Government Spending

Q for Those in Favor of "Balanced Approach" of Spending Cuts and Tax Hikes: How Many Times Has Real Spending Declined Since 1980?

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All the signs are pointing toward some sort of late-minute, ill-conceived deal to avoid the "fiscal cliff" at year's end.

This fiscal cliff is that dreaded Witching Hour come midnight on Jan. 1, 2013 at which the Bush tax rates expire (meaning a reversion to higher rates in place under Bill Clinton), Obama's payroll tax "holiday" ends, the debt ceiling might need upping (again), and "sequestration" kicks in, thereby cutting $110 billion in 2013's estimated spending tab (currently assumed to be about $3.8 trillion). The fiscal cliff, we're told, will be ruinous because our economy—not yet recovered from the recession that ended some time in 2009—will not be able to withstand higher taxes on low- and middle-income earners (you know who you are) at the same time that the federal government will be forced into draconian "austerity" (also known as nearly 3 percent of anticipated federal spending for 2013).

Yet in the name of "fiscal responsibility," says the president who has overseen four consecutive years of trillion-dollar-plus deficits and a majority of adults, we should raise taxes on the wealthiest 2 percent of Americans because they alone don't respond to basic economic incentives (why should they—they've got money to burn). And yes, let us be clear that we will also work to cut spending sometime down the road when we can afford to, after we have even more debt than we do today.

Because lord knows that no other countries have ever addressed debt-to-GDP issues by actually cutting spending in the here and now. Except maybe for, well, the United States itself after World War II and the New Deal, and Canada in the long-ago 1990s. And some other places, all of which not only reduced expenditures but saw powerful economic growth as a result.  

Republican legislators such House Speaker John Boehner (Ohio) has already nudge-nudge-wink-winked and Sens. Lindsey Graham (S.C.), John McCain (Az.), and Saxby Chambliss (Ga.) are now signaling that, like President Obama, they are willing to adopt a "balanced approach" to fiscal responsibility. That means that more and more of them are willing to talk about hiking government revenues in the short term for promises of cutting government expenditures in the long run.

Here's a quick question for the folks earnestly in favor of such a trade-off: How many times between 1980 (when Ronald Reagan was elected) and 2011 (last year for which full data are in) have inflation-adjusted, year-over-year government expenditures declined? That strikes me as a decent indicator of just how serious the federal government can be about restraining spending in recent years. The answer, using constant 2005 dollars and relying on Office of Management and Budget (OMB) tables (see table 1.3)? Four times, in 1987, 1993, 2007, and 2010. At least two of those four years warrant asterisks, too: In 2007, spending was almost exactly flat, and the decline in 2010 mostly had to do with the inability of the federal government to get its shit together and pass a budget.

So why exactly would anyone expect Congress to really cut spending down the road if it has shown essentially no ability to rein in spending in the near term? This is like a variation on the old joke about losing money on every unit sold but making it up in volume. Except it's not like that at all. Or funny.

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  1. The whole ‘budget crisis’ is a giant scam.

    2012 est federal revenues: 2.4 trillion

    3rd highest ALL TIME revenues.

    California est 2012 revenues: 142Billion. ALL TIME highest revenue

    It is all lies. And the fools lap it up.

    1. FEED ME SEYMOUR!

    2. Just cut spending back to pre-bailout levels. Tax receipts are plenty high. Cutting spending to 2005 levels would balance the budget right away. Was government spending too low in 2005, or too high?

      2005 federal spending: 2.47T
      2006 spending: 2.66T
      2007 spending: 2.73T
      2008 spending: 2.98T
      2009 spending: 3.52T
      2010 spending: 3.46T
      2011 spending: 3.60T
      2012 estimated spending: 3.80T
      2012 estimated revenues: 2.47T

      1. People were dying in the streets in 05. Or did you forget who was president then?

      2. I’ve long thought that a more politically palatable method would be to simply freeze spending at current levels and let revenues catch up, which they would likely do in 5-7 years.

        1. Draconion cuts!

          1. Old people! Cat food! Birth control!

  2. excellent alt text btw

  3. FIS-CAL CLIFF! *shakes pom poms*

    FIS-CAL CLIFF! *shakes pom poms*

    FIS-CAL CLIFF! *shakes pom poms*

    FIS-CAL CLIFF! *shakes pom poms*

    FIS-CAL CLIFF! *shakes pom poms*

    1. Just because you’re occcasionally tacitly for pot legalization, doesn’t make you a libertarian. Bill Maher went around for years basically claiming exactly that. Politically Incorrect was an interesting program to watch as a young libertarian. What was most hilarious was when he would take the most left-statist position possible on a given topic and end with something like, “But what do I know, I’m a libertarian.” Hell, we have Mike “Fuck Due Process” Godwin and Steve “Ends Justify, Well, Whatever” Chapman running around calling themselves libertarians and even being allowed to present articles here as libertarians.

