Wednesday, October 26, 2005

Why We Must Run Deficits -- Big Ones -- By Cutting Taxes 

Because it is the only way to put a halt to Congressional malfeasance. John Stossel reports briefly on something many have been blogging about for awhile. And credit Senator Tom Coburn for cojones -- big ones. He has been outing the porkery Senator by Senator, state by state. Stossel reports on some of the demagoguery in process, notably Senators Stevens and Murkowski about Alaskan bridges to uninhabited islands. Apparently Coburn proposed dropping the Alaskan Bridge in favor of paying for the New Orleans Bridge, to which Stevens essentially responded "over my dead body".

Ronald Reagan identified something nobody else had the good sense to realize before. The only way to stop this stuff and impose fiscal discipline was to pass tax cuts (which are undeniably politically popular), forcing Congress to live on less money and therefore prioritize. Tax cuts to Congress are like interest rate increases to financial institutions -- it takes the punch bowl away....eventually.


By Blogger Gordon Smith, at Wed Oct 26, 08:03:00 PM:

If only... if only...

Congressional Republicans are lookings to cut away fat from the budget alright. They're looking to cut the fat that currently provides a social safety net for America's poorest citizens

Pork isn't being jettisoned, CP, basic human services are - Medicaid, college loans, pension protections, foster care.

Congressional Republicans look to cut these programs while maintaining the pork and cutting taxes some more for the very rich.

It's unconscionable. Moral values, my ass. The 21st century Republican party is committed to widening the gap between the rich and the poor. Congress has laid out its "priorities", and they are to injure the poor first, then the middle class.


By Blogger Cardinalpark, at Wed Oct 26, 08:22:00 PM:

SH - that is the silliest, sappiest, factless post you've thrown up here yet. How about some facts? What is the Medicaid budget doing from 2004 to 2005 to 2006? Care to get into a factual discussion?  

By Blogger Gordon Smith, at Wed Oct 26, 11:18:00 PM:

Factless? That's not true at all. What are you talking about.

Try something. Just go Google Medicaid Cuts and see what you learn. Do the same for foster care cuts. Learn something about the social safety net. I work with marginalized, impoverished, working people every day. Google yourself some college aid cuts. Look it up, CP. I don't have to do this for you.

And then tell me that the Republican Congress isn't slashing away at social programs central to keeping America's working underclass from living in poverty and America's impoverished from dropping off the radar altogether.  

By Blogger Cardinalpark, at Thu Oct 27, 10:40:00 AM:

SH - again, I am disappointed by your sappy BS disingenuousness. The notion of a budget cut is a fiction, a lie. The overall medicaid budget for 2006 including both Federal and State Spending will be $338 bn. In 2005, the overall Medicaid budget was $322 billion. The Federal portion is growing from $182bn to $192bn (more than 5%) from 2005 to 2006.

When the MSM and political fraudsters whine about "cuts", they simply mean reduced growth -- as in, instead of growing by 6%, it's growing by 5%.

There are no Medicaid cuts SH. And Medicare is growing dramatically given the new PDP enacted by the current administration.

So stop twisting your hanky about budget cuts because it simply ain't true.

Preserving Medicaid, though, is another noble reason to do away with PORK, which was the point of my post. Like the bridge to nowhere in Alaska.  

By Blogger Lanky_Bastard, at Thu Oct 27, 10:54:00 AM:

Sometimes I do this in my personal life. I have this latent fear that if I ever have money on-hand I might spend it on investments, building a house, or improving my quality of life. Instead, I run up the credit card bill and live paycheck-to-paycheck, because that's the only way to be sure I don't waste money. Hopefully I can die and pass some of my debt onto my children. That will teach them to responsibly live within their means.

Hyperbole aside, this is serious.

We don't need to get into the eternal argument over who should be shouldering the tax burden and whether or not we should help the downtrodden, but in 2005 (fiscal) we spend 352 billion dollars on debt interest. 1000 dollars a year for every US resident, paid to other countries. I don't care if you want to give that 352 billion to the wealthy, the poor, businesses, New Orleans, or a mission to Mars. That's an abysmal waste of money, it would be better spent or saved inside the US, and should be a bipartisan issue.

At 352 billion already, I don't buy this argument that if we act irresponsibly then sooner or later we will bottom out and have to fix it. The right thing to do is to fix it now.  

By Blogger Cardinalpark, at Thu Oct 27, 11:19:00 AM:

Lanky - you are wrong about one simple and critical fact. Most of that $352bn of interest in paid internally, within the United States. The majority of US Treasury Securities continue to be held by US holders. You said it is held externally. That is incorrect.

