Budget

How To Get Better at Budgets

In a few countries, legislators have enacted policies that actually constrain spending. The U.S. has a lot to learn.

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You don't have to be an avid consumer of news about the federal government to know that Uncle Sam's annual budgeting process is a mess. The budget is rarely completed on time, and it always seems to get bogged down with partisan bickering and political scheming. The process is often interrupted or transformed into an emergency by fiscal cliffs and government shutdowns, and it faces numerous chronic problems as well, from dead-on-arrival White House budget plans to perpetually ignored statutory deadlines.

When the dust finally settles, the result is usually a bloated agglomeration of goodies for special interests that most likely had a better grasp of the budget's contents than the elected representatives who voted on it (probably without ever reading it). Of course, almost every budget is bigger than its predecessor.

If the budgeting process is broken, it's apparently been broken for a long time. Since the enactment of the Budget Control Act of 1974, which dictates the current rules and was meant to make Congress more accountable, legislators have passed all 12 of the required discretionary spending appropriations bills on time on just four occasions. Instead of an orderly process, we tend to end up with omnibus spending legislation that wraps everything into one giant spending bill or short-term "continuing resolutions" that punt on hard choices.

Various "fixes" have been proposed to right the budget process. One recurring idea is that we should replace an annual budget with a biennial budget, covering two fiscal years. Supporters argue that a longer budget period would give legislators more time to conduct oversight of federal programs and, thus, more time to weigh competing spending desires. With more time, spending would supposedly be better targeted toward those programs that "work," while those that "don't work" would either be "fixed" or see their funding cut thanks to better oversight.

This is wishful thinking. In the 19 states that currently have such a process in place, the opposite is true. Biennial-budget states actually spend more money, while oversight remains flat.

And congressional oversight is overrated. Oversight hearings are often just political dog-and-pony shows of little or no consequence. In many cases the whole point is for politicians to make statements that can then be used during political campaigns. These events are designed to benefit lawmakers, not the public.

The same can be said about budget-process reform, argues Stan Collender, a budget expert who teaches at the McCourt School of Public Policy at Georgetown University. His take is that the process actually works exactly as legislators want it to work. Indeed, for all the complaints that the budget process receives from those in charge, it enables politicians to do what they want to do (cater to interest groups) while avoiding what they don't want to do (live within their means).

The growth of mandatory spending exacerbates the problem. Outlays on Social Security, Medicare, and Medicaid, as well as interest payments on the debt, aren't appropriated each year in the manner of discretionary programs covering education, transportation, and the like. As a result, those programs can't be used to distribute favors (though promising not to reduce spending on them often indirectly serves that function). As the number of people benefiting from the entitlement system grows and the eligibility rules are relaxed, a bigger and bigger share of spending has to be directed toward it. Today, 70 percent of the budget is spent on such programs, compared to 40 percent in 1970. Politicians therefore have less money to fling around on new spending meant to curry voter favor.

It's true that some members of both houses talk about reforming the budget process to make it more rigorous and fiscally responsible. They have even formed House and Senate budget committees and held hearings on the issue. However, Collender believes that "this activity is less designed to retool the budget process than it is to placate all those who are so fervently saying that it needs to be reformed: the interest groups, think tanks, and associations that make up the inside-the-Beltway federal budgeting community."

This situation is tragic. This chaos, and the resulting failure to follow budget rules, has led to an unremitting expansion of the size and scope of government. This U.S. debt, meanwhile, has more than doubled in the last 10 years, recently reaching $22 trillion. If it continues as projected, Washington will find itself in a tough spot, vulnerable to the risk of interest-rate hikes, an inability to increase spending on short notice to respond to emergencies, and slower growth overall.

Interest in how to design a better budget process—one that actually limits the growth of government—isn't new. F.A. Hayek wrote in 1948 that Adam Smith's "chief concern was not so much with what man might occasionally achieve when he was at his best but that he should have as little opportunity as possible to do harm when he was at his worst." The goal must therefore be "a social system which does not depend for its functioning on our finding good men for running it, or on all men becoming better than they are now, but which makes use of men in all their given variety and complexity, sometimes good and sometimes bad, sometimes intelligent and more often stupid."

It was the 1986 Nobel laureate James Buchanan who really pioneered the notion that good fiscal rules are key to controlling government spending and restraining government borrowing. His extensive body of work shows that, at least in theory, these rules can enforce budgetary restraints by tying politicians' hands.