      He seems to be motivated by a combination of nostalgia for a bygone era and liberal logic breakdowns. Sure some things were better in the 80’s or the 50’s or whenever. The newspapers might have been better when they had 3 times the staff – and nobody had an alternative source of information. Then he gets hostile when confronted by the liberal failures in the cities. Welfare breaks down the family (The Wire documents perfectly), but we need more.
      (Click Here to view more) Education is bad – just because. Capitalism in bad because Wall Street and stuff. It bores me.

  4. If we cut spending, Tinkerbell will die.

    1. Since Tinker Bell is a fairy, maybe the gay rights community will come to her defense.

  5. “No, fuck you, cut spending!”

      1. http://www.youtube.com/watch?v=edtEpPhSk20

        Tonight is the night that I come unglued. No longer will the beautiful people walk the streets and smile while I sit and stew. Benn waiting all of my life just to give it to you. Gonna pay back all you generous souls and when I’m done you motherfuckers will all be through.

        1. Thank you for posting this!
          I love when I’m pleasantly surprised by music links, although around here it’s never really TOO surprising because regardless of specific tastes most of the people here at the very least like music with balls.

    1. Do you think I should pick the Giants in their game next weekend?

      1. “No, fuck you, cut spending!”

        1. So, you’re saying bet on RGIII?

          1. As a lifelong Giants fan, I can assure you the Giants will fuck you no matter which way you pick.

            1. They fucked the Packers pretty good yesterday.

              1. Damn right, I’ve just learned never to bet a Giants game. They’ll crush a team like the Packers, then lay a giant egg against a team like Cincinnati.

            2. As a life long Pats fan I can agree that the fucking Giants will always find a way to fuck you over in the end.

      2. Going back to the Fuck Eli pickem strategy.

        1. I made a joke last week about switching my GB pick after you revealed yours. I should have done it.

          1. I do try to announce it, just so nobody else in the league has to suffer with me.

            1. That’s nice of you. At this point I need to try and stab everyone in the back. I was right up there 2 weeks ago but have had awful showings.

  6. Answer: Who cares.

    Counter question: How much has the population decreased since 1980?

    1. Aren’t you supposed to be out picking up your Obamaphone?

  7. “How Many Times Has Real Spending Declined Since 1980?”

    Oh! Oh! Pick me! I know the answer!

    1. ‘A rat, with a dick this long!’

  8. …we should raise taxes on the wealthiest 2 percent of Americans because they alone don’t respond to basic economic incentives…

    It’s true, you know. Those moochers don’t even know the meaning of the term tax planning. Which, by the way, no one can really do since no one knows what voodoo those D.C. dipshits are going to come up with to save the planet from fiscal armageddon.

  9. If not passing a federal budget causes spending to decline, isn’t not passing a budget a good thing?

    I’m having trouble understanding why you think 2010 needs an asterisk, other than it’s convenient for your narrative.

    1. If not passing a federal budget causes spending to decline, isn’t not passing a budget a good thing?

      It will ruin the GDP!

    2. Because everyone knows they would never have passed a budget that reduced spending. What, are you trying to imply that they might have? Please.

      1. Also, yes, not passing a budget is a good thing.

        Ideally everything up there in DC would grind to a halt and the federal aparatus would start to crumble.

    3. You’re the stupidest fuck ever, joe, and thanks for proving that with every post. Holy shit you’re dumb.

      1. I can’t even read his posts most days. It’s like intentionally setting your eyes on fire and then hammering in your own head with a dead trout.

        1. It’s interesting that you should say that, because last week, my wife and daughter went to some farming event, where one of the booths featured painting dead fish and pressing them against a shirt to make a design.

          1. Where did this happen?

            I have a friend who specializes in weird folk art in publicly staged events.

              1. Unless he took off out of the blue this week likely not Ted.

                1. It was all farm stuff–farm animals, stuff on produce, little games for kids, making ice cream in a plastic bag, that sort of thing. And fish painting.

                  1. He once painted me staring into a bucket of tripe (thankfully I didn’t sit for it), so you can see why I thought it was possible.

            1. Not St. Pete–it was at Heritage Village in Largo.

            2. I have a friend who specializes in weird folk art in publicly staged events.

              Has this friend ever been featured on DieHipster or LookAtThisFuckingHipster.com?

              1. He’s a bit old for the hipster scene. Close to 60. Was part of the Athens Ga scene in the late 70’s early 80’s though. So, close enough, I guess.

                1. He was a hipster before it was cool?

                2. Was part of the Athens Ga scene in the late 70’s early 80’s though.

                  The Speakeasy?

        2. I swear he has to be drunk or something; the stupidity is so epic as to be almost some kind of Kaufman level meta-joke.

          1. Maybe he has the day off from work?

          2. If no one’s out sick in the school district and your ex-wife won’t you you see your kids, why not drink the day away?

            Thanksgiving was really hard on joe, picking at a turkey frozen dinner in front of a flickering TV in his basement apartment, checking his Trac-phone every few minutes and wondering why it hasn’t rang.

