It's the Spending, Stupid!

Ludicrous, irresponsible spending is why we're in trouble

Listening to progressive media pundits, I'd think the most evil man in the universe is Grover Norquist, head of Americans for Tax Reform. His crime? He heads a movement that asks political candidates to pledge not to raise taxes.

I think Grover accomplished a lot. But I wish he'd convinced politicians to pledge not to increase spending.

President Obama says raising taxes to cut the deficit is a "balanced" approach.

Balanced ...

But what's "balanced" about raising taxes after vast increases in spending? Trillions for war, Medicare, "stimulus" and solar panels. Tax receipts rose—after tax-rate cuts—from $1.9 billion in 2003 to $2.3 billion in 2008, the year the recession started. That increase couldn't keep up with the spending. The deficit doubled—actually, more than doubled—as politicians increased spending to nearly $4 trillion! Our debt, at more than $16 trillion, now exceeds our gross domestic product.

Ludicrous, irresponsible spending is why we're in trouble. As columnist Ron Hart points out, Bill Clinton's balanced budget spent $1.7 trillion. "Adjusted for inflation," he writes, "our federal government would (have) a $200 billion surplus. But instead of increasing government spending in line with normal inflation, under Bush and Obama we are spending $3.8 trillion today. Democrats, who believe we have a 'revenue' problem instead of a 'spending' problem, must also think they have a bartender problem, not a drinking problem."

The media obsess about tax rates, but spending is more important. As Milton Friedman taught us, spending is a far more accurate gauge of the government burden. If government spends a dollar, that dollar is taxed away from someone. If it's borrowed, it's removed from productive use, setting the stage for higher taxes later. If the government prints more dollars to fund spending, our purchasing power falls. Transferring purchasing power from the people to the government via inflation is a form of taxation.

If Republicans and Democrats reach a deal, the tax increases will be real—but spending "cuts" probably illusions. If they actually happen, they will only be reductions in already planned increases. The Wall Street Journal notes that when the two parties talk about cutting spending by $4 trillion over a decade, "those numbers have no real meaning because they are conjured in the wilderness of mirrors that is the federal budget process. Since 1974, Capitol Hill's 'baseline' has automatically increased spending every year according to Congressional Budget Office projections.... Tax and spending changes are then measured off that inflated baseline."

Given our growing debt, can't they even slow the growth of government to the rate of inflation? Or inflation plus 1 percent? Or even inflation plus 2 percent? That might balance the budget within a decade.

But the spenders won't even give me that. They want more. Always more.

Jonathan Bydlak, founder of the Coalition to Reduce Spending, has a good idea. "It's important to do for spending what Norquist has done for taxes: create a means for voters to hold elected officials accountable when they break campaign promises of fiscal responsibility."

Bydlak has no time for any politician who pledges not to raise taxes without pledging to cut spending. He praises Doug Collins, representative-elect from Georgia, and Ted Cruz, senator-elect from Texas, for signing the Reject the Debt pledge and thereby promising voters they would:

"ONE, not vote for any budget that is not balanced nor for any appropriations bill that increases total spending;

"and TWO, consider all spending open for reduction, and not vote to authorize or fund new programs without offsetting cuts in other programs."

Well, sure. Good luck to him.

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  • newshutz||

    Spending is taxation

    We pay for it in identifiable taxes, increased interest rates, or in devaluation of currency.

    Time for a new mantra

    Spending is taxation

  • Being Waterboarded||

    This is incredibly important, and incredibly ignored by the masses. This is also why I think the greatest threat to our liberty is the monopoly power of government over currency (along with their borrowing power). Think how long Americans would let the current spending practices go if the government would actually have to raise taxes to the point necessary to provide enough income to cover their spending.

    BTW, that's a good question: what would the average tax rate need to be if the yearly federal budget were fully covered by income taxes?

  • Drake||

    Yes - the government is economic drag. The amount of drag is spending. Tax, borrow, or print makes little difference.

  • aelhues||

    Not sure about rate, but if all taxpayers shared the load equally, we'd each owe about $31k a year. Of course, that is just federal spending, and includes all tax payers, including those under the poverty line, the unemployed, and the retired. If you include state and local spending, that goes up to $55k per tax payer.

