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Monday, June 27, 2005

Budget Deficits - Ya Gotta Love 'Em! 

Bellyaching about the annual US budget deficits is really a bit ridiculous and I wish could be removed from political and journalistic discussion.

Let's start with this: a government budget surplus is senseless. You're giving your hard earned money to politicians over and above what they've already agreed to spend. Is this an IQ test? If in surplus, give me my money back!

Then, for step 2, can we agree in bipartisan fashion that no politician can help himself -- Republican or Democrat -- he or she will spend whatever you give him or her no matter what? There is no benefit to being an actual (versus rhetorical) spending hawk. Every elected official has a responsibility to bring bacon him to his or her own jurisdiction. The way they ensure success is to give it as well to those whose agreement they require to bring it home. Enough said on this.

So step three: the only way to limit a politician's own worst tendencies and incentives is to deny him or her the revenue they crave. By creating a real budget constraint, and related deficits, government borrowing and the demands of the market (namely, interest rate demands), the obvious momentum to spend is mitigated and the need to prioritize spending instead supplants purely outrageous porking (though of course it is unstoppable to a degree).

Said another way - another great Reagan discovery, by the way - we must run deficits and have significant government debt outstanding to serve as the final discipline on our Legislative and Executive Branches' natural tendency to waste our money.

Are our debts dangerous? Well, our outstanding debt owed to external parties (non Americans) is a small fraction of our $11 trillion annual national income. For those homeowners out there, most understand that individuals usually borrow a multiple of their annual income to finance a home. SO I think we're just fine, thank you. Current 10 year Treasury rates confirm that...

6 Comments:

By Blogger Counter Trey, at Mon Jun 27, 03:06:00 PM:

Term limits are a fine way to remove the incentive to bring home the pork. That was one clause in the Contract with America that I hoped would survive, but even idealistic, conservative Republicans can have flaws.  

By Blogger Screwy Hoolie, at Wed Jun 29, 12:08:00 AM:

But deficits are being used by the Bush administration as an excuse to cut or zero-out many of America's most important social programs - the programs that provide health care, housing, and opportunity to America's most vulnerable populations.

We can pretend that spending money you don't have is o.k., but we can't pretend that America will not suffer from turning its back on the poor.  

By Blogger Cardinalpark, at Wed Jun 29, 02:33:00 PM:

SH - I don't buy it. Spending is congressionally controlled, not by Bush. Furthermore, spending is up dramatically in aggregate udner the Bush Administration. He introduced the most expensive new program since the 60s with Medicare Part D (for the elderly). Medicaid budgets (primarily poor women and kids) are up dramatically in his tenure (the Feds fund roughly half of Medicaid).

Give me your concrete examples...  

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