Government Spending

Hey, Look at Me, I'm a Conservative Dupe or, What Part of Massive Increases in Federal Spending Don't You Understand?

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Over at The New Republic, Jon Chait takes issue with my blog post from yesterday that's titled, "Why is everyone picking on the 'Bush tax cuts' rather than the 'Bush spending increases'?"

In that post, I collected a series of quotes from across the political spectrum which argue that the tax cuts pushed by George Bush in 2001 and 2003 and due to expire at the end of this year bear most of the responsibility for the massive federal deficits currently facing the nation. Folks such as Alan Greenspan want all the Bush tax cuts to expire, a move which the CBO estimates would generate $3.9 trillion over the next decade. The Obama administration and Nancy Pelosi bitch and moan about the need to increase revenue but want to keep all the Bush rates, except for those affecting indivduals making over $200,000 and households making more than $250,000 a year. The CBO estimates that just dinging top income earners would pull in about $700 billion over the next decade.

The point of my post is given away in its title (sorry, I'm not good at building suspense): Those supporting a reversion back to Clinton-era tax policies constantly blame the Bush cuts for starving federal coffers and, hence, increasing the deficit. Why partisans such as Obama and Pelosi would then argue that 82 percent of foregone revenue—$3.2 trillion out of $3.9 trillion—should go uncollected is understandable in light of electoral politics. But that doesn't make it any less deceitful. Indeed, as I point out in a New York Post op-ed today, Speaker Pelosi is now crowing about "Obama middle-income tax cuts," which apparently refers to Obama maintaining the Bush rates for the foreseeable future.

What I showed in the post is that in fact federal revenue increased nicely under Bush, despite the tax cuts. Revenues tailed off at the end of his reign of error, because of the recession and the financial crisis (caused largely by idiotic government policies).

Unfortunately, what I also showed is that federal spending was thoroughly jacked through the ceiling. In fact, in the eight years in which Bush was responsible for the federal budget, most of which featured a supposedly conservative Republican majority, total outlays increased by an unbelievable 104 percent. That's adjusted for inflation and includes entitlements and discretionary spending. There's no way around the reality that Bush was, as I put it in a valedictory op-ed in the Wall Street Journal, a Big Government Disaster.

Which brings me to Chait's huffy rejoinder to my post. Chait is a reliable Democratic partisan, so he always gets his panties in a bunch whenever anyone anywhere says anything that might imperil the righteousness of his tribal affiliation. Chait generously titles his post "How Tax Cuts Dupe Conservatives: A Case Study," and then goes on to inform his readers:

Most people have very little understanding of economic and fiscal policy, so it's easy to convince anybody with a general predilection for small government that regressive, debt-financed tax cuts are advancing the small government cause.

A perfect example is this column by Nick Gillespie, editor of the libertarian magazine Reason. Gillespie is not a policy wonk, nor is he a reflexive GOP partisan. So it is instructive to watch him work toward the position that the Bush tax cuts must be made permanent.

So there I am, despite libertarian bona fides up the ying-yang, a conservative dupe (hi, Mom!) for pointing out that George W. Bush's real crime against future generations was not cutting various taxes but for kicking the jams out on any sort of fiscal restraint. To that charge, I gladly plead guilty (though I should point out that Matt Welch is the editor of Reason magazine; I'm the editor of Reason.tv and Reason.com). It's not rocket science to figure out that even if you're taking in more and more money, you'll go broke pretty quick if you spend even more and more money.

Which is what Bush and the Republicans (and then the Democrats) did. And I certainly stand by my conclusion that "to talk about how 'tax cuts' inexorably add to deficits ignores the amount of tribute that poured into D.C. throughout most of the '00s. It's a fundamentally faulty and fruitless discussion." Precisely because it simply doesn't even acknowledge the spending side of the equation. Read through Chait's post and you'll see what I mean. He's fixated on revenue. But spending matters too.

More Chait:

The government also experienced year-to-year drops in revenue from 2001 to 2002, reflecting both the shaky economy and the effects of the Bush tax cuts. Gillespie oddly fails to include those years, instead leaning on the strange implication that the Bush tax cuts began in 2002. Moreover, he excludes the drop in nominal revenue in 2008, which he attributes to the recession. Obviously, though, economic conditions work both ways. When the economy is expanding, revenue tends to rise even in the absence of policy change. When the economy is contracting, it tends to drop. Gillespie's approach is to ignore the state of the economy when it creates data that seems to bolster his argument, and to take account of the economy when it creates data that undermines it.

There's nothing odd about starting with 2002, which is the first year that Bush had full control of the federal budget. Again, the proper focus of attention should be on revenue and spending, not simply revenue. I end with 2009 because, again, that's when Bush gets the heave-ho (and in fact, as I note in the post, 2009's budget includes some last-minute spending by Obama because the government didn't clear everything up before Bush left office).

Even more Chait:

Inflation, population growth, and a growing economy all impact the value of a given dollar sum of taxation of spending. Pointing out that the nominal size of government is growing is a nice tactic to use for the Rush Limbaugh audience. Any remotely serious economist looks at revenue and spending as a proportion of the economy.

Hey, I want to be remotely serious too! There's no question that looking at revenue and outlays as a percentage of GDP is an important measure, which is one of the reasons why I do it all the time, such as in this post. Here's how revenue as a percentage of GDP fared in the '00s (and I'm including 2001 as a sop to Chait):

200110286.219.36a
200210642.317.42a
200311142.116.00a
200411867.815.84a
200512638.417.04a
200613398.917.97a
200714077.618.24a
200814441.417.48a
200914258.214.76a

That comes to an average of about 17 percent, a point lower than that the post-war historical average of about 18 percent.

And what about spending as percentage of GDP over the same period?

200110286.218.11a
200210642.318.90a
200311142.119.39a
200411867.819.32a
200512638.419.56a
200613398.919.82a
200714077.619.38a
200814441.420.65a
200914258.224.67a

Average federal spending was about 20 percent, or about 3 percentage points higher than revenue.When you look at these figures, it becomes pretty obvious where the deficits come from: From spending more money than the amount coming in.

To the right is a graph that spells out the mismatch. Do you need to be a remotely serious economist to get the picture? And as AOL News' John Merline points out in the story accompanying that graph, good luck goosing revenue higher than 18 percent. It happens from time to time (in fact, it did so under Bill Clinton, who also increased total spending a relatively measly 11 percent over eight years), but it is the exception to the rule.

But more importantly—and directly to Chait's churlish dismissal that year-over-year amounts don't count for shit – I want to make the point that simply discussing amounts as percentages of GDP misses a huge amount of information. There is absolutely no reason to assume that government revenue or spending can or should stay equal as a percentage of GDP forever and ever. Various defense hawks argue, for instance, that defense spending should always be 4 percent of the federal budget. Why? Because they say so. That's as unconvincing an argument as saying that if you make $10,000 a year and food is 20 percent of your budget, it should still be 20 percent of your budget when you make $100,000. There is an exhaustible limit of how much a family or a country should spend on various goods and services. Is there any reason why Medicare should always be a set percentage of the budget? Or education? Or AmeriCorps? Or abstinence-only sex ed programs? Or anything? The short answer is no, of course not. Unless, of course, you're trying to bias the discussion toward the status quo.

Chait winds up with:

There's just a lot of vaguely anti-government, anti-Obama hand-waving, culminating in the conclusion that we should stop blaming the Bush tax cuts for contributing to the deficit. It's a telling portrait of how your tertiary anti-government type goes about deciding to sign up for Team Tax Cuts.

I am not sure if being called a "tertiary anti-government type" is more or less of an insult than being called a "conservative dupe." Given that in the past I've been called everything from an "apologist for stupefaction" to "a gay Elvis impersonator" to "the free-market Fonzie" to "a dishonest whore for the wealthy" (this last treat coming from an emailer who had just glossed Chait's post), I take insults and compliments where I find them.

Sure, I'm anti-Obama. Every bit as much as I was anti-Bush. But that's really neither here nor there when it comes to looking at how Bush spent our way to the poorhouse. It's Bush's spending policies—recall that he increased inflation-adjusted outlays by 104 percent!—that were his major contribution to deficits, not his tax cuts. While I'm not a member of "Team Tax Cuts" (whatever that is), I do like the idea of people keeping more of their own money.

After all, it is their money and I'm betting they can put it to better use than Tim Geithner or Hank Paulson. Or Gen. Petraeus for that matter. I'm foolish enough to think that government can and should live within its means, which does qualify as a tertiary position since neither the Democrats nor the Republicans (or their handmaiden journalists) seem to agree.

NEXT: Deficit politics forever

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  1. …Nancy Pelosi bitch…

    Nice.

    1. Nancy Pelosi bitch…

      Wow, that’s an edit Fox News would be proud of. Of course when you include more of the sentence “The Obama administration and Nancy Pelosi bitch and moan about the need to increase revenue…” it doesn’t have quite the same inflammatory ring, does it?

  2. There’s no way around the reality that Bush was, as I put it in a valedictory op-ed in the Wall Street Journal, a Big Government Disaster.

    Which brings me to Chait’s huffy rejoinder to my post. Chait is a reliable Democratic partisan, so he always gets his panties in a bunch whenever anyone anywhere says anything that might imperil the righteousness of his tribal affiliation.

    Nicely said. One might think that an economy completely sumbmerged in the shitter might cause anyone with even half a brain to question the current system.

    Even if their payroll check comes from “Status Quo, LLC”, can they not imagine how a financial collapse might disrupt the fantasy economics game?

    1. No, see, because they have models that say “tax once, spend twice” is a winning strategy. Haven’t you ever heard of a multiplier?

      1. Those models are less accurate than Cheney with a shotgun.

        My point is that sooner or later even true believers begin to imagine the possibility that the bad news can get irrevocably worse.