    So, if I were paying my fair share, as defined by that, I'd be paying $110k for my wife and I each year, in total taxes. Too bad I don't make that much gross.

  • Thomas O.||

    And along with this, how about another one: Debt is inflation.

    If we don't cut spending drastically, any other option will lead to inflation.

    Allowing the debt to pile up unabated will lead to securities firms continuing to downgrade the Treasury, which leads to interest rate increases, where inflation usually follows after that.

    Raising taxes on the rich or corporations will lead to inflation coupled by a decline in jobs.

    Printing money willy-nilly will lead to hyperinflation. Remember the Weimar Republic? Trillion-mark currency?

    Debt is inflation. Take away reducing spending to pay down the debt, and it's a political Kobayashi Maru.

  • ||

    It's the spending, stupid!

    Fuck you, cut spending.

    FTFY

  • Kyfho Myoba||

    What does FTFY stand for?

  • GregMax||

    "fixed that for you"

  • Pound. Head. On. Desk.||

    Given our growing debt, can't they even slow the growth of government to the rate of inflation?

    Do the math. With the debt level we have now, and with the huge entitlements the Boomers are aging into, tax increases won't do it. Even holding the budget at zero growth won't do it. Cutting the Federal budget (including the "off-budget" budget) 10% across the board from a flat baseline won't do it.

    I don't believe the political will exists in this country to do anything better than an order of magnitude short of what is needed to halt this decline.

  • Palin's Buttplug||

    As columnist Ron Hart points out, Bill Clinton's balanced budget spent $1.7 trillion.

    The Hit and Run peanut gallery says that really didn't happen. And the moon landing was fake too.

  • CE||

    Not sure about the moon landing, but Clinton balanced the budget only if you include excess Social Security receipts, back when that program was running a surplus.

  • OldMexican||

    Re: Palin's Buttwipe,

    The Hit and Run peanut gallery says that really didn't happen.


    No, it did happened.

    Sure, they used accounting rules and shennanigans that would have landed either of our asses in fucking JAIL if us rubes tried using them same "rules" as well, but since they got away with it, then you can say that the Clinton admin did indeed "balance" the budget!

  • T o n y||

    Yet here we are all these years later and not a runaway inflation event, or any other debt-related crisis, in sight.

  • Ayn Random Variation||

    Is it being sarcastic, or is it really this stupid?

  • John C. Randolph||

    It really is that stupid.

    -jcr

  • fit2post||

    Like the Titanic, our economy is designed to be unsinkable.

  • Red Rocks Rockin||

    Nope, just a perpetually dropping labor participation rate. Other than that, things are groovy.

  • Red Rocks Rockin||

    The Hit and Run peanut gallery says that really didn't happen.

    The spending level is pointed out all the time--but when you spend more than you take in, as even Clinton did, that's not balanced.

  • dan'o||

    Check treasury.gov. The debt grew 1.7T during Clinton's time in office. Also helps to be at the helm during a period of massive (and false) prosperity during the dotcom boom.

  • CE||

    Take a look at the historical tables on the White House OMB site:

    Estimated tax receipts in 2012: 2.47 trillion
    The budget could have been balanced this year just by cutting spending back to 2005 levels (2.47 trillion).

    2001 spending: 1.86 trillion (receipts 1.99 trillion)
    2012 spending: 3.80 trillion (receipts 2.47 trillion)

    Spending increase: 104 percent
    Revenue increase: 24 percent (despite a bad recession and tax cuts)

  • Red Rocks Rockin||

    More to the point, when Eisenhower was in office (and the marginal rates were higher), spending averaged 18% of GDP and revenue averaged 17.5%. Since Obama's been in office, spending's averaged 24% of GDP and revenue's averaged 15%.

    The White House's own data shows we don't have a revenue problem--just rescinding the payroll tax cut would take care of most of that 2.5% spread--we have a spending problem. And since gutting federal spending by over $315 billion (or, 1/4 the current deficit) will result in an instant recession, don't expect anyone, Obama least of all, to be honest about the hole we're in.

  • OldMexican||

    If government spends a dollar, that dollar is taxed away from someone.


    Aggregate-demand mountebanks would reply to this that spending is spending, no matter who does it or where it goes.