As the structural roots of budget deficits have become more widely understood, a growing number of countries have adopted fiscal rules to reshape democratic governance. The Columbia University macroeconomist Pierre Yared found that in 1990, only seven countries had such restrictions in place, but by 2015, 92 countries did. Governments across the world have been mandating deficit, spending, and revenue limits to constrain fiscal policy and curtail further increases in government debt.

These fiscal rules are broadly effective. Comprehensive data covering many years show that countries with such rules have annual budget deficits that are smaller by an average of 0.5 percent of gross domestic product (GDP) when compared to countries without such rules.

But not all rules are created equal when it comes to limiting government profligacy and slowing the growth of debt. Yared and Yale economist Marina Halac recently found that rules based on outcomes (e.g., setting a rule, preferably through a constitution, that limits spending growth to a certain percentage of GDP) tend to work better than rules based on short-term and arbitrary restraints, such as the "sequestration" requirement included in the debt ceiling deal of 2011, which lawmakers can lift easily. More specifically, expenditure-based rules and debt caps have higher rates of compliance in advanced economies than do balanced budget rules—around 70 percent vs. 35–55 percent. Compliance, which is fundamental to the success of fiscal restraint efforts, is even greater if the rules are legally enshrined or constitutionally binding.

Hong Kong

While there are many troubling aspects of governance in Hong Kong, it might actually represent the gold standard of good fiscal policy.

"Our commitment to small government demands strong fiscal discipline," the territory's financial secretary, John Tsang, explained in a 2014 speech at the Heritage Foundation. "It is my responsibility to keep expenditure growth commensurate with growth in our GDP." That may sound like something a politician would say during a speech, but in Hong Kong it's actually a constitutional requirement. Article 107 requires that the government strive to achieve a fiscal balance, avoid deficit, and, more important, make sure government spending doesn't grow faster than the economy.

When their constitutions demand fiscal restraint, politicians go out of their way to anticipate the problems they might encounter in the future. Tsang noted, for example, that he had created a Working Group on Long-Term Fiscal Planning and directed it to conduct a fiscal sustainability health check. "We are keenly aware of Hong Kong's low fertility rate and aging population," he explained, "not unlike many advanced economies. And that can pose challenges to public finance in the longer term."

Hong Kong's public spending hasn't risen above 13.5 percent of GDP in several decades, compared to 38 percent in the United States. Its debt is close to zero; social welfare spending remains steady around 3 percent of GDP (vs. 18.7 percent in the U.S.); and the share of the population relying on social security assistance has gone down from 8 percent in 2005 to 5.4 percent in 2014.

Switzerland

The Swiss are known for their fine watches and chocolate. They should be recognized also for the comparative excellence of their fiscal rules. After public referenda in 2001, the Swiss government in 2003 implemented a new constitutional requirement aimed at ensuring a balanced annual budget through a cyclically adjusted expenditure ceiling. The short story is that Swiss politicians are not allowed to increase spending faster than average revenues rise over a multiyear period (as calculated by the Swiss Federal Department of Finance). That basically confines spending growth to a rate no higher than the rate of inflation plus population growth.

Significantly, the Swiss "debt brake" rule appeals to economists and policy makers on both sides of the aisle. The fiscally conservative types like it because it is effectively a spending cap. It also makes it impossible to raise spending during good times, since the rate ceiling is taken from an average over several years, so the treasury's coffers during such periods become flush with cash.

Key to this design is the fact that it is more difficult than it might seem for politicians to increase the spending cap by raising taxes. As economist Dan Mitchell of the Center for Freedom and Prosperity explained in The Wall Street Journal, "Maximum rates for most national taxes in Switzerland are constitutionally set (such as by an 11.5% income tax, an 8% value-added tax and an 8.5% corporate tax). The rates can only be changed by a double-majority referendum, which means a majority of voters in a majority of cantons would have to agree."

Yet the debt brake also appeals to economists and policy makers who favor deficit spending when revenues plummet during economic downturns, because the rule allows for spending in excess of estimated revenues under special circumstances. This escape clause, which applies to recessionary periods, effectively deals with unforeseen emergencies without putting the rule at risk in the medium to long term.