        And I don’t think even they believe the hype. I think that they’re hoping to stash enough away to avoid drowning in the shit storm. True believers would be furiously attempting to prove the multiplier effect, not just double-down on the rhetoric.

      2. The multiplier effect was supposed to explain a macro economic effect within a free market, whereby PRIVATE consumption enriches multiple PRIVATE suppliers. When the government talks about the “multiplier effect” you mind as well replace that with tax and spend. They are taking money from the PRIVATE economy and then feeding it back into the economy but only after spending 100% of it on the deficit, so that all the money that goes back out is unfunded by actual tax dollars. Why do we need the government to be the middle man for this “multiplier effect”? Wouldn’t it be easier to just let people spend their money on shit they need and want?

        1. Well it might be easier, but then the middlemen wouldn’t be able to get a cut right off the top.

          1. Oh, my bad.

      3. No, see, because they have models that say “tax once, spend twice” is a winning strategy. Haven’t you ever heard of a multiplier?

        Well, except their model is more like “tax twice, spend ?”

        Other than that, what you said.

  3. Dude, don’t you realize that nothing you say matters because you aren’t a policy wonk? Put the same words in the mouth of that dreamy wunderkind Ezra Klein, and it all makes sense, but coming from a dime store Brando like you, it’s meaningless. If you want to be taken seriously, you need to spend more time coming up with very complicated, complex ways to spend vast amounts of other people’s money to advance your vision of what this country should be. This is why everybody mocks libertarianism, because instead of having big dick contests over the number of pages in their favorite legislative project, they tend to notice things like “the government spends a lot of money.”

    1. I’m a libertarian…. my dick is smaller than yours.

      1. It’s the staying power where we really excel.

        1. It’s not the size of the stimulus, it’s the skill with which it’s applied.

    2. Dude, don’t you realize that nothing you say matters because you aren’t a policy wonk?

      If it does not matter then why are the aces of Reason (Matt and Nick) getting all the left wing bloggers so upset that they must spread bullshit lies about them?

  4. So Jon Chait is a tool who faithfully regurgitates the Democrats talking points. In the New Republic no less. Color me shocked.

    Look at this and tell me the main problem is anything other than spending.

    1. But, but Bush cut taxes, cut spending and he scent the regulators home, giving America over to Big Corporations causing the collapse of the economy. How else can we advocate increasing spending, taxes and regulation as the solution when if everyone knows it has already been done, it makes us look stupid to advocate those things? We really want to!

      1. And, and, babies starved in the streets. And female and minority babies were hit the hardest.

        1. Teh externalities!

      2. As Elliot Spitzer pointed out on TV just a few days ago, it was all these libertarian policies we tried that failed and got us into the mess we’re in now.

    2. Of course Chait is a tool. What’s interesting is the need for such tools to directly address points made in articles by Gillespie and Welch.

      The shocking thing is that freaks like Chait seem to be frightened to death of a loose political group that hasn’t shown much fire at the ballot box in the past.

      If the GOP wasn’t so stupid, they’d be attacking Gillespie and Welch as well. (Gay free market Fonzie and beer swilling Sandy Duncan stand in.)

      1. I only wish my figure was so girlish!

        1. Ha! Don’t worry, it’s all about the hair.

        2. You have a glass eye, Matt? It’s not noticeable, don’t worry. But I would have figured you more for a Wendy and less of a Peter.

        3. Well, if you had tits you’d have a nice ass!

      2. Gay free market Fonzie

        Don’t forget the Justin-Bieber’s-Creepy-Uncle haircut!

    3. And back in that ’41-’45 spike, we got to shoot a lot of krauts and japs for our money.

    4. This is excellent – thanks for the link J sub D!

    5. It’s clear you are racist. Repent now!

  5. I love how in Chait’s graph, which I assume comes from the CBO, they assume that tomorrow they’ll suddenly start collecting more revenue and halt spending increases. They’re like dieters who are always going to start cutting spending tomorrow.

    1. Planning to reduce government expenses three years from now is easy; must have been done at least 50 times.

  6. “Team Tax Cuts” (whatever that is)

    It’s a team of dudes in leather jackets with knives. They cut anybody who argues against spending reductions.

    1. as a general rule with Team Tax Cut members like myself, we’re not happy with our knives in the sheath

      1. literally or figuratively

        1. Speak for yourself. I like putting my “knife” in her “sheath”.

          1. Do you know the latin word for sheath?

            1. The wiki entry on this subject is a fun read.

    2. What sort of mascot does this team have?

  7. I am not sure if being called a “tertiary anti-government type” is more or less of an insult than being called a “conservative dupe.” Given that in the past I’ve been called everything from an “apologist for stupefaction” to “a gay Elvis impersonator” to “the free-market Fonzie” to “a dishonest whore for the wealthy” (this last treat coming from an emailer who had just glossed Chait’s post), I take insults and compliments where I find them.

    At least he did not call you a racist right wing tea pirate like Serwer called Welch yesterday.

    1. …nor did he call him a liberaltarian, so there’s that

  8. If I didn’t know better, I would have to say, the MSM is gunning for Reason these days.

    Do they know something we don’t?

    Perhaps a putsch aimed at Kochtopus after the elections by the justice department? Notice any stares, avoidance and whispering off in the distance around the Georgetown scene of late?

    1. Do they know something we don’t?

      Quite the opposite. They’re just now catching on to what Reason and its readers have know for some time. And it scares them. Shitless.

  9. Very well-written post, Nick.

    However, the game of people like Chait is to keep saying that anybody who criticizes Obama is therefore pro-Bush, or at least not anti-Bush enough. They don’t say this out of any misunderstanding. They say it repeatedly so that it will become true, or at least true enough to discredit “anti-Obama” types. Similarly, they hope if they keep claiming that those who dislike Obama’s policies are steadfastly holding onto a failed ideology, people will believe it.

    Not saying you shouldn’t point out the folly of his logic, but at this point, people either know that being “anti-Obama” doesn’t mean you are “pro-Bush,” or they don’t. Or, they likely know it, but won’t concede it.

  10. I’m foolish enough to think that government can and should live within its means…

    HFS, Gillespie, don’t you get it? You keep clinging to this idea of highly expensive tax cuts when, in truth, Chait is trying to explain to you that the government simply wants and needs to increase its means.

    1. The chart that Gillespie reposted makes the very good case that the government’s maximum “means” is 18% of GDP — and it should probably learn to live within considerably restricted “means” (10%, say, and certainly no more than 15%) in order to be robust against the occasional economic downturn.

      To me, the government that 15% of GDP can buy is nightmarishly huge. I find it almost inconceivable that anyone would want a bigger government than that. Obviously, some people do, and they fight viciously to get their way. But it is hard to view them as fellow humans. That kind of mentality seems literally alien to me.

      1. Those 15% or 18% are just the Feds. You have to add state government expenses, local, and stuff that is off the books such pension obligations and Fannie Nightmae.

      2. That kind of mentality seems literally alien to me.

        They are aliens – they’re lizard people. 😉

        1. Someday the lizard people will reveal themselves and you will have to explain your bigotry.

    2. If the government needs more revenue, then let Obama and the Congress get second jobs and donate the money to the treasury.

  11. I love how remotely serious economist Chait “proves” that during the bush years revenues were plummeting by apparently sort of normalizing revenue to the size of government which he grants is defined by government spending. In other words Gillespie is wrong because in reality, revenue was smaller than spending.

    Also, totally dishonest to characterize Gillespie as an apologist for “deficit financed” tax cuts. I don’t think Gillespie’s proposal for “financing” tax cuts is by increasing the deficit? Did anybody read it that way? This guy is a total crank.

    1. I just have to break in here and say: I’m an apologist for deficit financed tax cuts to boost aggregate demand during a recession even if Nick is not. And I believe that if Nick were fully informed and thinking clearly about it, he would be too.

      One reason I post here is to get more libertarians to see the light on this issue.

      When 10% of people are unemployed, it means the country isn’t producing all it could. That is a disaster that holds back standard of living increases and compounds forever in the future (anti-compounds, if you will). And thanks to the fiat money system, it’s easy to get people to be more productive in a recession and boost aggregate demand. And the best way to do that is to deficit spend by taking less money in taxes until the economy no longer has excess capacity.

      I’ll be attacked (as always) for stating this truth, but I figure it’s worth it if just a few intelligent people check it out or think it through on their own.

      1. It doesn’t help much if more people are “employed” doing things that aren’t terribly useful. If government fires a lot of dead weght, it can also free up the resources used to pay them and allow them to work, and those resources can be reallocated to hiring people (perhaps the people just fired, perhaps other unemployed people) to do something more useful for society.

        1. You are being too… cynical. I’ll bet you could come up with just one way that someone collecting unemployment compensation could do something more productive than they are currently (which is: enjoying a paid vacation on our dime).

          But more crucially, you make the usual mistake that libertarians do here: you assume we live in a commodity currency regime. We don’t. First government spends, and then it taxes to reduce aggregate demand. The “resources” you are talking about are strictly financial, and the govt can print as much money as it needs to to improve outcomes. There is no need to “reallocate” any thing. This is the same error we argued about a few days ago. Government borrowing does not “crowd out” private use of financial capital.

          1. You make the usual mistake in thinking that anyone not working should collect unemployment. News flash: savings accounts, use them and don’t mooch off others if you can’t get a job.

          2. I bet you liked the 10% inflation of the 1970s.

          3. Printing money is not a cost free exercise.

            It creates inflantion and devalues the currency – it is a stealth tax.

            Government spending is a forced transfer payment. It creates no new wealth.

            It has to be financed by taxes, borrowintg or inflating the money supply or some combination of all 3.

            And all of them amount to merely a wealth transfer that creates nothing of any net value.

