother would love to see who you are replying to though, I bet I wont like their post either
ya gotta start somewhere, i dont have a problem with them paying less taxes, the way you kill the govt. beast is cut off the funding. the way to stop unemployment from draining the treasury is simple enough, rescind the program, done its over, all you govt. hacks go find productive employment you leeches. any other questions?
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