Government Spending

Robert Samuelson: "national government is on the verge of a permanent expansion"

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Washington Post economics columnist Robert J. Samuelson peers into a recent Congressional Budget Office long-term budget outlook and despairs:

Without anyone much noticing, our national government is on the verge of a permanent expansion that would endure long after the present economic crisis has (presumably) passed and that would exceed anything ever experienced in peacetime. This expansion may not be good for us, but we are not contemplating the adverse consequences or how we might minimize them. […]

For the past half-century, federal spending has averaged about 20 percent of GDP, federal taxes about 18 percent of GDP and the budget deficit 2 percent of GDP. The CBO's projection for 2020—which assumes the economy has returned to "full employment"—puts spending at 26 percent of GDP, taxes at a bit less than 19 percent of GDP and a deficit above 7 percent of GDP. Future spending and deficit figures continue to grow.

What this means is that balancing the budget in 2020 would require a tax increase of almost 50 percent from the last half-century's average.

Whole thing here. Reason on Samuelson here, including his terrific "Lessons From the Great Inflation."

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  1. So we’ll be killed by our own sword and a new generation will relearn the lessons the older generation already knows.

  2. What this means is that balancing the budget in 2020 would require a tax increase of almost 50 percent from the last half-century’s average.

  3. What this means is that balancing the budget in 2020 would require a tax increase of almost 50 percent from the last half-century’s average.

    Or, you know, cutting spending.

  4. For the past half-century, federal spending has averaged about 20 percent of GDP, federal taxes about 18 percent of GDP and the budget deficit 2 percent of GDP

    That model is “broken.” It represents “the politics of the past.” The president ran on a platform of “change.” To defy him is to be “the party of ‘no’.” Dick Cheney is evil. Rush Limbaugh is fat.
    Look! Is that a comet?!

  5. > Look! Is that a comet?!

    Hope it’s not _Lucifer’s_Hammer_ this time.

  6. Obama’s plan seems to be to drastically increase spending and then force people to either agree to tax increases and a perminant increase in government or watch the government go bankrupt. I vote bankruptcy. Honestly, I think perhaps the government defaulting or writing down huge portions of debt may be the only way to stop the long, slow slide towards a third world state.

  7. Is it even physically possible for the federal government to get 26% of GDP as revenue? With all the fiddling with tax laws over the years, revenue as % of GDP has been pretty stable long term.

    Any reason to assume that raising taxes wont just kill the economy enough to keep us at around 18%?

  8. Or, you know, cutting spending.

    HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHahahahahahahahahahahahahahaha

    Oh robc, you kill me.

    Seriously, folks, prepare for the fucking. It’s gonna be long, it’s gonna be deep, and there is not a drop of lube in sight.

  9. > Honestly, I think perhaps the government defaulting or writing down huge portions of debt may be the only way to stop the long, slow slide towards a third world state.

    Oh, that *too*.

  10. Robc,

    There is a limit to how much money you can collect. There is very high limit to the percentage of the economy you can collect. Liberals don’t understand how economies work and think that taking 50% of GDP will give them twice the money to spend that takine 25% will. It doesn’t work that way of course. The government just gets a larger and larger piece of a smaller pie and everyone gets poorer.

  11. Obama’s plan seems to be to drastically increase spending and then force people to either agree to tax increases and a perminant increase in government or watch the government go bankrupt.

    It’s the famed Cloward-Piven Strategy being put into effect on a national scale. By an even more nasty piece of work than Cloward and Piven were, I might add.

  12. I don’t think this result is surprising to anyone. The spirit of the day is that the government needs to be more prepared to take over at a moment’s notice when the next contraction occurs. People are perfectly happy with a description of permanently increased government, unfortunately. We are screwed by the narrative. If only there had been more regulations and more risk sharing and more top down direction, everyone would be wealthy. That’s what people believe. Sigh.

  13. Obama’s plan seems to be to drastically increase spending and then force people to either agree to tax increases and a perminant increase in government or watch the government go bankrupt.

    Just so. As was repeatedly observed here on this forum when the stimulus was being rammed home.

    Oh, and I love Samuelson’s “on the verge.” That train has already sailed, buddy boy.

  14. “Without anyone much noticing,” well, except Bob Samuelson, who’s been writing the same fucking column for fifteen fucking years. I agree with Bob, about 90%, but until budget deficit have an obvious negative effect on the economy, Congress is not going to do a damn thing about them, because anyone at the state or federal level who tries to implement economic sanity Samuelson-style loses his job. The American people love their government bennies and they love their low taxes.