            1. Printing money is not a cost free exercise.

              Yes it is. You don’t even need a printing press now. You need an internet connection and some spreadsheets (and some electrons).

              It creates inflation and devalues the currency – it is a stealth tax.

              Inflation is indeed a stealth tax. But creation of money happens every year without significant inflation. A small and steady rate of inflation is considered a good thing by most economists (it keeps people putting their money to work). Inflation is not much of a threat during a recession. You need to get your priorities right, which is the point of my posts here. It’s not a case of “always do this and never do that.” It requires some finesse.

              Government spending is a forced transfer payment. It creates no new wealth.

              First government spends. That’s where the money comes from. Then it taxes (and/or sells securities) to cut aggregate demand. How it taxes in the current environment does, unfortunately, result in redistribution of income and wealth. New real wealth (real goods and services) is created by the people in their various productive efforts. No argument there. But net new financial assets can and must be created by the federal government year by year under a fiat regime.

              Feel free to post further commentary and argument at my WordPress.com blog, available by clicking on my name. I’d be happy to carry on the discussion there, politely and respectfully, with as many of you as wish to engage.

              1. It requires some finesse.

                That’s best laugh I’ve had in a while. You do realize who will be in charge of doing this ‘finessing’, don’t you?

            2. If the government could cut taxes without any increase in the level of inflation, but the deficit would go up, would you object to that?

      2. I’m sure there’s more important things to do with my tax dollars than fuel an artificial level of demand so that people can have temporary jobs producing things that most people would not be able to afford during a recession anyways.

  12. “Free-market Fonzie” sounds more like a compliment.

    1. Ayyyyy…

      1. Free-market Fonzie says, “A is Ayyyyyyy.”

        1. By the wayyyyyy, we need to get Gillespie photoshopped into that picture of Fonzie that Henry Winkler’s character uses in the Royal Pains TV show. Stick with “Free Market Fonzie” as your monicker, Gillespie. It has staaaaaayyyyyyying power.

          1. An animated gif of his head on Fonzie jumping a shark while water skiing would be way better.

            With the bonus of giving us 4chan bonifides.

          2. Well, if the jacket fits…

      2. If only the economy were a jukebox, we could get out of this mess!

    2. And its better than the free market Charles in Charge.

  13. If I could put any chart on the front page of every newspaper every day, it would be the one that shows Uncle Sam’s revenues and expenditures and the resulting deficit. Perhaps after, oh, 15 or 20 years, the truth would sink into the tiny brains of the Booboisie. (snarky comments about there not being any newspapers in 15 or 20 years start below).

    1. snarky comments about there not being any newspapers in 15 or 20 years start below

      Are there any newspapers anymore?

      For national or world news it resembles a whole bunch of blogs some with print additions.

      1. Bullshit. There are still plenty of quality newspapers that do actual reporting. You may have noticed I link to them often.

        The death of the printed news media is greatly exagerrated. They’re going through some difficult adjustments right now (loss of ad revenue mostly), there will likely be further consolidation in the business but the newspapers will remain important.

        1. Bullshit. There are still plenty of quality newspapers that do actual reporting. You may have noticed I link to them often.

          My point is they no longer resemble newspapers and the fact is “newspapers” produce more journalism for the web today then they do for print.

          Out side of weeklys in small towns there are no newspapers any longer.

          1. Out side of weeklys in small towns there are no newspapers any longer.

            Are you insane or just stupid?
            WaPo
            NYT
            Christian Science Monitor
            The Times

            Almost all big city newespapers cover the state and metro scene quite competently. Yeah, they no longer have a reporter in Iraq or on Wall Street, but the big boys do and their reporting is reprinted via AP.

            You know all that (or should) but would rather be one of the cool kids and mock what you apparently don’t know shit about.

            1. WaPo
              NYT
              Christian Science Monitor
              The Times

              All of which is online. And all of which is more widely read online then in their print additions.

              No idea why you are arguing with me. It is as if you are desperately trying to prove the world is flat or something.

            2. most of the papers “Sub D” listed are not newspapers. They are mouthpieces for Obama and the left wing loons.

              1. He also forgot to mention the Daily Kos newsletter. . .Oh wait, NYT = New York Times. . . My bad.

        2. Would you please name some of these quality papers? Most seem to have sold their souls to the liberals.

  14. First they came for the tertiary anti-government type and I didn’t know what the fuck they were talking about

    … then they came for the Free-market Fonzies, and I still didn’t know what the fuck they were talking about.

    1. Okay, any insult that involves The Fonz and the free market cannot really be an insult. Thats like being accused of being a really nice guy with a huge penis.

      1. My ears are burning…

  15. Two questions.

    If spending had stayed at 2000 levels plus inflation would we have a deficit?

    answer: No

    If Bush tax cuts were not implemented would we still have a deficit?

    Answer: yes

    It is obviously the spending that has blown up the deficit not tax cuts.

    1. If you love Bush so much, why don’t you marry him?

      1. Hmmm. How much is his net worth?

        1. Hush, John. It’s okay for US to be rich.

          1. You don’t get it. The reason I’m in favor of Gay marriage is because there are guys out there with more cash than Teresa! I’m just sussing out GWB’s net worth.

            It’s what I do.

            1. I’m just sussing out GWB’s net worth.

              Make sure you don’t get it in your eye…

            2. I’m in favor of Gay marriage

              John Kerry is against Gay marriage.

              He wants civil unions or some nonsense.

              1. I was against it before I smelled the cash and became for it.

  16. (or their handmaiden journalists)

    I’m guessing that is the polite way of saying ass-licking lackeys?

    Which fuels the only relevant debate between Blue and Red: tastes great vs. less filling!

    1. Well, we’re allowed to say “ass-licking lackeys.” But I guess Nick et al have to convey the meaning in less pointed language…

    2. They taste bad, and are so filling.

    3. Thanks, Nick. Now I have a visual of Chait in a French maid costume.

      And it’s hilarious!

  17. Baffle them with bullshit.

    Germany is 1/5 the size of the US and yet has the second highest trade surplus in the world (after China). They’ve accomplished this while having higher rate of unionization and higher pay. Interestingly, the US economy was also doing better when unionization and pay was higher in the US.

    Gee why is that ya think?

    Reagan Republican: the GOP should file for bankruptcy

    Stockman rushes into the ring swinging like a boxer: “If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation’s public debt … will soon reach $18 trillion.”

    It screams “out for austerity and sacrifice.” But instead, the GOP insists “that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase.”

    1. So Jon Chait frog in a pot is a tool who faithfully regurgitates the Democrats talking points. While trolling at Reason.com no less. Color me shocked.

      Look at this and tell me the main problem is anything other than spending.

    2. that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase.”

      Yeah, easy for you to say, it’s not your 3 percent. There are always plenty of people to shrug and say that the other guy should be able to give a mere 3 percent.

      1. Until Atlas does.

    3. They already pay far more in taxes than the value of any government benefits that they are personally receiving in exchange for their money calculated on a user fee basis.

      Give me one good reason why ANYONE should ever have to pay more in taxes than the value of what they personally receive in return for their money.

      Or why ANYONE should be able to get away with paying less – like all the folks who pay nothing in federal income taxes.

  18. Baffle them with bullshit.

    Germany is 1/5 the size of the US and yet has the second highest trade surplus in the world (after China). They’ve accomplished this while having higher rate of unionization and higher pay. Interestingly, the US economy was also doing better when unionization and pay was higher in the US.

    Gee why is that ya think?

    Reagan Republican: the GOP should file for bankruptcy

    Stockman rushes into the ring swinging like a boxer: “If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation’s public debt … will soon reach $18 trillion.”

    It screams “out for austerity and sacrifice.” But instead, the GOP insists “that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase.”

    1. And Germany did that with greater austerity and a gradual loosening of its labor regulations. Despite this trade surplus, they still have a lower standard of living than Americans. And ‘higher pay’ is meaningless: all that matters is how much stuff one can buy, which is much higher now than in the union-50s, thanks largely to union-busting.

      1. Germany does not have a “lower standard of living than Americans”.

      2. I miss living in Germany. I remember getting on the autobahn in my $400.00 BMW, driving as fast as I want to get to Frankfurt to fuck a nice prostitute then buy some good hash just accross from the Bahnhoff.

        1. Let me guess, USAREUR in the 80s. Good times.

    2. Union blue collar class warfare. Yeah, that never gets old.

    3. Interestingly, the US economy was also doing better when unionization and pay was higher in the US.

      Gee why is that ya think?

      You racist, you’re ignoring black people. Not a surprise since almost the entire raison d’etre of US unions was to keep the black workers down, except in California where “look for the union label” was to instruct people to avoid the products of Chinese labor.

      Once again showing your racist roots.

      “If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation’s public debt … will soon reach $18 trillion.”

      It screams “out for austerity and sacrifice.

      If the deficit’s such a problem, then let all the tax cuts expire. The middle class portion of the tax cuts are even more “unaffordable” to the government; they cost much more.

      If you argue any differently, then you clearly don’t care as much about the deficit nor think that the tax cuts are as unaffordable as you claim.

      “that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase.”

      1. That’s confusing, because the wealthiest taxpayers aren’t getting a three-percentage-point rate increase, but 4.6%. (Plus they’re getting the extra Medicare taxes and the Medicare taxes on capital gains, of course.)

      2. Another way to put it is that they’re going to lose over 9% of their marginal post tax income, once state taxes are taken into account. Not all percentage point rate increases are the same. If your rate is 10%, then increasing that to 15% means that post tax you have 5 5/9% less than before. But if your rate were 50%, then increasing that to 55% means that post tax you have 10% less than before.