            1. Tony showed up down thread. So this is pretty much the rim of some ugly DP action.

            2. You think joe’s kids are actually his?

              1. Of course not. They’re mine.

              2. I’m sure there was a hatchet-faced East Coast shrew that let him spill his foul seed into her for the liberal cause. She was just ready to move on to husband #2, the one with money and a full head of hair.

              3. You think joe’s kids are actually his?

                No, they’re actually his.

      2. I think he enjoyed being able to post here over the holiday without us calling him names. What a pitiful little man.

        1. I’m thinking the best thing he could do would be to just off himself and spare the world his miserable, midget presence.

          1. I recommend for him to drag a trunk to a distant cave fill it with cement, and lock himself inside. That way, he’ll be isolated from contact from the rest of the world. No would need to be reminded of the shame that is his life’s work if he just disappeared like that.

            1. I am simply going to fire my editor.

    4. Re: The Derider,

      I’m having trouble understanding why you think 2010 needs an asterisk, other than it’s convenient for your narrative.

      I understand your confusion, since you were not paying attention to the main point of the article, which is that the dire consequences of reducing spending are mythical. The fact is that spending was not reduced in 2010 because of any rational action by Congress, which means that spending in what matters was still not restrained.

    5. Just like every turnstile, that went right over his head.

    6. It IS a good thing. Democrats were in a terrible huff because the Republicans wouldn’t let the President do his job.

      That WAS their job, and what the voters who elected them wanted them to do. Otherwise we’d be in an even worse mess.

    7. Perhaps you didn’t understand the context, which is that congress didn’t actively cut spending that year. It just kinda happened through neglect, really.

  10. Canada cut its debt-to-GDP ratio by introducing a national sales tax and cutting federal payments to provinces. The provinces compensated by raising taxes.

    1. Lies. The Feds cut spending by 10% non-interest. The GST replaced an earlier tax that collected slightly more money. The provinces also cut spending, a great deal in some cases. They also cut taxes in general.

      1. Not to mention the fact that a low-scale nation like Canada can afford to cut spending and not have it send massive ripples because their economy isn’t as wedded to Big Government as ours is.

        I mean, Jesus Christ, between Social Security, Medicare/Medicaid, and defense, that’s roughly $2.5 trillion–16-17% of the economy–that’s completely dependant on government spending. If that drops below 14-15%, that means INSTANT RECESSION right now.

        1. Any reduction of our spending by more than 2% of GDP would set off a recession, by definition. We’re at 2% growth (say), but GDP is calculated to include all federal spending, including what is borrowed.

          Cut federal spending by more than 2%, do the math, and there you are: recession.

          1. Right, not disputing this–just pointing out that the three biggest items on the budget don’t have a lot of leeway as far as cuts for the recession to occur.

      2. Toxic,
        You’re 0-3.
        Feds cut spending by downloading on to the provinces.
        The GST, while it replaced a hidden tax, brought in more revenue than the hidden tax did.
        And the only provinces that cut spending were Alberta, thanks to Ralph Klein, and Saskatchewan, which was in default of its bonds and had to get a guarantee from Ottawa or it would have been lights out for Roughriders fans.
        But thanks for coming out, collectivist asshole.

  11. Same old power politics. The Republican establishment has no reason to fear the Tea Party and libertarians.

    We’re a left-of-center country now. California is the future of America.

    1. That’s because California keeps driving everyone out and they bring their batshit nonsense with them.

      Of course they go right back to implementing it and voting for it where they landed. eventually even Texas will turn communist if we drive enough guilty rich liberals out of the state from their own policies.

      1. You’re right about Texas… the urban areas are minority majority cities or are becoming that. And you have plenty of Californians and “Yankees” moving in as well.

        This all good for gays and pot smokers, so yay, but it is going to be bad for the political economy.

        1. “the urban areas are minority majority”

          There is something very wrong with the way the word “minority” is used these days.

      2. So, forget about stopping illegal immigration from Mexico. The Texans should be worried about stopping legal immigration for California.

    2. We’re a left-of-center country now. California is the future of America.

      Greece is the future of California is the future of America is the future of Europe is the future of California is the future of Greece.

      I hope this clears up the issue.

  12. The Repubs really ought to agree to sign whatever the Dems want. As long as the Dems have to make any compromise, they will always be able to claim that that the concessions to the R’s were the reason their fixes did not work. Let the D’s go full retard and let’s see once and for all whether their economic vision works.

    1. Dude, it’s going to take decades to undo all of the damage that was done by the Rethuglicans. Democrats are going to need that long to work their magic.

      1. But we need a stimulus because the private sector can’t come back fast enough to prevent massive amounts of needless suffering.

        That’s how they really sold it.

        1. massive amounts of needless suffering

          That’s like saying I can’t stop eating myself to death now because it will cause me needless suffering.

          1. prevent massive amounts of need[ed] suffering.

            FTFY

            And bring the pain!

    2. It has been suggested that the Republicans in the House just vote “present” to whatever Obama wants, to avoid the blame. It’s got an appealing irony due to all of Obama’s “present” votes in the Illinois legislature.

