Thursday, July 21, 2011


An interesting graphic can be found here. It shows deficits by year, 1980 through 2010, in both dollars and as a percent of GDP. Most interesting.

From the ideological side of the fence, I notice that Clinton's surplus did not happen until after the Republicans took over in 1994. I also note that after W's 'monster deficit' in 2004 - which is no where close to where we are now(!) - was followed by a steady decline until 2008. IMHO, the 2008 deficit was predominately caused by the economic collapse, although the budget was most certainly bloated (and first pure Democrat budget in a decade or so). This trend continued into 2009 and 2010, when spending *really* took off. I also think the projected reductions in the deficit in the coming years are woefully optimistic.

All of this ideological analysis means nothing.

Whether Democrats or Republicans get proportionate blame is meaningless. Congress writes the checks, Presidents cash them. Everyone's finger is in the pie with the ONLY goal of "getting re-elected".

We both agree that we have a spending problem. Right now, it appears BOTH SIDES are trying to find a way to push things into the next Congressional cycle so THEY won't have to deal with the very hard decisions which are looming. Rest assured that I'm just as ticked off by the Country Club Republicans as I am by the Wacky Left. Everyone is on a spending spree, and the head-in-the-sand pronouncements that things are not as bad as they could be, hides the problem (and the solution).

Fundamentally, I think either you believe in economic liberty – which is to say that government IS NOT the optimum means of allocating investment – or you don’t. I am hopeful that an increasing number of people realize how we REALLY got in this mess (and who was at the controls, e.g., all of the self-serving 'power brokers'). Unfortunately, this is counter-balanced by an increasing number of the "dumb-masses" who are accepting the argument that government ought to take any money lying around to spend as government wants, and this is OK (e.g., ‘fair’) just so long as it soaks ‘the rich’.

I don’t want to fix blame, and I don't want to shift the burden from Peter to Paul, and I don't want to waste time trying to manipulate who gets the credit... I want true economic freedom to make a Real Comeback.

If I may paraphrase Jerry Pournelle again, "Freedom is not free. Free men are not equal. Equal men are not free. And the universe is not fair."

- Steve


  1. I thought the Post article was balony, but I also think the problem is one of spending AND revenue. Note, on the chart you reference, the deficit nose dived after the Bush tax rate reductions (please, don't call them "tax cuts") of '01 and '03 - which goes directly against the conservative mantra that lower tax rates result in higher tax revenue.

    If I remember correctly, the CATO Institute opined that the Bush tax rate reductions would eliminate the Federal DEBT in something like 5 years - a miscalculation of a mere 10 trillion by the crack CATO team.

    If you want, I'll send you a Price Waterhouse compilation of U.S. venture capital investments during the period 1995 to 2011. Incredibly, VCI's literally dropped off a cliff during the period Q1, 2000, to Q1, 2003 - and have not since recovered.

    Which is amazing, because this is just the opposite of what the Bush tax rate reductions were designed to do.

    My short answer is that American investors used the extra capital from the tax rate reductions to plow more money into mortgage derivitives, and that money went up in smoke when the housing market went sour.

    I've got a lot more to say on this, but I wonder if we are headed for a disagreement characteristic of what is happening in Washington right now. My take on this is that you aren't really serious about DEBT (not deficit!) reduction unless everything is on the table - including tax increases.

    Like the guy in Full Metal Jacket said, "Its a big sh*t sandwich and we all gotta take a bite."

  2. I've said before that everything should be on the table. That includes tax increases. It also includes some serious cuts in spending. It's not either-or. But I want cuts that take effect NOW and on the same schedule as tax increases - not at some nebulous 'projected' point down the road.

    I think the serious problem goes back to the fundamental question of what is a proper function of government. Frankly, I think we're paying WAY too much for what we get in return. (And, yes, that does include defense spending.) It's been said by some we could save 100 BILLION just by eliminating the Dept of Education. Is that a Bad Idea? I'm not 100% sure... But I *do* know we're not seeing the results for the money we spend.

    If government has been proven to be unable to accomplish a task more effectively and efficiently that private concerns doing the same thing, then why keep doing it? Or worse yet, always - ALWAYS - operate from the position that "we just need to throw more money at it". Why should it be so hard to fire an incompetent civil servant (they work for US don't they?)

    We need some Big Cuts in existing and proposed programs. We need drastic changes in our tax code ("fairness" is non-existent). We need to accept there are no sacred cows everyone is being hurt by where we are and everyone needs to step up and shoulder part of the burden. The first thing I'd like to see is an immediate 10-20% cut in Executive/Congressional/Judicial STAFFING and budgets.

    Here's a simple idea no one is pitching...

    Cycle everything back to the 2009 spending level. No increases for new programs started since then (all suspended). No budgetary increases for COLA, etc. No raises. No etc.,etc.,etc... And freeze spending at that point - NO INCREASES OF ANY KIND! - until we get a balanced budget WITH a deficit reduction plan AND a new tax code (e.g. Fair Tax).

    Not a complete solution by any means, but it's a start.

    - Steve
    (We're going to end up agreeing on the basics of this, except for the details.)