      1. Utter bullshit and lies.

        Comparing Democratic and Republican tax plans
        http://www.washingtonpost.com/wp-dyn/…..ferrer=... ? Cached page

        Nice pictures and everything so you might understand it.

    4. Is there a category of people more loathsome than union class-warfare Democrats?

      1. Nazis?

        This here is sarcasm in case there are any pro-union people out there.

        1. Yeah because NAZI’s didnt cart off the union people and liberals off first or anything.

          So that make you……

      2. Name one country that has a strong middle class WITHOUT strong unions…just one will do…good luck with that genius.

        1. Please name one of those that has no huge depts? And please point out which ones are also NOT facing huge unfunded liabilities?

        2. Please name one of those that has no huge depts? And please point out which ones are also NOT facing huge unfunded liabilities?

  19. “Mitch McConnell, the Bush Tax Cuts, and the Future of Government

    Thus, to balance the budget McConnell would have to slash the rest of the federal government in half. If you are tea partier, that probably sounds pretty good. But let’s look at what that would mean.

    The biggest remaining program is, of course, Social Security. It happens that projected Social Security spending in 2020 is almost exactly equal to the $1.2 trillion McConnell would need to balance his budget. But the vast bulk of that money would go to those who are already 60 or older and there are no serious proposals to make substantial reductions in benefits for those retired or close to it. The one change that might?slowing annual cost of living benefit increases ?would reduce total payments by only about 4 percent by 2040. So there isn’t going to be much dough there, especially as soon as 2020.

    What’s left?

    Well, McConnell would have to abolish all the rest of government to get to balance by 2020. Everything.

    No more national parks, Small Business Administration loans, no more export subsidies, no more NIH. No more Medicaid (one-third of its budget pays for long-term care for our parents and others with disabilities). No more child health or child nutrition programs. No more highway construction. No more homeland security.

    Oh, and no more Congress. . ..
    blogs.forbes.com/…/mitch-mcconnell-the-bush-tax-cuts-and-the-future-of-government/”

    1. And the problem is?

      1. It can’t seem to figure out that this is a libertarian site.

        Rushing in with that announcement is like trying to scare patrons of Starbucks that supporting a certain policy will drop the price of coffee by tenfold.

        1. I think a lot of Starbucks patrons actually get off on being able to buy a $5 coffee.

          Now… telling McDonald’s customers it would be a tenfold decrease…

      2. What he said.

    2. Hey dimbass (that’s you frog with his head up his ass), name a major pol in either party who is willing to admit that we can not and will not balance the budget withou cutting entiltlements (soc. sec., Medicare, Medicaid) and defense.

      Give fucking idiots an internet connection and your’s is the kind of drivel we get.

      1. Give fucking idiots an internet connection and your’s is the kind of drivel we get.

        You need to look around more. There’s plenty of other kinds of drivel.

    3. Sounds pretty good. Also a great illustration of how far the problem has gone. While for some, it seems unthinkable to enact drastic cuts on government spending, if you ARE BROKE YOU MUST CUT SPENDING. Duh.

    4. You have no idea where you are, do you?

    5. Social Security benefits are too high. The reason there have been no serious proposals to reduce Social Security benefits is that politicians don’t want to lose the votes from the aged voters.

    6. No more national parks…

      The parks would still be there, you just wouldn’t have entrance fees, camping fees, permits, roving rangers, etc. The “parks” were there before congress was established.

      1. Well, there could be those things. Just instead of being managed by the government, it would be funded and run by private organizations and people who actually give a damn about conservation.

        1. You’re funny.

          You know they’d be covered with oil derricks, cattle and tree stumps but you’re just too coy to admit it. (Not arguing whether that’s worse or better, but let’s be realistic.)

    7. This kid is lost…

    8. Just thinking about all those programs being whiped away gives me a massive woody.

  20. It is interesting that the chart speaks of “GPD,” which should probably be “GDP,” and that the typo is mentioned by neither Gillespie nor the author of the original article. Indeed, there are no comments attached to the original article, so it seems as if no readers brought up the discrepancy, either. In consequence, the error has been allowed to remain posted for some time, and propagate into other online efforts, uncorrected. Are people just being polite? Is nobody actually READING the articles that use the chart? Is nobody paying attention to the chart? Or is GPD another legitimate way of saying “Gross Domestic Product” (in English, I mean)? I would have thought that, somewhere along the way, this would have been fixed. I would have been mistaken, though.

    1. The whole world is dyslectic.

  21. statistics from the Department of Labor

    All Employees: Hourly compensation costs in manufacturing in 32 countries in U.S. dollars
    Year: 2007

    Germany $50.73
    Denmark $47.54
    Canada $31.91
    Australia $34.75
    Austria $43.17
    Belgium $38.75
    Finland $39.74
    France $37.68
    United Kingdom $36.66
    Ireland $35.62
    Italy $32.19
    Norway $55.03
    Spain $24.55
    Japan $23.95
    Korea $18.63
    Singapore $15.43
    Netherlands $39.47
    USA $30.56

    Average wage in countries using the Euro: $40.71
    Average wage in Europe: $39.41

    Now, unemployment in Germany, for example, is far lower than in the U.S. because they paid companies NOT to lay off workers. Germany’s economy depends on manufacturing exports and they’re going great guns again.

    Automation has reduced the number of people involved in manufacturing, there is no avoiding that. But how can all these countries with similar living standards to ours, manage to pay people working in factory jobs more, in most cases, than companies pay in the USA? China can sell goodies to them too!

    You do not have to lower the standard of living for your people via lower wages to remain competitive in the world market. Labor, is only 10% of the cost of making a car, for example.

    What’s the difference? One is that the average CEO earns 25 times the average worker’s wages in Europe. Here, it’s 300 times.

    High labor costs is a straw man.

    Just not true.

    1. !0% is an assembly labor number. The price of a car contains all labor including uncapitalized R&D, marketing, admin which can be huge expenses in production.

      To put it quite frankly you are either a disingenuous hack and know this, or talking out your ass.

      The 10% you are using is a union number. I’d maybe try hitting up EDGAR and deriving my own numbers if I were you.

      Let me guess. Poli Sci degree?

      1. Definitely talking out of its ass. Who, with any grasp of reality, defends a union system that is pushing for a massively unsustainable pension program to be funded by taxpayers.

        1. Anyone who would benefit from said pension and doesn’t care that everyone else is going to get fucked. . . Which begs the question, how many of these people still exist?

          1. Government or non-government?

            1. Does it really matter?

          2. How many people voted for President Obama?

            I’m not saying that everyone who did is one, but I’m willing to bet it’s a good starting number.

            1. Everyone who actually thought “hope” and “change” meant that they hope nothing changes with regard to their upside down pensions

    2. Germany’s economy depends on manufacturing exports and they’re going great guns again

      German industry is doing well because the PIGs are close to default and the euro averages Greek weakness in with German strength to something that is too high for Greece but too low for Germany. German consumers, otoh, are not happy they are bailing out the PIGs out, and many are openly calling for a return to the mark or at least a more limited euro.

    3. Germany’s economy depends on manufacturing exports and they’re going great guns again.

      Germany also forewent economic stimulus, which Krugman and others claimed at the time was an enormous mistake that would cripple them.

      You do not have to lower the standard of living for your people via lower wages to remain competitive in the world market.

      Right, you can lower the standard of living for your people via high tariffs instead, which is how you’re advocating to reduce the standard of living.

      Another thing that you can do is choose to have all your low productivity people unemployed, and only employ the most productive. If you do that, then you’ll end up paying labor more.

      So once again frog in a pot’s solution comes down to keeping all the poor people, especially blacks, unemployed so that middle class people, especially whites, can get higher salaries. Typical union racism.

      I’m impressed that you apparently think that the Japanese have enormously low manufacturing labor costs, and pay their laborers extremely low salaries. Do the Japanese have absolutely horribly poor standard of living? You seem to be claiming so.

      What’s the difference? One is that the average CEO earns 25 times the average worker’s wages in Europe. Here, it’s 300 times.

      Isn’t this what they say about Japan as well? And yet if your figures are to be trusted, Japan pays its manufacturing workers much lower than the US despite this.

      Perhaps it’s that your numbers are bullshit.

    4. Germany has incomes, but the third highest taxes in the world, and a brain drain:

      http://www.businesspundit.com/…..tax-rates/

    5. Germany has high incomes, but the third highest taxes in the world and a brain drain. (Link under name to avoid spam filter.)

    6. Germany has high incomes, but the third highest taxes in the world, and a brain drain. (Sorry, you’ll have to cut and paste the link, because the spam filter prevents a working one.)

      http://www.businesspundit.com/12-coun…..tax-rates/

    7. Germany has high incomes, but the third highest taxes in the world, and a brain drain. (Sorry, you’ll have to cut and paste the link, because the spam filter prevents a working one.)

      businesspundit.com/12-countries-with-the-highest-lowest-tax-rates/

    8. Germany has high incomes, but the third highest taxes in the world, and a brain drain.

      http://zikkir.com/business/60403

      1. Stop embarrassing me. I’m doing everything I can to put us in the top list. Bear with me.

      2. Fake statistic here, too. Germany does not have the third highest tax rate in the world. Using “marginal tax rate on average workers” is brain dead, but even if you use that, the quoted 45% are false – those 45% are the maximum income tax rate, which kicks in at 250,000 Euros/year for single person households.

    9. The above numbers are fake. Any Euro zone numbers should be listed in Euros, not in US-Dollars. Otherwise, whoever creates such a statistic will simply select a year where the ?/$ exchange rate guarantees the desired results. Or use a fake exchange rate.

      2007 German numbers for manufacturing were 33.00 Euros/hour (overall 2007 in the private sector in Germany was 29.10 Euros/hour). Thus, whoever put together the above numbers used a hideous $/? exchange rate of 1.537,
      whereas the actual exchange rate in 2007 was below 1.40 until the last two months of the year. Or maybe they just faked the whole thing.