    3. I’ve been thinking somewhat along these lines. The better solution would be for the Republicans to vote “Present” en masse to a Democratic proposal, preferably after denouncing it on the floor.

      That preserves their ability to attack the policies and allow the public to learn just what these policies would entail.

  13. I’m having trouble understanding

    Yes, you are. I’d be curious to know why spending decreased under the continuing resolution for 2010, true, but you can’t say that it decreased because anybody actually budgeted a decrease. I suspect that some of the “stimulus” money ran out, although much of the “one-time” stimulus money seems to have been built into the baseline under the continuing resolutions.

  14. I don’t get why you ask for inflation-adjusted dollars then highlight constant dollars. Besides, when it comes to taxes, I thought percentage of GDP is all that matters, and as long as it stays within say a 5-point range then it means there’s no budget effect on a change in policy. The same isn’t true for spending? What a shock.

    As usual, the lesson of that chart is, if you care about fiscal soundness, don’t elect Republican presidents.

    1. Fuck off, sock puppet.

    2. I don’t get why you ask for inflation-adjusted dollars then highlight constant dollars.

      Because you don’t understand that inflation-adjusted and constant dollars are the same thing?

      Besides, when it comes to taxes, I thought percentage of GDP is all that matters,

      Why would you think that?

      as long as it stays within say a 5-point range then it means there’s no budget effect on a change in policy.

      Try again, in English.

      1. Yeah, Tony isn’t real good with that whole math thing.

    3. Re: Tony,

      I don’t get why you ask for inflation-adjusted dollars then highlight constant dollars

      Take your Thorazine so you stop hearing the voices.

      Besides, when it comes to taxes, I thought percentage of GDP is all that matters,

      You thought wrong. What people are finding is that you cannot squeeze more than 18-19% of GDP as taxes from the teeming millions.

      The same isn’t true for spending? What a shock.

      I understand your confusion, as you think that, somehow, TAKING is the same as SPENDING. YOU control your spending, whereas you CANNOT control your income unless you presume to be able to control minds, like the Thrint.

      They’re not the same.

    4. As usual, the lesson of that chart is, if you care about fiscal soundness, don’t elect Republican presidents.

      Right, because running 8-12% of GDP in deficits every year to get a 2% growth rate, as Obama has done, is the height of fiscal soundness.

      1. Oh, and this is even more delicious–one of the periods where the government took in 19% or greater revenue to GDP was during the 1980-82 recession. So clearly that metric doesn’t even need to rely on an economic boom for a higher ratio.

    5. T o n y| 11.26.12 @ 12:58PM |#
      “I don’t get…”

      Story of your life, shithead.

    6. As usual, the lesson of that chart is, if you care about fiscal soundness, don’t elect Republican presidents.

      As usual, Tony is half right.

  15. A question for Groovus if you’re still awake and reading:

    I was in a discussion recently where Person A asked me what would happen to the state of medical care if American medical schools suddenly began graduating double the number of doctors. I suggested that the quality of doctors amx care would degrade because medical schools would have to relax their admission and graduation requirements. Person B immediately said that that was a lie because it is very difficult to get into medical school if one doesn’t “know people” or have doctors for parents. Person A immediately agreed with this, and they both concluded I was wrong about everything. Any thoughts on the particulars of their assertions?

    1. Db,

      It’s not clear what the effect would be… your statement assumed that the quality of doctoring correlates with medical school admission standards.

      Not to mention that doubling the number of doctors might lead to less rationing by queue, meaning that people are treated more promptly, and this could offset any decrease in quality.

      We just don’t know what would happen for sure.

      1. That’s a fair point, but I think the question to be addressed here is “what limits the number of doctors in a market for health care?” One can’t simply decree more doctors be made and not expect changes in quality of care, unless there is a market warping force in play such as a cartel limiting admissions to medical school. If there is, presumably doctors of equal quality would be made in greater numbers (assuming an educational system with enough capacity).

        The context of the argument was Persons A and B suggesting that an evil cartel of elite rich doctors artificially limits enrollments (not graduations) in medical schools primarily for the purpose of keeping prices high.

        While it’s clear the AMA does some od that under the guise of attempting to maintain a high standard of competence in doctors, I think there are market forces that play in more strongly. Would one make the same argument of engineers? No, what regulates our ranks is partly the difficulty of completing an engineering degree, partly the compensation, and part luck.

        1. unless there is a market warping force in play such as a cartel limiting admissions to medical school.

          It’s called the AMA.

            1. The AMA explicitly limits the number of residency programs nationwide, which affects how many students med schools are willing to admit. It wouldn’t surprise me if they directly limit the number of students as well.

              1. I have to think the AMA supports the “certificate of need” laws for hospitals or they wouldnt have passed in such numbers.

                Also, it was the AMA that lobbied against the organizations back in the 10s and 20s or whenever who had the staff doctors.

                1. Well, look, I know the AMA is a cartel, but my question was more specifically on what basis it sets its limits, and whether it encourages medical schools to admit connected applicants to the exclusion of others.