    It’s good to know what

  15. Ack, I didn’t finish:

    It’s good to know what should be done, but, as Abraham Lincoln used to say “A thing isn’t so in politics until you can explain it to the people in a way they can understand.” We haven’t reached that point yet.

  16. “Congress is not going to do a damn thing about them, because anyone at the state or federal level who tries to implement economic sanity Samuelson-style loses his job.”

    Who was the last person who actually tried to implement econimic sanity via cutting the size of government? Reagan maybe? He seemed to do pretty well. And if not him, then whom? I think the American people love their bennies a lot less than you think. American politicians love their bennies and getting their buddies rich.

  17. John,

    Not Reagan. He did well by caving into the Dems on enough spending issues to get his other stuff passed.

  18. What this means is that balancing the budget in 2020 would require a tax increase of almost 50 percent from the last half-century’s average.

    We can just get it from rich people; it’s only fair.

  19. John, the government got way bigger, fatter and more intrusive under Reagan. You will recall that his promises to eliminate the dept. of education went nowhere. Sure, some of his budgets proposed cutting some programs and some did get cut, but on the whole, government spending surged.

  20. Without anyone much noticing, our national government is on the verge of a permanent expansion that would endure long after the present economic crisis has (presumably) passed and that would exceed anything ever experienced in peacetime

    Wasn’t that the real purpose of the “spend trillions over the next 10 years because we need it spent NOW!!!” stimulus. Obama is just as transparent as promised, just not in the way we were led to expect.

    Chad, Joe, want to chime in on how justified The Chosen One was to lie to all of us to get what The Right People know to be best for us?

  21. Who was the last person who actually tried to implement economic sanity via cutting the size of government? Reagan maybe?

    It was actually Speaker of the House Newt Gringrich back when the Republicans took control of Congress in ’94.

    President Clinton responded by saying that he would refuse to cooperate and would rather keep the government without an operating budget in perpetuity rather than acquiesce to fiscal sanity (while at the same time disingenuously spouting nonsense such as “the era of Big Government is over”).

    Clinton famously won that PR battle, the Republicans eventually gave up, and the rest is history.

  22. You can starve Leviathan or you can feed Mr. Creosote.

  23. “What this means is that balancing the budget in 2020 would require a tax increase of almost 50 percent from the last half-century’s average.”

    Great! Another opportunity to demonstrate my patriotism!

  24. “President Clinton responded by saying that he would refuse to cooperate and would rather keep the government without an operating budget in perpetuity rather than acquiesce to fiscal sanity (while at the same time disingenuously spouting nonsense such as “the era of Big Government is over”).”

    I remmeber it well. The polls were starting to tilt against Clinton and Gingrich wimped out. A big part of the problem is that the media acts as a poltical organ for big government. Gingrich got destroyed in the media for doing nothing but argueing for fiscal sanity. Despite this, Gingrich damn near pulled it off. I think he would have if the Republicans in Congress had just had some balls.

    When the government finally goes bankrupt and the revolution happens, the first people who need to be shot for justice’s sake are the main stream media.

  25. Yes, John, they should be shot-but others will be shot before them.

  26. Addressed to:
    1600 Penn. Ave., Washington, DC

    Dear Resident,

    We present to you this once in a life time investment opportunity. Your contribution will return many times over due to what the Science of Economics calls the Multiplier Effect.

    Sounds, to good to pass up? It is! Call now, and we’ll set you up with some true West side playas.

    Sincerely,
    The Californ-i-a Keep It Rockin’! Fund

  27. Yikes! This isn’t the California budget, stupid union leaders thread? Shit, where did that tab go off and disappear to —

  28. Nothing is permanent. Our country is nearing the end of a decades-long binge, and the crash is going to be very hard. I hate to be a pessimist, but it’s pretty clear that Americans have no desire to make the hard choices now, when disaster could potentially be averted.

  29. When the government finally goes bankrupt and the revolution happens, the first people who need to be shot for justice’s sake are the main stream media.

    Shot? They wish. A few days of torture is a more reasonable hope.

  30. Did you know the Balanced Budget Amendment came within one vote of passing the Senate? In 1995? Just imagine if it had passed: no bubble, no war, no prescription drug benefit… I have to pinch myself now to make sure this dystopian reality is for real.

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