Second, you must compare that $352bn in interest to an $11 trillion GNP economy. That's annual income. 3.5% of national income is paid in interest. And our economy grows from 3-4% per year. It's just not the "crisis" that the economic geniuses who write in newspapers for a living seem to think it is.

If you compare US national finances (our balance sheet) to most households, the country is a might fortress of financial strength. The reason people here and around the world are willing to hold dollars (which pay zero interest) as a reserve currency and treasury securities at extremely low cost is because of that towering fianncial strength, backed by a spectacular work ethic, a culture of freedom, and tremendous power.

So relax. But don't let the government get to be to big a part of the economy either. Historically, tax receipts have averaged about 20% of GDP. When they get much higher, the private economy breaks down. And that should be, over the long haul, about the right standard for the budget. The danger develops when you have too much "non-discretionary" spending growing too fast -- and that is a risk, things like Medicaid, Medicare and Social Security are huge benefits paid out annually; we have to provide for the military. Invariably, other things must be ccrowded out of th equation. Hence...get rid of the frivolous pork - bridges to nowhere.  

By Blogger Gordon Smith, at Thu Oct 27, 11:20:00 AM:

You're a mean one, CP, what with all that name calling...

Anyhoo - When health costs are rising a lot faster than the rate of spending growth on Medicaid, any reduction in spending on the program is, in effect, a cut. Calling me a liar for saying this is meanspirited and incorrect.

I'm not being disingenuous, nor am I trying to call a cut a rise. The health care crisis in this nation is very real. The foster care crisis in this nation is very real. I could, of course, go on and on.

Denying these problems won't make them go away.

I'm no fan of pork either, but realize that pork isn't the first thing to go when the budget is made tight, basic human services are.

There's also that nasty $8,000,000,000,000,000 debt we need to pay off, or is that a silly, disingenuous, sappy, BS, liberal suggestion too?

Taking care of our nation's most vulnerable citizens is silly, disingenuous, sappy, BS in your world?

Silly, disingenuous, sappy, BS-monger Hoolie signing off...  

By Blogger Lanky_Bastard, at Thu Oct 27, 12:36:00 PM:


I'll grant you that a lot of that 352 billion is going to investors in our country. Some of that comes back as tax revenues, and some makes our investors more wealthy. Good for us, but it's still an expense we pay every year in taxes.

What I don't get though, is how you blithely disregard this huge expense as a mere 3.5% of our GDP. You said yourself that there is a practical limit of 20% GDP on taxation. (I'll take your word for it.) That makes 3.5% of our GDP become 17.5% of our operating budget. That's 1/6th of our economic power: wasted. It's over half of what we pay on social security (another crisis) and over half of what we spend on the military. Unlike the former two, it doesn't feed old people or protect us.

I agree with cutting pork. Less government is good, especially less federal government. But increasing debt is foolish. You wouldn't do that in personal life, why advocate it as a nation? Instead of trying to cause a crisis, why not highlight the one we already have?

The issue (and this isn't meant to be ad hominem)is when one belittles these big costs (or worse, comes out and advocates exacerbating them in order to force people to cut things one doesn't like)...well, it doesn't look like you're out to fix the problem, it looks like you're out to win. If it comes down to winning, the Screwies of the world want to win too. Bipartisan common sense solutions get bickered away over who's view of the world is best. And then those of us who aren't even backing a horse have to pony up our share of the 352 billion.  

By Blogger Cardinalpark, at Thu Oct 27, 01:32:00 PM:

SH and Lanky: I will try to address both of you.

Nice try Screwey, but that is a non-factual answer. The fact is government expenditure on providing healthcare is increasing, rapidly, and not being cut -- more people are getting more benefits than ever. So cut it out. The facts speak for themselves.

Lanky - I don't minimize the importance of anybody's mortgage payment either. But comparison provides context, while focusing on mere absolutes is an imperfect way to analyze a problem. The fact is, 3.5% of income just ain't that much. And having a very large and liquid treasury market is in and of itself very attractive.

Now I happen to agree that it would be irresponsible, and eventually destructive, to do this forever. But I think we demonstrated quite powerfully our ability to run from large deficits to surplus during a 15 year period while we dramatically grew our economy. And I have no doubt we will do so again.

And I would argue further that one of the profound lessons of economic history - the Great Depression in particular - is that when you have a dramatic economic bubble burst, as we did in 2000, you run big fat fiscal deficits, lower interest rates, and grow the money supply. That ensures that you do not contract your economy into a disaster, as we did in 1929 and thru the 30s. This was proven again during the Reagan Administration.