              2. Interesting…is that limit published, and on what basis is it computed? I’m genuinely curious. The argument seems to have been that highly qualified applicants are turned down in large numbers in favor of well connected ones.

                1. Interesting…is that limit published, and on what basis is it computed?

                  Check this out.

                  1. Thanks, but I don’t click on shortened urls.

                    1. Your snark aside (and did you really miss my sarcasm at your apparent failure to read the term “AMA” in my post to which you responded “AMA”?), I did do some googling and found some sources with actual data. Looks like enrollment (according to these sources) has been capped for a decade or more. That looks like a pretty classic cartel action.

        2. And professional licensing depending on the type of engineer.

          1. Oops, almost forgot ABET accreditation.

          2. Most engineers I know (including me) are not professionally licensed. Mainly that’s only required if you’re doing work for a government or designing a building, a bridge or other public work such as a water treatment plant. Most of the work is done by unlicensed engineers “under the direction of” a licensed engineer who stamps the drawings.

            1. I know, that’s why I said depending on the type. Of course there’s always rumblings about extending the licensing net. (“Deficient software engineering could kill millions.. must require a stamp first”)

              1. Deficient software engineering also tends to alienate customers, so winning companies try to avoid it. (Or, more causally, companies that don’t try to avoid it don’t win, and hence disappear.)

                1. Deficient software engineering also tends to alienate customers

                  This may be true in the private sector (maybe), but from what I witnessed in 8 years of government software engineering, deficiency is not only expected, but required. Of course, our “product” wasn’t software, but asses in chairs that government managers could feel like they were in control of. Who cares if it works? Be in that chair where the customer can call a meeting to complain and you get another contract.

    2. Quality of medicine would decline only if there is a meaningful drop-off in the quality of applicants sometime before you double the current class sizes.

      Not sure that is the case, but it certainly doesn’t go without saying.

      1. Do the people with really higher undergrad GPAs really make the best doctors?

        Im skeptical of that.

        BTW, I have no clue, what skills does the MCAT test? I know what the LSAT tests, but no clue on MCAT.

        1. The correlation between a high tolerance for cocaine and competent surgical skills is so close as to be noncontroversial, however.

          1. Killazontherun| 11.26.12 @ 1:17PM |#
            “The correlation between a high tolerance for cocaine and competent surgical skills is so close as to be noncontroversial, however.”

            THAT would explain a LOT.

        2. So, reading about the MCAT, I bet I could have put up ~38R back 20 years ago.

        3. GPA and MCAT are probably just filters. It’s very likely there are doctors who got 3.0 undergrad GPAs that are better than other doctors who got 4.0… but if you have a 2.0 GPA it’s very unlikely you’d be a good doctor.

          1. GPA and MCAT are probably just filters

            That is exactly what they are. Because spots are limited, they use them to filter out candidates. And Im sure a 4.0 GPA candidate, in general, does better than a 3.6, who does better than a 3.0 who does better than a 2.0.

            Partly is has to do with personal taste and the undergrad school I went to (which is changing, for the worse, in my opinion, on this matter), but I prefer a wide admission + weedout system.

            You still want to filter low GPAs are low MCATs (at least at the quality schools), but I dont see a high washout rate as being a problem.

        4. There is at least one positive correlating factor between high undergrad GPAs and being a good doctor: a high GPA is evidence that you can think clearly with little sleep late at night, a condition which for some unknown reason the medical profession subjects young doctors to during their residency.

        5. While the LSAT tests things like deductive logic and reading comprehension, the MCAT mainly tests ones ability to process new information quickly in relation to the basic sciences. You are given a passage and have to answer questions about it by applying your knowledge of physics, chemistry, organic chemistry, biology and physiology. It certainly does not prove someone will be a good doctor but it indicates that a person has a practical knowledge of science. The MCAT is of course used as a filter for med school but it is actually the strongest predictor of success in med school and ability to pass the medical boards. That is because average GPA varies from college to college and everything else med schools judge you on is quite subjective where as the MCAT is consistent.

        6. I can address that issue, to a degree. The school I dropped out of was johns Hopkins (NOT, I hasten to clarify, the Medical School). As matters stood in the 1980’s (and I have no reason to think that they have improved) the heavy competition for Med School spots led to pre-med students (not all, but a large number) to deliberately sabotage the work of other students, to the point that it was considered unsafe to leave lab-projects unattended. I think that this means that for a while any loosening of the competition that resulted in less qualified people becoming doctors would be offset by the consequences of NOT teaching aspiring doctors to be cut-throat bastards.

      2. Well it was implied in their argument that highly qualified applicants are turned away in approximately a 1:1 ratio to accepted applicants due to action of an elite cartel.

  16. Clinton’s last budget: Outlays were 18.2% of GDP.

    Do that, and estimated receipts have us running a surplus in 2014.

    1. I would accept Clinton-era level taxation (I repeal of ALL the Bush tax cuts, no nit picking and leaving the 10% bracket alone) in exchange for immediate return to Clinton-era level spending.

      Let the tax cuts expire, cap spending at 18.2% of GDP.

      Sounds like a good and fair compromise to me.