      Then, this correct German number of 33 Euros/hour in the manufacturing sector is not the “wage”. This is the total cost of one hour of work, including things such as taxes and insurance premiums.

    10. Now, unemployment in Germany, for example, is far lower than in the U.S. because they paid companies NOT to lay off workers.

      I like how 7.6% unemployment is considered “far lower” then the US.

      Not so long ago (pre-obama) 7.6% unemployment in the US would be called a recession.

      1. Comparing official unemployment numbers from different countries is pointless, as they all apply different methods.

        In the official German numbers, anybody who works less than 15 hours per week but is registered as looking for a full time job is counted as unemployed. The official German numbers also count people as unemployed who are no longer eligible to receive unemployment benefits, regardless of how long they have been unemployed.
        The German numbers, though, do not count a mother as unemployed who stayed home for a few years to take care of the children, and now is looking for work again.

        Overall, the German method is somewhere in between the US U-3 numbers (those are the numbers that make the headlines) and the US U-6 numbers (currently at 16-17%).

    11. It also helps that Germany slaps some ridiculous import tariffs on incoming goods compared to the US.

      How else could German labor compete with Chinese labor on goods sold within that country, think about it?

      1. Urban legend. German import tariffs are lower than US import tariffs
        o no import taxes whatsoever on goods from the EU, which is the bulk of German foreign trade. Meaning, you can always import to Spain first, and then ship to Germany.
        o if a German travels to outside of the EU, he can bring back goods for up to 430 Euros completely tax free.
        o German maximum import tariff is 17%, but most categories of goods have either no import taxes, or very low import taxes. This money is passed on directly to Brussels. Total in 2008 was a whopping 4 billion Euros for the whole year.
        o Germany also has a VAT that works differently to a sales tax in the US. This is not an import tariff, though.

  22. I have yet to descend on this thread and give my irrefutable proclamation on the subject.

    It seems, that if someone were to criticize Obama’s policies, there are two, and only two, reasons. The first, they are racist. The second, they love and support Bush. However, it would be erroneous to suggest the two are mutually exclusive.

    As this is factually the case, I no longer need to acknowledge that there is a legitimate viewpoint other than those of me and my fellow progressives.

    Not taxing the wealthy, as Obama justly and rightfully supports, would lead to disasters of biblical proportions. Than cannot be denied. It’s too bad that racism and Bush loving may lead to said disaster.

    Do not bother to engage with me if you disagree, for to do so would make you racist, a Bush toady, or both.

    Good day.

    1. “Than cannot be denied” should be “That can not be denied.” However, my wisdom still stands.

      1. I have yet to descend on this thread and give my irrefutable proclamation on the subject… then claim to not be a smug elitist prick, which I gladly admit.

        1. You tell ’em, Tony! Admit he’s right, Ron Pual cocksuckers!

          I’m NEVER coming back to this websight!

          1. It is spelled “Paul,” not “Pual.” Of course, radical conservatives are the only ones who ever expel people from their movement on ideological grounds, something we enlightened progressives would never do.

            However, our movement would do better without the likes of people who lack the ability to spell, such as yourself. And, frankly, Chad is a little too populist and low-brow for my liking.

            1. Hey Tony,

              Fuck you. I was the congressman from Hawaii’s 1st district until that bastard Charles Djou beat my ass.

              Anyway, Max is constantly sucking my cock. When he’s not sucking cock, he’s talking about sucking cock.

              If anything, he’s consistent.

              1. I shall not respond to someone so gauche.

            2. Oh, and I have absolutely nothing to do with Ron Paul.

              He likes women.

              Unlike Max. NTTAWWT. You can ask him tomorrow, when he’s back commenting again.

            3. Fuck you Tony! This is how you treat me after I cleaned your pipes in your beachfront cabana? And those pipes were dirty as shit, you fucking bastard.

              1. You have mistaken my intentions. I care about “the poor,” but I do not care about individual poor people.

    2. Sweet! Spoofers arguing with each other about… something, I am not sure exactly what. This is what makes H&R great.

      1. Great? Hardly. I simply enjoy tweaking you rigidly dogmatic libertarians in my spare time. It’s an amusing diversion from my hectic schedule of worrying about the poor, and shuttling between my three palatial properties (one of which is on the beach, did I mention that?) Also, looking busy keeps my driver from interrupting me with his tedious stories about his children and family, as I doggedly persue the interests of the common man online.

        1. Thank God for you, Tony!

  23. I’m a little disappointed that no one addressed the blatant sheepfucking.

    Most people have very little understanding of economic and fiscal policy, so it’s easy to convince anybody with a general predilection for small government that regressive, debt-financed tax cuts are advancing the small government cause.

    Unless his BA has the word Economics behind hit he can feel free to slide himself over to this group. I’m feeling pretty secure in assumption that it doesn’t.

    I like his line, “Any remotely serious economist looks at revenue and spending as a proportion of the economy.” They also look at both sides, the G (injections) and the portion of T (leakage) removed from Y. See the obvious happy little relationship there? Welcome to the most basic macroeconomic model. It only gets vague and fuzzy from that point on.

  24. Henry Carey’s Harmony of Interests, 1851
    Henry C. Carey, adviser to Abraham Lincoln, and perhaps the leading American System economist, wrote extensively exposing the failure of the British free trade approach and demonstrating the success of the American System.

    One looks to exporting men to occupy desert tracts, the sovereignty of which is obtained by aid of diplomacy or war;

    the other to increasing the value of an immense extent of vacant land by importing men by millions for their occupation.

    One looks to increasing the necessity for commerce;

    the other to increasing the power to maintain it.

    One looks to underworking the Hindoo, and sinking the rest of the world to his level;

    the other to raising the standard of man throughout the world to our level.

    One looks to pauperism, ignorance, depopulation, and barbarism;

    the other in increasing wealth, comfort, intelligence, combination of action, and civilization.

    One looks towards universal war;
    the other towards universal peace.

    One is the English system;

    the other we may be proud to call the American system, for it is the only one ever devised the tendency of which was that of elevating while equalizing the condition of man throughout the world.

    “Such is the true mission of the people of these United States…. To raise the value of labour throughout the world, we need only to raise the value of our own…. To improve the political condition of man throughout the world, it is that we ourselves should remain at peace, avoid taxation for maintenance of fleets and armies, and become rich and prosperous….

    Why dont libertarians stand up for the american system?

    1. Why dont libertarians stand up for the american system?

      You nationalist, collectivist piece of shit. And the hilarious thing is that you probably think of yourself as “progressive”.

      1. Don’t feed the LaRouche trolls.

        1. “Bob Dole needs company. LaRouche won’t stop with the knock-knock jokes.”

          1. Maybe he’s a world class troll? I just watched Man on the Moon again, and I am now sensitive to the possibility of Andy Kaufman level shenanigans.

    2. Carey ended up a protectionist not a free market economist. What’s your point?

    3. Um. What?

  25. I think this will all be for not when Obama gallops through sundry government programs on a unicorn, brandishing his “scalpel” and slashing inefficiencies. This simply boils down to some thinking the state, with the right people in power and their “experts,” can better manage the lives of 300 million plus people rather than the individuals themselves. And then there are other people, of the unretarded variety, that know this is impossible. The former group’s perspective sure seems cynical, controlling, arrogant, and utterly retarded. And above all, it’s insulting and oh so tiresome.

    More troubling is that every time I think I am reading a liberal-tarian publication, it turns out to be right-wing. You guys are a pain in the ass of both state-controlled programs.

  26. I just wanted to say, great post Nick.

    The revenue vs. spending graph really tells the whole story, doesn’t it?

    It also explains why we’re not growing — if you accept that the private economy grows efficiencies better (which is practically a truism), it ought to follow that over time C+I is increasingly more multiplicative than G — esp. at the 45% of GDP that gov’t spending currently sits at, since each marginal dollar of G is less likely to be efficient than the one before. That’s why the stimulus didn’t work — increasing G doesn’t help growth much, just as that recent Harvard found.

  27. Gee how do we compete internationally when all other industrialized nations have national healthcare?
    You know taking those costs off the backs of companies?

    And how do we compete with countries like Japan who subsidizes each car from between 2k and 5k per car?

    And China who is going full speed ahead with green technology and subsidizing it with trillions ?

    Why do we buy 90% of our wind turbine parts from them?

    Bush’s Dad,uncle and brother all work for China….cooinkydink?
    Who owns our debt?

    1. We compete by not doing any of that retarded shit for starts. For second, get rid of medicare. I actually hope that the people dependent on it die off. Fuck parasites.

      1. Uh, you are uninformed.
        I have paid into Medicare for 40+ years and now that I am on Medicare, I pay as much for med insurance as I paid to the last 2 companies I worked for. AND I have to pay for a suplimental policy to cover the gaps.

        I’m sick of know nothing assholes complaining about medicare. Besides, thanks to ObamaCare, you will get your wish. We will be dying off quicker under this Maxist plan.

        1. So, if you’ve paid into medicare for 40 years, are now on it, and are paying as much or more than you paid for health insurance pre-medicare, in what way did Medicare benefit you?

          Would you not have been better off saving that money for the last 40 years?

          So if this is the case, aren’t you really making the argument that medicare is a shithole of a program, but because you’re finally getting a benefit from it (even if the benefit does not equal the cost), everyone should shut the fuck up and let it be?

        2. You never paid “into” medicare. For the last 40 years you paid for old people’s medicare, you built up nothing for yourself.

          1. You never paid “into” medicare. For the last 40 years you paid for old people’s medicare, you built up nothing for yourself.

            Baloney. He paid into it. If he “built up nothing for himself,” it’s because the thieving government used it for something or someone else.