    Obviously, if you tried that with the wife after spending the paycheck on cheap whores and booze, I bet she becomes pretty Austrian in a second, and your ass pretty bruised.

    If it's borrowed, it's removed from productive use, setting the stage for higher taxes later.


    Again, aggregate-demand mountebanks do not understand the concept of opportunity cost. If people are taxed to the hilt out of their investments, then they will resort to "investing" in tax-free shelters which are going to be in the form of government debt. This starves the economy of badly-needed capital.

    If the government prints more dollars to fund spending, our purchasing power falls. Transferring purchasing power from the people to the government via inflation is a form of taxation.


    The triple-whammy: The government starves the economy of capital via taxation and debt, and then the Federal Reserve transfers capital from POOR people into the hands of speculators and the government, through the mechanism of INFLATION. Either way, it is still thievery.

  • T o n y||

    If the problem is a budget deficit then the problem is either not enough revenue to pay for the spending or not enough spending cuts to balance revenue. You guys say spending is the only problem because you don't want government doing things. That's not the same thing as spending being a problem by itself.

    But the fact is debt isn't the biggest problem right now and it won't be solved until the actual problem is first: the weak economy and high unemployment. And you can't really solve both at the same time.

    Of course you understand that the only reason people are proposing tax increases is because of people claiming the budget deficit to be the most urgent problem. This bullshit rhetoric is stale starve-the-beast stuff and it's a bit bizarre that so many of you take it as some kind of reality.

  • Ayn Random Variation||

    Too bad idiots like you don't understand that lowering income, corp and cap gains RATES will lead to lower unemployment and more REVENUE.
    And it's really too bad that 99.5% of this country doesn't understand this, so we are all fucked.

  • T o n y||

    Evidence that lowering tax rates increases revenue? Has it ever happened?

  • fit2post||

    "the soundest way to raise the revenues in the long run is to cut the rates now." - John F. Kennedy

  • Ayn Random Variation||

    Way to ignore unemployment. Do you believe that raising taxes will lower unemployment?

  • T o n y||

    No, as I said unemployment is the main problem, not debt. You guys are claiming debt is the biggest problem. But you refuse to look at one half of the ledger because of ideology. It's absurd.

  • califernian||

    Since the spending levels are absurd, as are revenue levels, lowering both by as much as possible is the only sane position to take.

  • Kyfho Myoba||

    But I don't WANT to increase govt's revenue!

  • Being Waterboarded||

    "You guys say spending is the only problem because you don't want government doing things."

    I admit that, IMHO, the primary reason that government spending is a problem is because it has the effect of government further reducing my liberty. Government spending almost always results in some sort of tyranny and the use of force on its citizens. However, the fact that I don't want government doing most of what it currently is up to due to liberty reasons does NOT mean that there are not other legitimate(besides liberty arguments) reasons why government spending is problematic.

  • Being Waterboarded||

    Oh, and to think that high unemployment is the primary problem (your blaming of the "weak economy" is ambiguous and thus disregarded) is rather ludicrous. Especially since it is so easily solved. Draft everyone that is unemployed. Alternatively, let the government hire every person in the country that is unemployed and pay them to dig holes and fill them back in. What next? Primary problem solved, no?

  • John C. Randolph||

    You guys say spending is the only problem because you don't want government doing things.

    Bingo. I'd rather see people spending what they earn on the things they want, then have the government steal the fruit of their labor and spend it on undeclared wars and TSA granny-gropers.

    -jcr

  • Red Rocks Rockin||

    Take a look at the spread between spending and revenue relative to GDP again and get back to us.

  • califernian||

    But the fact is debt isn't the biggest problem right now and it won't be solved until the actual problem is first: the weak economy and high unemployment. And you can't really solve both at the same time.

    I could solve the debt "problem" in 10 minutes with a red pen. It's really not that hard. It's just *politically* difficult, which is very different.

  • T o n y||

    It's not hard at all if you don't have to deal with politics. And it doesn't have to be hard on anyone if you accept that revenues are part of the deal. Libertarians and Republicans want the old, sick, and poor to pay the whole bill, I guess because they are evil.

  • Australian||

    Zero taxes for the Rich!!

    /no one ever.

  • trshmnstr||

    Yes, and liberals want to replace mommy and daddy with government, i guess because they are evil.