    2. Why not change that to 2% of GDP? I think that still might be too much.

      1. Im fine with that, but Im willing to compromise. Cut to 18.2% and let the economy recover and then we can quibble over whether it should be 17% or 15% of 8% or 2%.

        I want it under 10% (2% sounds good to me), but I promised to never complain about spending again if it gets (and stays) below 15%.

        1. I’d vote for 0%, but if spending ever dropped to 10% I’d throw a party.

    3. 18.2% of the GDP in 2000 or the GDP in 2012?

      1. Im fine with 18.2% of 2012 GDP.

        We are spending about 24% of current GDP now, so that would be a nice big cut.

        1. 1951 was the last year below 15%.

          18.2% in 2000 and 2001 was the lowest in my lifetime.

          I would like to see 15%. I will leave getting it to something lower to the next generation. If it gets to 15%, my fight has been won.

          1. robc| 11.26.12 @ 2:08PM |#
            “1951 was the last year below 15%.”

            Reminder to the shitheads of the world: The highest marginal rate was 93% at the time.
            Stuff it, shitheads.

  17. Our rectal blockage friend’s favorite “capitalist” weighs in on why we should tax people like him more. First he tries to “eviscerate” the idea that high tax rates discourage investment.

    SUPPOSE that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.”

    Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.” Only in Grover Norquist’s imagination does such a response exist.

    Apparently the great capitalist Buffett has never heard of the concept of risk, and thinks the only safe alternative that people pulling over a million bucks a year have for their money is a garden-variety savings account. Indeed, by his logic, why wouldn’t a rich person jump to invest their money in anything that promised more than 0.5% APR yield?

    Or he’s lying. Guess which one seems more likely?

    1. Im gonna go with option #2.

    2. He understands risk perfectly. His whole life insurance business is based on it. Of course, without the estate tax, the end-of-life cash outlay to pay the Feds goes way down, lowering your cash-crunch risk and making life insurance less necessary. Buffett preys on this artificial risk.

      1. That, and his role as a literal-vulture capitalist, who swoops in and buys assets at bargain prices from desperate heirs who can’t afford to pay the estate tax.

        1. Quite so, just ask any former claims employee of CNA or AIG.

    3. Buffet also can’t grasp the notion that the capital to invest might have been taxed away already, thrown into the fires of the DC moneyhole.

        1. If you love America you throw money in its hole!

      1. Oh, he can grasp it. He’s just confident that he’s crony enough with the folks in DC that the moneyhole that the cash will be thrown into will be HIS moneyhole.

    4. So Buffett is actually saying that nobody takes taxes into account when calculating the benefit side of a risk/benefit equation?

      Bullshit. The only reason anyone buys tax-advantaged muni bonds is because of the tax break.

      If I can earn .5% risk free, and my after-tax return on an investment that puts my money at risk is 1%, then I probably am not going to put my money at risk.

      1. And Buffett has most of his savings in Munis for exactly this reason. The one person in the world who behaves the most like the investor who Buffett says is a figment if Nordquist’s imagination is Buffett. He’s a smart guy but he completely lacks any sense of self-awareness. He’s a much better investor than Trump, but the same class of clown.

        1. No wonder he wants higher taxes. Someone has to bail out the muni bonds when all the states and municipalities go broke from overspending.

          1. Even without bailouts, munis do well from tax increases. The value of their tax exemption increases. Don’t think for minute that Buffett doesn’t know this.

    5. I like how he advocates for a “minimum” tax on the “wealthy” as if no one had ever tried that before. It’s called the AMT, it’s paid by many people who are nowhere near rich, and the AMT “patch” has become an annual ritual in DC. But hey, let’s try it again with feeling!

    6. So the empirical question is at what rate is investment discouraged. Because clearly it’s not the case that any tax hike discourages investment. The evidence suggests it has to be closer to 90% than where it is now to truly make wealthy people not want to become more wealthy.

      1. Goalposts moved? Check.
        Straw man assaulted? Check.
        Tonyism is complete.

      2. queue ad hominem

      3. T o n y| 11.26.12 @ 2:57PM |#
        “Because clearly it’s not the case that any tax hike discourages investment.”

        Nice try, shithead. Now offer something like data.

    7. Until these rich folks who want to pay more taxes actually step up and write simply checks to the U.S. Treasury (which takes donations) for the amount they think they should pay, I will ignore them.

      Buffett also makes money from helping rich people structure their estates in order to avoid taxes, so there might be a little self-interest there.

    8. Is he ignoring the fact that investors are not animate bank accounts, but people, with lives? Any drop in take-home income will either come out of investments or consumption. The latter is closely tied to quality of life, and (rich or poor) most people like to keep QoL from decreasing jarringly — certainly, no one likes to face the risk of losing their home, whether it’s a trailer or a McMansion. As a result, if there’s a likely, significant drop in take-home income on the horizon, people (perhaps not the ludicrously wealthy like Buffett, but the hundred-thousandaires or millionaires out there) are going to shift more of their current income into more liquid assets to even out any future shocks to take-home income.