            1. No, the thieving government didn’t do anything different with the “contributions” to SS and Medicare than what they said they were going to do with them. Part of the revenue was used to pay benefits to current recipients and part was given to the Treasury to be put in the general fund. That’s how the SS system was set up in 1937 and no one has ever claimed that they were going to do anything else.

              In fact the thing that I find surprising is the fact that the purpose of the FICA tax is to raise general revenue is not blindingly obvious to everyone.

              And no one has been paying “into Medicare for 40+ years”. The separate Medicare part of FICA did not start until the eighties with the Greenspan “reforms” IIRC. Before that it was alleged that the geezers were funding it with their own current contributions.

              1. It’s obvious to me whenever I look at my pay stub, and another thing that just recently became obvious to me…minimum wage isn’t just another well-intentioned but misguided policy. It allows the government to take more of our money through FICA, which is at a higher rate for low earners than income tax. I’m convinced now that although most voters are too dumb to know that nice-sounding policies screw them over, politicians know full well that the outcome will be at odds with the stated intent. It’s sick.

    2. Gee how do we compete internationally when all other industrialized nations have national healthcare?
      You know taking those costs off the backs of companies?

      National healthcare isn’t free. Either the companies pay taxes for it (like in Germany), or else you’re advocating that individuals pay higher taxes in order to give breaks to companies?

      Why are you advocating subsidies for companies on the backs of the average taxpayer?

      1. And before the moron argues that national healthcare is cheaper, why isn’t Medicare cheaper at all? If you compare 63 and 64 year olds to 65 and 66 year olds, you find no savings. If you compare the cost of our 65+ health care to that of other countries’ 65+ health care, you’ll find that it’s just as more expensive as our non-Medicare health care is to health care in other countries.

        For that reason, there’s no real reason to expect a shift to a government system to make our health care any cheaper. So either the companies will still be paying for it– whether directly in taxes, or because they’ll have to offer higher wages to make up for the individual taxes– or else you’re advocating giving a tax break to corporations on the backs of individuals accepting higher taxes and/or lower wages.

        1. The observation that national healthcare, even decent national healthcare, is cheaper elsewhere in no way implies that any US national healthcare would be cheap, affordable, efficient, or anything like that.

    3. “And how do we compete with countries like Japan who subsidizes each car from between 2k and 5k per car?”

      We shouldn’t compete. We should do something else and enjoy the subsidy courtesy of the Japanese taxpayer.

    4. frog in a pot|9.18.10 @ 7:30PM|#
      “Gee how do we compete internationally when all other industrialized nations have national healthcare?
      You know taking those costs off the backs of companies?”
      Uh, what?
      You think putting the cost of healthcare ‘on the backs of taxpayers’ helps competitiveness?
      How about we turn over the purchasing of toilet seats to, oh, the military, so they cost a couple of hundred each instead of 5 bucks?
      Do you somehow fantasize the the government does things less expensively than a for-profit organization? If so, please tell us what they are.

      1. “How about we turn over the purchasing of toilet seats to, oh, the military, so they cost a couple of hundred each instead of 5 bucks?”

        Sounds good to me. I’ve always wanted a stainless steel toilet seat off the USS Seawolf. Funny how people believe that you can just go to the local Walmart and get the equipment you need. Though I will admit we did make a run to Radio Shack for a pack of diodes because we could not wait on the procurement system.

    5. How do we compete? Perhaps you could explain how we have been competing quite nicely over the past century or two without “national healthcare”.

      And after you are done explaining how we managed to maintain the richest economy in the world for decades prior to the advent of “national healthcare”, you can tell us what the fuck Bush’s relatives have to do with anything. Seriously is there some kind of fucking illness afflicting those on the left that requires playing “six degrees of George Bush” in every fucking post?

    6. Why do we buy 90% of our wind turbine parts from them?

      Because if we buy cheap crap from China, we can spend more of that federal subsidy and grant money on higher salaries and profits for ourselves and kickback campaign contributions to our boys in Congress. Sure, the damned things fall apart after a few years, but hey, we’ll just get another subsidy, tax break, or grant and buy some more. China likes it, we like it, Congressmen like it, and the enviro-nazis like it. The American taxpayer? Oh well, you can’t please everybody!

  28. How about we let the tax rates go back to normal AND cut federal spending?

    That’s the best way to obliterate the deficit, but no one seems to be taking that position; instead we get this inconsistent red-blue shit.

    1. “How about we let the tax rates go back to normal AND cut federal spending?”

      What do you consider “normal” tax rates, and how do you feel that this will obliterate the deficit, seeing as how the U3 and U6 are still high?

      If people aren’t working, it won’t matter how “normal” those tax rates are–and that’s another factor that Chait conveniently ignored.

      1. Letting the tax cuts expire will not obliterate the deficit, I agree. We need to cut spending.

        Considering the money that would remain in the private economy if the tax cuts are extended is about 10% the size of the stimulus, which didn’t help the unemployment picture one bit, it’s dubious that extending the tax cuts would either. And don’t tell me that rich people are so much better at spending money where it’s needed than the govt; if that were the case the bailouts, which largely benefited the most wealthy, would have corrected the unemployment problem.

        I propose to cut spending, allow the tax cuts to expire, stop fucking with the economy with stupid regulations and bailouts. That will (eventually) allow the economy to start growing again. In the meantime we need to start attacking the deficit.

        1. You’re drawing on some weird assumptions.

          -stimulus had no friction costs or tax cuts do
          -stimulus went to the private sector
          -stimulus (an injection) and tax (a leakage, or removal) reductions have the same effect on unemployment
          -the bailouts benefited individuals more than companies (I assume the wealthy refers to individuals) when it was predicated on a collapse and riots in the streets. (I’ve never seen someone with a Gucci bag rioting)

          Why don’t we cut spending, tax everyone in some manner and stop using tax code as social engineering. This would allow more revenue, and the country to grow faster!

          1. No, you’re making the opposite assumptions. Your position appears to be that the increase in the deficit that tax cuts would cause in a vacuum is negated by, well, some positive effect of tax cuts which no one has really put their finger on yet.

            1. Um I was pointing out the things you assumed to either exist or not exist. Not saying they existed. I said nothing about the overall impact of any

            2. Um I was pointing out the things you assumed to either exist or not exist. Not saying they existed. I said nothing about the overall impact of any

              1. (oops hit submit by mistake)

                I said nothing about the overall impact of any of the assumptions that you made. Personally I don’t think you even considered them and just wanted to paint a broad rosy picture.

              2. (oops hit submit by mistake)

                I said nothing about the overall impact of any of the assumptions that you made. Personally I don’t think you even considered them and just wanted to paint a broad rosy picture.

    2. What’s a “normal” tax rate?

      1. Are you guys this confused when the Back To School sale ends at Wal Mart? Sheesh.

        1. There are no “normal” tax rates. The fact you refer to the past rates as normal leads me to think you are either being negligent in the use of the word for the sake of your argument, or you don’t know there are no “normal” tax rates. Tax rates imposed (from the view of those taxing) are always exogenous and the rates are only endogenous from the point of view of government trying to suck every last drop out. You could say to a level of maximizing revenue, or to some other means, but normal or even the idea of equilibrium seems off. And goofy.

          1. from the view of those being taxed..

            So the tax is exogenous for taxees and endogenous for taxors

            I edited that the above and didn’t proof it.

          2. My point remains, do you give Walmart grief about referring to “normal” prices on clothes and notebooks and such after they end a sale?

            1. No, because they are advertising a reduction in what they normally charge. The government is not advertising anything there is no set margin by which the government has to tax per a set plan (business plan in walmart’s case). Normal taxes makes no sense. There are no normal tax rates, there the previous tax rate, and the rates before that, and the rates before that, iterating back to 0. So are you saying the normal tax rate on income is 0? Or are you saying you want the tax rates to return to where Clinton set them? Or do you want normal to be the rate where the government can maximize the tax revenue?

              You’re using the word normal to marginalize a tax increase. Nothing more.

              1. And the Bush tax cut was a reduction in what the government usually charges, intended from its time of passage to be temporary.

            2. My point remains, do you give Walmart grief about referring to “normal” prices on clothes and notebooks and such after they end a sale?

              So government should market tax policies like business? Using taxpayer money to convince us we should give them more taxpayer money. Typical.

        2. Why don’t you consider the rates that were in affect before the Clinton Tax Increase as normal? It seems you have arbitrarily started with the Bush administration simply to make your non-existent case.

          1. How about the rates in 1880?

        3. This is just lazy deflection. You established a generalized statement to let tax rates “go back to normal,” yet when challenged on what you consider “normal” to be, you never establish any concrete rates, and responded with strawmen like “Wal-Mart prices.” As if the two had any actual correlation, which you know they don’t–after all, even with all the superstores out there, no one is forced to shop at Wal-Mart. We’re all forced to pay taxes to the government.

          So put your money where your mouth is and propose what you consider to be “normal tax rates.” Is it the rates from 2000? 1984? 1952? 1920?

          Personally, it seems to me that with unemployment so high, no large economic engines in existence to absorb the ~150K in new workers every month plus the unemployed, and $1.5 trillion in structural deficits, it really won’t matter how much taxes are raised. Especially with five things taking up roughly 70% of government spending, all of which are considered sacred spending cows.

          The big, 8000-pound gorilla in the room is that no one has really discussed the possibility that there might not be an actual fix to our predicament short of default and liquidation. Probably because there’s too many pipelines of government cheese that would cease to exist in that particular scenario.

          1. The fix exists and is easy: slaughter the sacred cows

            1. I agree that the slaughter needs to happen, but I’d categorize that as “simple” rather than “easy.” I’m not naive enough to believe that killing off a huge chunk of defense, SS, Medicare, unemployment, and Medicaid wouldn’t result in massive social upheaval. Too many calves all vying for a turn at the udder, and when it gets removed, let the bawling commence.

