Murphy Twin Spin
On Monday I kept it real by discussing slushy drinks at Mises.org.
Then today I ripped Paul Ryan’s budget plan in the WSJ MarketWatch blog. Left-leaners take note: I criticize Republicans too:
Even using the Ryan plan’s own numbers, it doesn’t expect to actually balance the federal budget until 2038. In other words, even if everything goes exactly according to plan, the Ryan budget would have the federal government continuously run deficit after deficit for almost three decades. In just the first 10 years of its implementation, the Ryan plan calls for adding $5.1 trillion to the federal debt held by the public, an increase of 45 percent. These disturbing numbers are all the more depressing when we consider they are unrealistically optimistic.
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Yet another weakness is that the Ryan approach gives the goodies (reductions in tax rates) upfront, while deferring the politically painful changes to entitlement spending down the road. Why should we expect future Congresses to be more willing to anger senior citizens than current politicians, especially when this demographic is growing in relative size and influence?
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There aren’t any magic-bullet solutions to the tremendous fiscal hole into which the U.S. government has dug itself. Spending has risen to astronomical levels because it’s popular; people enjoy getting money from the government. The only path away from crisis is the obvious one: Washington needs to drastically cut spending to its current revenues. It needs to live within its means and stop racking up additional debt.Tea party activists who put into office alleged budget hawks need to hold their feet to the fire. Rather than raise the debt ceiling on the basis of “promised” future spending cuts, true reformers would keep the debt limit where it is. This need not cause economic calamity or require a default on existing debt obligations, if Congress simply cut spending in other areas. Rather than saddle future legislators with the tough decisions, the current Congress should tackle the crisis now.
“The only path away from crisis is the obvious one: Washington needs to drastically cut spending to its current revenues”
So just to clarify, it’s your position that to end the crisis, all that needs to happen is for the federal government to remove ~$1.1T from the private sector overnight? I’m curious, what’s the long term implications on the private sector savings rate, the trade deficit, and employment under this scenario?
Also, just as an FYI, not sure if you have spent much time studying US federal government budget history, but the US federal government balanced it’s budget and/or paid down substantial debt from in 1817 to 1821, 1823 to 1836, 1852 to 1857, 1867 to 1873, 1880 to 1893, 1920 to 1930, and 1999. the US has had 7 periods of depression, including 1819, 1837, 1857, 1893, 1929, and today. See a pattern? Coincidence?
AP,
On Monday my critique of MMT should run at Mises.org. Let’s save it for the ring.
AP Lerner,
I see no pattern. there was no depression in 1817, 1818, 1820, 1823-1836, 1852-1856, 1867-1873, 1880-1893 and from 1920-1929, assuming your data is correct about U.S depressions.
“I see no pattern. there was no depression in 1817, 1818, 1820, 1823-1836, 1852-1856, 1867-1873, 1880-1893 and from 1920-1929, assuming your data is correct about U.S depressions”
Because they started in “1819, 1837, 1857, 1893, 1929, and today”
“Because they started in “1819, 1837, 1857, 1893, 1929, and today””
Exactly. I see neither coincidence nor correlation.
APL, do you think all these depressions had a single cause? Balanced budget? If that is the case then why wasn’t there a depression in 1817, 1818, 1922,1923, 1924, 1925, 1926, 1823-1836, 1867-1873, 1880-1893?