  18. Tax the rich, feed the poor
    Till there are no rich no more

    1. …and then the poor starve, apparently.

      1. Poverty is romantic.

        1. Only from a distance.

    2. …And everybody’s poor

      1. Equality, man! Equality!

  19. Paul Krugman: Has He Reached Peak Idiot?

    For we have our own currency ? and almost all of our debt, both private and public, is denominated in dollars. So our government, unlike the Greek government, literally can’t run out of money. After all, it can print the stuff. So there’s almost no risk that America will default on its debt ? I’d say no risk at all if it weren’t for the possibility that Republicans would once again try to hold the nation hostage over the debt ceiling.

    Yay fiat currency! What CAN’T it do?

    1. It creates value out of thin air! It’s magic!

      1. If you have a large chunk of your wealth in money, you’re a chump anyway, so it’s sort of like the lottery — a tax on the foolish?

        Money is a medium of exchange, a unit of account and a store of value? 2 out of 3 ain’t bad!

        1. T-bills are also affected.

          Commodities aren’t totally safe either, since you need to find a buyer for them to have value, and most potential buyers are the foolish you mention.

    2. Uh, yeah, and then what would happen to our Treasury bill interest rates when our lenders realize they’re getting paid back in worthless paper?

      Krugman obviously read Buffett’s NYT op-ed and felt he had to out-idiot him. The Times is not big enough for both of them.

      1. “Uh, yeah, and then what would happen to our Treasury bill interest rates when our lenders realize they’re getting paid back in worthless paper?”

        Go long on wheelbarrows.

    3. Zimbabwe also prints its own currency.

      As did Weimar Germany.

      1. You know who else… oh, you already answered that.

        1. Cuba? Venezuela? North Korea?

      2. Weimar’s Versailles debts weren’t denominated in marks, though, so it’s not a good comparison.

        The Fed cranking up the printing presses would go badly, but not that badly.

        1. Fair enough, on Weimar. Im guessing Zimbabwe’s debt isnt in Z-dollars either. At least not any more. 🙂

          1. Zimbabwe ran into a very interesting problem when the company supplying the ink for their currency printing operation started demanding to be pre-paid in non-Zimbabwe currency. So I guess there are limits to how much you can run the printing presses to solve your problems.

        2. Weimar’s Versailles debts weren’t denominated in marks, though, so it’s not a good comparison.

          Weimar had to print money to buy the forex to pay reparations, true, but its still a perfectly good example of why just being able to print your own money doesn’t mean you will never run out.

          The critical element supporting US monetization of its debt is the dollar’s status as a foreign reserve currency. This effectively allows us to export our inflation. However, that status is eroding, and continued failure to adopt any kind of sustainable fiscal policy guarantees it will end.

          At that point, there is no difference at all between Weimar printing money to pay reparations, and the US printing money to pay entitlements.

    4. He can’t actually be this stupid, can he? It’s some sort of performance art. Right?

      1. I keep waiting for him to submit an editorial with the title of A Modest Proposal.

      2. No, he thinks his audience is. And considering it’s the Times, he might not be wrong.

    5. Holy shit, he’s really suggesting this? Amazing. I like that he asserts that printing money won’t lead to inflation, because inflation apparently means something different than what it means.

      The real fun, as always, is in the comments. You’re the looters!

      Laurence B.Portland, OrNYT Pick
      FLAG
      The very wealthy pay very little taxes and are mostly concerned with replacing government with the private sector and eliminating government regulations and red tape.
      They have devised layers of schemes to avoid taxation.
      The official rates are not the real rates because countless billions of dollars are hidden in schemes that avoid government scrutiny.
      The fuss is really about discrediting government in order to replace it and get rid of its annoying regulations.
      They want the schools, medicare, social security, and even police and firefighters to be privatized. That is where the trillions are hidden and can be looted.

      1. You’re too sharp for us, LaurenceB, you got us figured out. There are TRILLIONS hidden and just ready to be looted.


      2. Laurence B.Portland, OrNYT Pick
        FLAG
        The very wealthy pay very little taxes

        The IRS sez you are full of shit.

        and are mostly concerned with replacing government with the private sector and eliminating government regulations and red tape.

        perish the thought!

        They have devised layers of schemes to avoid taxation.

        accountants and tax attournies say you are full of shit.

        The official rates are not the real rates because countless billions of dollars are hidden in schemes that avoid government scrutiny.

        Oh?

        The fuss is really about discrediting government in order to replace it and get rid of its annoying regulations.

        heaven forbid

        They want the schools, medicare, social security, and even police and firefighters to be privatized. That is where the trillions are hidden and can be looted.

        drink moar antifreeze…now!

        FIFHim

      3. It does help to understand that the wealthy who are for higher income tax rates mostly derive their wealth from sources that do not count as income for taxation purposes.

    6. The question Krugman can?t answer:
      Why do some countries issue debt that is not nominated in their currencies????????

    7. So our government, unlike the Greek government Weimar Germany, Hungary, and Zimbabwe, literally can’t run out of money. After all, it can print the stuff.