          2. You established a generalized statement to let tax rates “go back to normal,” yet when challenged on what you consider “normal” to be, you never establish any concrete rates, and responded with strawmen like “Wal-Mart prices.” As if the two had any actual correlation, which you know they don’t–after all, even with all the superstores out there, no one is forced to shop at Wal-Mart. We’re all forced to pay taxes to the government.

            Never said they are the same thing; that’s what an analogy is. This is an argument about what the word “normal” means, not about the coercive nature of taxation.

            If you asked the manager at Walmart what the “normal” price for a T-shirt is, they would say it was whatever the price was before the sale began. If you said “well, your prices 20 years ago were only half as much, so why isn’t that ‘normal’?!” they would probably look at you funny. Just like I am.

            The big, 8000-pound gorilla in the room is that no one has really discussed the possibility that there might not be an actual fix to our predicament short of default and liquidation.

            I agree with this, actually. But talking about this is like failing to clap when Tinkerbell is dying.

            1. We’re probably talking past each other on the topic you initiated, honestly, but it would be nice to see what tax rates you would consider to be “normal.” If they were the pre-Dubya rates, we could at least accept that as an answer, albeit a somewhat incomplete one in that we’d still have to establish what exactly makes them the baseline.

              I do think both of us are looking at a bigger picture than just tax rates, though, and it’s kind of tripping up the discussion.

      2. A normal tax rate would be around 90% on the top wage-earners.

        On every dollar they make.

        1. Any every Yuan and Euro.

    3. If I thought that the additional revenue would actually be used to pay down debt and balance the budget, I’d be happy to pay more in taxes. We are legitimately on the hook for the debt our parents’ generation acquired. As it is, though, it’d just be spent on more of the same garbage. So no thank you.

      1. And if I thought that cutting taxes would cause Congress to stop spending so much, I would support tax cuts.

        1. Tulpa|9.18.10 @ 10:03PM|#
          “And if I thought that cutting taxes would cause Congress to stop spending so much, I would support tax cuts.”

          I doubt it would. but you ignore the alternative:
          Any perusal of history tells us that a rise in taxes results in a even greater rise in expenditures.
          It follows that cutting taxes leads to a lower rise in expenditures.
          It seems we have no option to actually cut expenditures; lowering taxes is the best we can do.

          1. Apparently your perusal of history doesn’t include the past decade.

    4. I agree with the idea of doing both, but only in the short term, and only because it’s not enough to overcome the deficit. We have to obliterate the debt as well.

  29. Would someone please kiss the frog and turn it into Tony. At least Tony puts up something that could be considered an argument rather than barely coherent completely retarded shit.

  30. Voodoo economics. Laffer Curve. Voodoo economics. Laffer Curve …. I keep trying to send a subliminal message. Buy my popcorn. Feature resumes in 6 minutes. Hie thee to the concession stand.

    1. Laughter Curve, more like it.

      1. he likes to think he knows his econ.

        humor him.

        1. I’d love to be educated on this, but the Laffer Curve cheering section has yet to produce any links showing that economists believe the peak is at or below current taxation levels. Bald assertion that the peak is at 10% doesn’t cut it.

  31. Damn. Nick and Matt are both brutal in their responses. More blog wars!

    1. Break out the Jackets and Viking helmets!

      1. SPAM, SPAM, SPAM, SPAM, SPAM, SPAM…

        1. I’m surprised he didn’t end the piece with “Now go away or we shall taunt you for a second time!”

  32. I think the phrase I am looking for is “Oh, snap!”

  33. It’s ok Nick, sticks and stones. You have bigger stones. And reason.com is a bigger stick according to Alexa traffic rankings.

  34. Only read half way through the posts so maybe i am not the first to point this out, but it looks to me like revenues rose in the 00’s after Bush’s tax cuts.

  35. Libertarians are worse than NAZIs at least Nazi’s cared about their country.More than I can say about libertarians.

    what would libertarians do about the poor,sick,elderly…kill them off,same as NAZI’s…without the nationalism.

    America who gives a fuck………right?

    1. Godwinning is the last resort of the foolish.

      1. There’s no evidence that this one’s progressed to foolish.

    2. at least Nazi’s cared about their country.

      Wait did you just apologize for the nazis?

      You can’t even use hyperbole without tripping over yourself.

      Pathetic.

    3. you do know, of course, that plural doesn’t need an apostrophe, right?

      1. No, it doesn’t know anything.

    4. what would libertarians do about the poor,sick,elderly

      Ok, this is the issue I’ve been running into while talking to people I know about libertarianism.

      It is not the governments responsibility to take care of the poor, sick, and elderly. You may argue that it is a civilized society’s responsibility, but that does not inherently make it the job of government.

      Poor, Sick, and Elderly are three very broad categories.

      As for the poor – before the welfare state, community ties were much closer. If your neighbor down the street fell on hard times, the community would support them, whether through charity, the church, or just neighbors pitching in to lend a hand. Government has since taken over this responsibility and lets look at the results –

      Pre-government intervention, if your neighbor was a lazy son of a bitch who didn’t want to work or get a job, this was not considered ‘hard times’. He would be told tough luck, find a damn job or starve. This person would then literally, be forced to work to survive, whereas a needy person would be taken care of until they could get back on their feet.

      Post-government intervention – If your neighbor is a lazy son of a bitch and doesn’t want to work, he gets a government paycheck taken from the fruits of your labor everyweek to sit on his couch and eat doritoes. He has no incentive to get a job or to become productive, as he gets his money either way. This causes negative stereotypes of ALL people on the federal dole, causing Americans to be less charitable as a whole.

      Outcome of government intervention – Negative

      1. I don’t have a problem with this, but I’d prefer to leave it to the state rather than the federal government.

    5. So, if we embrace nationalism you will say nice things about us? Or would you just compare us to Pol Pot rather than Nazis? That means a lot to me. I love you.

  36. Perhaps this is just a stage of ideological recognition. Stage 2, I believe
    Stage 1 – not even in the media or mainstream cultural conversation
    Stage 2 – in the conversation only occasionally but views, facts are distorted terribly
    Stage 3?
    Stage 4?

  37. I KNEW I recognized that name…

    http://i1186.photobucket.com/a…..1284884883

  38. Perfect!! I believe you hit the “nail on the head”

  39. Am I to believe that if the expiration of tax cuts leads to massive additional revenue, that revenue won’t immediately be spent? Thus continues ever-upward racheting of the government’s size and scope. This is about power. People like Chait, at the end of the day, favor more power over people like me by people like them. I have arrived at the point where I am finally saying, “Make me.” Millions agree.

  40. Anybody who says “deficit-financed” tax cuts is entirely missing the point. There is no such thing as “deficit-financed” tax cuts. There are tax cuts, and there is overspending when your revenue goes down, which causes a deficit.

    1. Ah. So if I choose to go from working 40 hours a week to working 20 hours a week (for the same hourly rate), and have to refinance my mortgage (=go further into debt) because I can’t make the payments on the old one, it’s NOT my decision to work less that sent me into debt?

      Semantically, you can make that argument…but it’s a pretty useless viewpoint in practice.

      1. A better analogy would have you going from 40 hours to 38 hours and then buying a second house.

      2. You are comparing the government expropriating income to an individual earning income. It does not work that way.

      3. To be honest, the argument would be that instead of stealing 1/3 of my neighbor’s money, I am just going to steal 1/4 of his money.

        Then I am going to spend more, no matter whether I am stealing 1/3 or 1/4. So I am racking up more debt no matter how much I am taking from the productive around me.

        Unlike a company or personal budget, in the Government budget, there is no true correlation between spending and income.

        If I choose to create more debt, even when my income goes down, I am not creating “deficit-financed” income reduction…I am just making less money and probably a poor manager of that money as well.

  41. There’s nothing odd about starting with 2002, which is the first year that Bush had full control of the federal budget.

    You’re being too kind. Although the Bush tax cuts (or perhaps we should call them the “Obama Tax Cut Preview”) applied to income on earned from January 1, 2001 forward, (potential) taxpayers couldn’t start factoring these cuts into their financial decisions until they passed.

  42. yar. (to be a pirate)
    those assholes who like the “starve the beast” have re-discovered their dislike of Big Govt, cuz there’s a “D” in office. getting back to their big govt social conservativism makes them forget the “anti big govt message”

  43. Vote Republican. We’ll wreck the country slower.

  44. Let me be clear. I like Nick and I can’t stand Chait and people like him.

    But sometimes Nick can confuse hatred of unwarranted expansion of the size of government (yay, we agree!) with hatred of “increasing debt.” The two things don’t have to be synonymous.

    People who argue that the government should “take in” (tax) more than they “put out” (spend) haven’t understood the macroeconomic and monetary basics. Even putting the budget into balance would, eventually, lead to disaster as the economy would have its growth constricted. That disaster would be especially swift and severe at the tail end of a recession, which is pretty clearly where we are now.

    Every dollar of government spending added to the deficit is another dollar moved to the private sector (e.g. social security check, contractor payment, office building rent, etc.) Those who argue for govt surpluses don’t seem to understand the implication of the government accumulating financial assets – pulling net financial assets out of the productive private sector – that’s what it is, of course.

    The place you should start is to determine the size of the government you want. Then, having determined that, you set fiscal policy to achieve that level of government and a steady deficit of probably something like 3-7% of GDP forever. That would allow the money supply to grow at a pace that would encourage economic expansion, while ensuring that all of the government (hopefully a limited and Constitutional level of government) you want is supported.