Last response. Our political system is not designed to achieve the idealistic solution you desire. I wish that it were so, but it's not. All sides of the aisle misbehave in appalling fashion and there is no reward for behaving otherwise (see treatment of Coburn on C-Span).

The only way to force prioritize spending is by taking away tax revenues and making them sepnd less. Period. Unless you give budget power to one person. And that ain't happening, and shouldn't.

There ya go.  

By Blogger Charlottesvillain, at Thu Oct 27, 04:24:00 PM:

Frankly I am far less concerned about the budget deficit than the current account deficit (and even that doesn't shake me up too much. Yet.)

One underlying assumption of Screwy's argument is that all those government services will really help people. I'd argue that there is a lot of evidence that, over the long term, they are highly destructive and lead to ever greater poverty and dependence. But our disagreement on that is why he's blogging where he does and we blog where we do.  

By Blogger Catchy Pseudonym, at Thu Oct 27, 04:52:00 PM:


This had some good info on poverty, insurance ...etc.

I seems the uninsured rates were dipping until 2003, and then have climbed since then. I also looked at a CDC census too but it ended in 2003. 45.8 million people are uninsured. I think more people are insured than ever because there's more people than ever. Doesn't mean there's not a huge problem there.

"But I think we demonstrated quite powerfully our ability to run from large deficits to surplus during a 15 year period while we dramatically grew our economy. And I have no doubt we will do so again."

That's just sounds like a really bad idea. That's like taking a loan out on the idea that one day you could potentially make a lot of money because at one time in your life you did. I'd like to hear a banks reply to that.

And Cardinalpark, you're right that is a fundamental difference between us. Outside of taking you from your home sticking you in the projects for a couple of years by youself with no job, no education and a couple of kids, I don't see how you'll ever understand why some people in our country need help.  

By Blogger Catchy Pseudonym, at Thu Oct 27, 04:54:00 PM:

My last part should have been directed to Charlottesvillian not Cardinalpark.  

By Blogger Cardinalpark, at Thu Oct 27, 05:16:00 PM:

Thanks Catchy for the correction, though in defense of the Villain, I don't think he was suggesting government services can't ever help people n tough shape.

The Medicaid program is covering 46mm people this year...primarily poor women and children. It is an amazing program in concept, but the variance across states as to its execution is dramatic. In some places, it is extremely well run -- Florida, a place where I have very tangible Medicaid program experience, is well run. Georgia, heretofore, has not been. Their Medicaid program has been a boondoggle for providers(mostly hospitals), cost taxpayers a foortune, and not delivered quality results.

Lots of reasons...sometimes programs are good, sometimes not so good...  

By Blogger Gordon Smith, at Thu Oct 27, 06:32:00 PM:


Thanks for your collegial tone. I have claimed this blog as an excellent place for me to learn and to hone my arguments, and I appreciate every courtesy you and Tigerhawk have extended.  

By Blogger Admin, at Thu Oct 27, 08:40:00 PM:

hey guys,

maybe we should elect the heads of the oil companies to run our country like their businesses, at least they are making a huge profit while sticking it to the american working class, the fools in congress now are just sticking it to us.  

By Blogger Cardinalpark, at Thu Oct 27, 08:42:00 PM:

SH - the Villain and TH are much more civil.

You are tenacious in your disregard for factual refuation of your mythology. It brings out the bad cop in me.  

By Blogger Cardinalpark, at Thu Oct 27, 08:43:00 PM:

oops - refutation...  

By Blogger Catchy Pseudonym, at Fri Oct 28, 08:57:00 AM:

Yea, I guess Cardinalpark didn't mean it how I took it. I always jump to the assumption that I'm hearing the "Why Don't They Just Get A Job Those Lazy Bums" arguement when I hear Republicans talk about cutting government programs for the poor. You know what assuming does.  

By Blogger Gordon Smith, at Fri Oct 28, 09:22:00 AM:


You are tenacious in your disregard for the facts I use.

ScruHoo used to have a visitor who constantly accused us of not using facts even though we're a fact heavy blog.

I think what you mean is that you don't like the facts I use.

I understand that when you see spending rising on social programs, your heart speeds up, and you gnash your teeth at the injustice of it all. When I see that spending on social programs is not keeping up with costs, then my heart skips a beat as I think about the next working family to get dropped from the Medicaid rolls.

It's about priorities evidently. You prioritize your money, and I prioritize my fellow citizen's well-being.

Que sera sera, eh?  

Post a Comment

This page is powered by Blogger. Isn't yours?