      Query: Is Krugman an idiot, or does he just think everyone else is?

      1. He knows his readership is. The comments are fool’s gold:

        The Bush tax cuts started our economic problems. I say let the Bush tax cut expire, all of them if the Republicans won’t agree to middle class tax cuts. That would immediately reduce the deficit by about 75%, based on what I have read. Gas prices are down, housing and consumer spending is up, and tax increases at this time won’t kill economic growth.

        I’m more concerned about the spending side right now. To get the economy growing at a brisk pace we need fiscal stimulus, preferably in infrastructure projects, such as roads and green energy research, that will have a long term positive economic return. Such stimulus has a double benefit: jobs now when they are needed, and financial payback in the way of long term economic growth, thus reducing the long term deficit.

        1. Oh, IMMEDIATELY reduce the deficit by 75%. Wow, who’d have thought?

      2. I love this one:

        These are not ordinary tax cuts. These are the Bush Tax Cuts – the job killing, deficit growing, GDP inhibiting Bush tax cuts.

        1. That tax cut’s got huge, sharp… er… It can leap about. Look at the deficits!

      3. I looked up the old classification of “Idiot” in the hope that there was some level lower that Krugman could belong to. Sadly “Idiot” is, or was, a person with an IQ below 20, with no lower limit stated. On that basis Krugman still qualifies. Of course so does a rutabaga.

    8. But what inflation, though?

  20. Isn’t Buffett’s company still trying to beat the tax man out of a whole ton of dough?

    1. You mean he’s a leftist and a hypocrite?

      How can that be?

  21. You guys dont get it. What we need is MORE UNIONIZED TEACHERS!!!!!

  22. Mr Gillespie forgets (or omits) to mention that in 1980 the US population was around 230,000,000 and in 2010 around 310,000,000. This translates in an approximately 35% increase in the US population during the last 30 years. Any comparison with past budgets needs to include both inflation adjusted numbers and adjustments with respect to population, something he fails to do. When population is included in the calculations we see that federal budgets are approximately what they were 30 years ago and in fact, may even be slightly smaller per capita.

    1. He’s not doing a comparison of 1980 and 2010, he’s talking about year-to-year increases. So your concerns are invalid.

      If you’re actually interested in longer term comparisons, the outlays have nearly doubled since 1995 in constant dollars, so taking into account 35% population growth since 1980 isn’t going to help.

      1. Ah, I was looking at the future estimates. Still, spending has increased by about 70% since 1995.

    2. % of GDP handles that.

      The border is the same fucking size it was 30 years ago, it doesnt take any more to defend it just because there are more people.

      Lots of other LEGITIMATE federal government programs are the same way. In fact, its mostly the non-Article 1, Section 8 programs that are population dependent.

  23. The entire notion that, somehow or other, raising taxes on the rich is fine while raising them on the middle class will be the end of life as we know it rests on the notion that the problem with our economy is a lack of consumer spending. The underlying notion is that rich people won’t cut back on spending as much as the middle class if we raise their taxes (a problematic notion in itself; why should we assume rich people are less competent financial planners than average?). But, it’s really really hard to make a coherent case that the problem with our economy is a lack of consumer spending. Real consumer spending is up 6.1% since 2008Q4. Over the same period, real GDP is up 5.7%. That is to say, consumer spending has grown faster than the overall economy. And this fits what we observe when we look at our daily life. People have been back in the stores for a while now.
    Instead the problem has been a lack of capital investment. There’s roughly $2 trillion in investment capital sitting on the sidelines, afraid to deploy. Non-financial business balance sheets look terrific right now because businesses are not putting their money to work. They’re storing it in cash and cash equivalents and reduced debt load. 2011 saw the first decline in the country’s capital stock in the post-WWII period. Policies that are even more hostile to capital and business activity are only going to make this situation worse.
    Expect a rough road ahead.

  24. The core truth is that the business-as-usual pillocks in Washington won’t cut real spending until it looks like failing to do so might affect THEIR gravy train. No raised taxes. Ever. The idea that the government needs more than a trillion dollars to do its enumerated job is grotesque.

    All my Liberal Lefty friends get so hysterical when it looks like spending cuts might actually happen. “They’re going to cut funding for Sesame Street!”. Good! “They’re going to gut the National Endowment for the Arts!” And not a day too soon!

    We’ll know that somebody is actually thinking the unthinkable when the Smithsonian starts getting looked at. I love the place. I lived for years in the DC area, and went to most of the museums in DC, and had a great time. But they are luxuries. We’re looking at bankruptcy; we can’t afford to keep the Cable TV hookup.

  25. When you adjust for the TARP loan and subsequent repayments; the spending did not go down 2010 it actually went up higher than the 19% Obama added in his first year over Bush’s last.

    http://rationalenvironmentalist.com/tarp6.jpg

    Correcting this historical error is essential to returning to any kind of fiscal sanity in this country.

  26. How Many Times Has Real Spending Declined Since 1980?
    thank you ,we have got it

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