    The problem is that politicians instead fight over tax revenue, and try to use it to buy off their constituencies. And I more despise the party that, on average over a very long period of time, have chosen to buy off their constituency by expanding the scope and size of government (the Dems) rather than using deficit financing to return financial assets to the private sector (the Reps). (Example: which party is for privatizing schools, or introducing charter schools?) I think that Nick agrees with me (setting aside the usual Reasonoid libertarian preening about NeoCon war policy and religious values issues).

    1. Are we gonna have to take this outside?

    2. “a steady deficit of probably something like 3-7% of GDP forever. That would allow the money supply to grow”

      The government doesn’t need to run a deficit to grow the money supply.

      1. Maybe you can tell us how else it grows the money supply then?

        My understanding of it is captured pretty well in Soft Currency Economics by Warren Mosler.

        “Fiscal policy determines the amount of new money directly created by the federal government. Briefly, deficit spending is the direct creation of new money. When the federal government spends and then borrows, a deposit in the form of a treasury security is created. The national debt is essentially equal to all of the new money directly created by fiscal policy.”

        1. The treasury security must still be “bought” by the private market, which takes money out of private investment and “invests” it in government (and at a lower rate!).

          Our current money-creation scheme does NOT involved direct printing, by treasury-creation or otherwise.

        2. The only way to create new money is this country is to loan it into existence, using fractional-reserve lending. This is done exclusively by the banks, NOT by the government.

          Government can only capture existing money.

    3. So Draco’s a Chartalist? Oh well.

      1. “Chartalist” is what you could call someone who understands the monetary system in which we live. As opposed to someone who just lives in it and doesn’t understand it (99.9% of people).

    4. It is not possible to have a “steady deficit of 3-7% of GDP forever”. That will just lead to bankruptcy.

      1. No, it would not lead the bankruptcy in a fiat money regime. The US government can simply never go bankrupt. It is an incoherent idea, which you will understand once you investigate some of the links I’ve posted. The Fed will always clear any check that Treasury writes.

        Fiat money regimes rely on a nearly constantly increasing overall debt (the debt serves as an interest rate maintenance account), and therefore budget deficits (manageable ones!) forever.

        In other words, Dick Cheney was right – “deficits don’t matter” and Chait is wrong.

        Bankruptcy is never a danger; but hyperinflation is. So there is no panacea here. You need to be careful that you don’t keep running a huge deficit after a recession has ended.

        I’ve asked this a couple of times in recent comment sections, but I’ll ask it again: why do you think just about every nation in the modern world with a fiat money system runs a perpetual deficit? The answer is that anything else would choke off growth and lead to major depressions. Open your eyes. If what I am saying isn’t true, wouldn’t you expect at least some kind of bell curve distribution of deficits and surpluses around the world, with a mean of zero (balanced budget)? But we don’t see this. We see nearly 100% of govts running deficits. The really amusing part for some of us is that most of their politicians don’t really understand why, but they’ve learned that when they do idiotic things like try to balance the budget or run a surplus, they wind up causing economic contractions, so like some kind of Pavlovian dogs, they do the only thing they’ve learned doesn’t generally cause contraction: run a reasonable sized deficit.

        Draco
        http://www.moslereconomics.com
        Counter Insurgency, Deficit Terrorist Unit

      2. I suppose it wouldn’t, if the US was the only country in the world.

        I guess that’s what I don’t get about what Draco keeps saying. The idea that we’re in a Chartalist (fiat) system seems at odds with the impression other countries have that they are lending to us.

        1. Hi Fatty. I almost want to say “Shhh!” when I hear this.

          You see, China might think they know what they are doing, but what they are really doing is sending us real goods in exchange for credit balances at the Fed, which they can either leave in their “checking account” (so to speak, think of it like a PayPal account they can use to buy American made things, or things they can buy with dollars), or transfer to a “savings account” (so to speak, think of Treasury Bonds) where they can earn interest. That’s it. We don’t need them for anything, and of course their top guys actually know this and are wondering whether our politicians are just stupid or playing some kind of trick on them.

          The US absolutely and positively does not need China, or any other nation, to buy our debt.

          The bonus we get from China is that they’ve been working their people and economy to produce goods for us at fantastic prices, while getting a PayPal account denominated in USD in return. They only thing they can do with that money is buy Treasuries or buy American goods or services.

          But let’s just keep this our little secret, ok? Because I’m loving me some cheap computers and HDTVs!

          1. OK… but if they want their money back, and we can’t pay, or we do something like just make a bunch more to pay them off, or it just begins to look like we could never possibly pay it off – what happens then? Who will want to deal with the US without charging a premium? No country is an island. If America loses its reputation as a sure thing, we WILL be poorer.

            1. It’s called inflation. We control the currency in which we owe money (few countries can do this). While it would cause problems elsewhere in the economy, we could dilute our currency and thereby decrease the real debt burden.

  45. (Mostly) rhetorical question:

    Has Peter Orszag always been a blathering imbecile, and I just never noticed until he started writing a column in the NYT?

  46. Excellent article. Liberals and socialist-Marxist are NEVER going to admit the obvious that lower tax rates create more jobs and higher revenues for the government.

    They also are BLIND to ever increasing Government Spending – it is their “lock on power”.

    As a lifelong registered Republican I can easily admit that the Bush Economic Policy of unfettered SPENDING was a disaster. Republicans are now being taken to the woodshed by the American People as they support Tea Party candidates over liberal Republicans.

    Anyone with a brain can review the record and come to the same conclusions as you have Nick. Chait is a liberal troll; he’ll just continue to babble the Democrat “talking points”.

    To hell with him; to hell with the socialist-Marxist Democrats and to hell with Ruling Class Liberal Republicans!

    1. To hell with him; to hell with the socialist-Marxist Democrats and to hell with Ruling Class Liberal Republicans!

      Here! Here!

    2. You are so right. One thing unites all Democrats across the Left ideological spectrum – they are all for bigger government. The political power advantage is that they don’t have to fight each other – so long as the pie keeps enlarging, everyone in the coalition will eventually get a nice piece.

      That is the problem with “moderate” Republicans. They muddy what should be an equally uniform opposition to bigger government. The Tea Party is, as you say, attempting to correct the problem in American politics of having 2 Big Government Parties.

      The unrecognized advantage of the coming new alignment is that with the pie shrinking, the varying members of the Democrat coalition will begin fighting with each other.

      Then our MSM commentators will see a real civil war.

    3. Excellent article. Liberals and socialist-Marxist are NEVER going to admit the obvious that lower tax rates create more jobs and higher revenues for the government.

      There is a point where lower tax rates mean *less* revenue. (I have no idea what that might be nor have any problem with lower tax rates.)

  47. Just imagine (I know this is a what-if) if the Republicans had held to their principles, revenue went up, spending went down and the budget started to go down!!! I believe this is what annoys people in the tea parties more than anything. Most people, when looking for cause and effect, know that revenue went up during the Bush years. Democrats always look at tax cuts as a zero sum game, which it’s not.

    ANyway, it’s the Republicans who blew it, from 2001-2006 and President Bush, as much as I like him, allowed it to happen by not using his veto pen.

    This time around, people will be watching much more closely.

  48. This is a very interesting article, but you left out one crucial factoid that will either blow you or Chait out of the water.

    Instead of comparing tax revenues and spending to GDP, you should re-do the same graph and base it on constant dollars. Why? Because, if tax cuts cause GDP to rise, then we should see more revenue and less or no deficits IF we HOLD spending to THE SAME LEVEL.

    To me, fixing our budget crisis is simple: we make the tax cuts permanent, we return spending to 2007 levels in 2011, and then we hold government spending (all government spending) to a fixed level over the next decade. The only allowable exception would be in case of an emergency that threatens the survival of the nation (war, ‘planet-killer’ asteroid strike, etc.).

    That means we’ll most likely have to repeal Obamacare. It also means we’ll have to start means-testing SS and Medicare recipients. And we’ll have to fix the public employee pension issue.

  49. Nick, thanks for pointing out that tax revenues are meant to fund the activities of the government. Progressives like Chait and big government conservatives like Bush believe that the more money they can bring in, the more activities they can engage in.

    This is a typical “win-win” for progressives, who also believe they can engage in more activities when revenues drop, as in a recession.

    The only reason the progressives criticize the Bush tax cuts is because they took away some revenue. Progressives had big government plans for it, too.

    1. I think it has more to do with the politics of envy.

      The Democrats know (well, a lot of them do) that the actual revenue collected does not scale perfectly with increases in the tax rate, and that higher tax rates can even lead to lower revenues. When Obama was confronted with this, he admitted he preferred a higher rate anyway, in the interest of “fairness.”

  50. Chait is nothing more than “a dishonest whore” for pseudo-liberals and statists.

  51. If the Republicans had honored their language of fiscal restraint, we’d be in a managable position right now and the Democrats never would have taken over the legislative and executive branches of government.

    When you abandon your principals, you abandon the people. Liberals have no legitimate principals so they have no fiscal restraint.

  52. I truly have to thank GWB for his lack of fiscal restraint, and his failure to use his veto power when he so clearly should have. He brought us to the brink of financial disaster. Then Obama jumped.

    And thus the Tea Party movement was born.

  53. FINALLY! Someone pointed out that spending causes deficits!

  54. I am confused by the figures presented. It states that spending under Bush increased by 104% (i.e. more than doubled). Yet spending as a percentage of GDP went up by about 1-2%. Mathematically, that would mean that GDP close to doubled during Bush, which obviously did not happen.

    Could someone please explain?

  55. Nice rebuttal, Nick. Get ’em. Chait is a hack.

  56. Stop dropping these moderates (Bush, McCain, Romney, Castle etc.) in the same field as the conservatives. Wolves in sheep’s clothing.

  57. Those supporting a reversion back to Clinton-era tax policies constantly blame the Bush cuts for starving federal coffers and, hence, increasing the deficit.

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