    Here's a little reality. The government spent money for ALL of us, we ALL owe money to repair this problem. That means the rich, the poor, the sick, the well, the elderly, the young, and the unborn are all going to be paying to get this government out of the Grand Canyon-sized Keynesian hole that it dug. Either that or the government will collapse and all sorts of fun ensues.

  • Viking||

    If government spends a dollar, that dollar is taxed away from someone.

    Don't forget about the additional $2 (guesstimate) taxed away from someone to pay for the bureaucracy that spends the dollar.

  • trshmnstr||

    And the $.40 taken out in loans to make up for the fact that the government didn't have enough tax revenues to spend that dollar.

  • The_Choctaw||

    I really preferred Stossel when he was getting bitchslapped by professional wrestlers in the 80's. http://www.youtube.com/watch?v=zrX9Ca7LSyQ

  • Red Rocks Rockin||

    The funny thing is, in this day and age McMahon would give Dr. D a nice heel run off of that incident instead of killing his spot.

  • Lukej||

    "Tax receipts rose—after tax-rate cuts—from $1.9 billion in 2003 to $2.3 billion in 2008..."

    I believe that should read $1.9 trillion and $2.3 trillion, respectively.

  • Patriot||

    Would you support my Patriotic Eugenics Plan?
    1. We need to keep abortion legal and make it free to all who want it. Those who get pregnant, and then decide they don't want to have children, are not the genetic stock we want in our nation.
    2. Free birth control to all who want it. The fact is that we have a large population of undesirable stock who either can't afford birth control, or are too stupid to buy it. Either way they reproduce, and we pay for it. This needs to stop.
    3. End the welfare system for parents. If they can't take care of their children, they will be taken away and raised either by competent parents or the state. It would save money and discourage reproduction among these people.
    4. Pay women 2,500$ each to get sterilized, 250$ a year to go on long term birth control. Men get 500$ to get sterilized. Sterilization reversals will not be covered. Prisoners who get or have gotten sterilized will receive special treatment in prison.
    5. Give tax breaks to middle and upper class Americans to reproduce more and improve the gene pool.

  • Kyfho Myoba||

    NOOOOOOOOOOOOOOOOOO! No more govt programs. Not even to do "good works". AUGGGGGHHHHHHHHHHHHHHHHHH!

    Can't people get it through their heads that NOTHING the govt does ever works as publicly advertised? EVER? Everything govt touches turns to shit. Shit that always decreases our liberty. ALWAYS. Every. Time. No Exceptions.

    "But if we could just incentivise .."

    NO!!!! Only if the absolutely free people in the market do it. Everything the govt touches turns to shit. Everything. Every. Thing.

  • Libertarius||

    Just buy physical gold, because after 100 years of the "progressive" rot of American freedom and society, when the dollar collapses they won't know what hit them.

    Just buy physical gold (in addition to investing in gold miners and explorers), because gold is the canary in the coal mine. The central planners have done everything they can to silence it, but when that canary finally sings, it will be a song of retribution and justice for me--and a funeral dirge for those craven enough to place their confidence in a pile of government paper.

    Buying physical gold is a big step towards unplugging from the neo-liberalism matrix. You will begin to recognize the matrix and all of its components--collectivism, statism, the feminine imperative, fiat money, all of it. It is no accident that bernanke closely resembles the Architect of the fiat feminism matrix lolzozlzolzlz

  • Kyfho Myoba||

    Buying gold and silver is an act of revolution and is more (far more) important than voting.

    +1000

  • uythsb||

    Merry Christmas

  • Australian||

    #include [stdio.h]

    int main(void)
    {
    printf("Merry Christmas\n");
    return 0;
    }

  • Bean Counter||

    There is NEVER enough revenue!! There is always some constituency that isn't getting government money to pay for their pet project.
    "My child has attachment disorder and my insurance company won't pay for rebirthing therapy!! WE NEED A GOVERNMENT PROGRAM TO PROVIDE FREE REBIRTHING CENTERS IN EVERY CITY, COMPLETE WITH MONITORS TO MAKE SURE WE DON'T SUFFOCATE THE KID!!! Get it for me now, you selfish rich bastards....NOW!!! Or I'll occupy your board room and shit on your teak conference tables!!"

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