There's no arguing with the results: Annual spending growth fell from an average of 4.3 percent before the rule was implemented to 2.5 percent after. And in 10 out of the past 14 years, Switzerland has had budget surpluses. Deficits have remained rare and small, averaging 0.85 percent of GDP during this period. At the same time, Swiss debt has fallen from almost 60 percent of GDP in 2003 to around 42 percent in 2017. Switzerland now finds itself in an unusual place, with policy makers frequently debating what to do with all of their surplus revenue—a situation that seems a million miles away from the fiscal conditions in the United States.

In 2010, Germany adopted a policy similar to the Swiss debt brake. The rules are parallel to each other in that each follows the "small-government Keynesianism" model that allows the government to spend in a recession but cuts expenditures in good times, creating surpluses for when the country needs them. While the German rule isn't as strict as the Swiss one, it has successfully reduced Germany's public debt from 80 percent of GDP in 2010 to 64 percent of GDP in 2017.

Denmark

Vermont Sen. Bernie Sanders loves to tout Denmark as his model of a socialist paradise. The country is certainly no libertarian ideal, yet since the 1970s it has undertaken impressive reforms to address the serious fiscal issues brought on by the Danes' very generous welfare programs. Among other reforms, Denmark has lowered its top income tax rate from 73 percent to 63 percent, lowered the corporate tax rate from 50 percent to 22 percent, abolished the wealth tax, reduced the length of government-supplied unemployment benefits from indefinite to two years, and raised the retirement age.

Denmark also implemented some interesting process-oriented reforms to more systematically control spending. In 2014, it passed a budget act aimed at ensuring a balance or surplus on the general government balance sheet as well as appropriate expenditure management at all levels of government.

The rule sets a limit of 0.5 percent of GDP on the structural—or persistent—budget deficit. Policy makers decided that managing spending under the condition of maintaining a balanced budget over time would lead to a stronger fiscal position in the long run. They also designed the system to take discretion out of their own hands by subjecting themselves to independent monitoring by the Danish Economic Council, which can impose automatic correction mechanisms in the event of a budget deviation. Such an action forces the Ministry of Finance to present an adjustment plan for the following year.

In addition to its structural deficit rules, the budget law introduced four-year rolling expenditure ceilings. These ceilings set legally binding limits for spending at all levels of government and by program. If one program spends under its cap, the remaining money cannot be reallocated to another program.

The Danish Economic Council assesses annually whether government policy is adhering to the target structural public balance and whether the proposed expenditure ceilings are consistent with medium-term projections in the structural balance for public finances.

According to data from the Organization for Economic Co-operation and Development (OECD), Denmark's fiscal position improved significantly in the three years after implementation of its budget act. General government debt fell from 59.14 percent to 49.96 percent of GDP in that time, while central government debt fell from 38.22 percent to 29.88 percent of GDP, according to the International Monetary Fund (IMF). And in 2017, the country ran a budget surplus equal to 1.09 percent of GDP.

The Netherlands

For such a small country, the Netherlands has a lot going for it: Amsterdam, pot, tulips, bike paths. As it turns out, the IMF, the OECD, and the European Commission have also regularly highlighted the Dutch fiscal framework as an example of good practices that achieve a high degree of budgetary transparency. The framework has several commendable features, such as its medium-term (rather than short-term) orientation and use of independent macroeconomic forecasts.

Under the Sustainable Public Finance Law, passed in 2014, expenditure ceilings are set for three main budgetary areas—central government, social security, and health care—and benchmarks are set for revenues. While the revenues can fluctuate over the multiyear cycle, the expenditure ceilings must be respected as statutory requirements.

The Netherlands' deficit ballooned beyond 3 percent of GDP from 2009 to 2013, but the country has seen noticeably improved fiscal conditions since 2014, especially compared to countries with other fiscal frameworks. In 2017, the government ran a budget surplus of 1.22 percent (compared to a deficit of 2.15 percent in 2014), and according to the OECD,  general government debt fell during those three years from 82.60 percent to 69.95 percent of GDP.

 

Why Most Rules Fail

Governments across the spectrum (from free market Hong Kong to Bernie Sanders' beloved Denmark) have implemented prudent budget rules and policies. The ones that are most effective share some common features: They all impose a limit on the growth of spending (as opposed to the balanced-budget constitutional requirement favored by some economists), and they all set automatic triggers to reduce politicians' discretion.

At this point you may be wondering: If they can do it, why can't we? That's the $22 trillion (and counting!) question. So what is it that convinced politicians in these other countries not simply to adopt fiscal rules but to adopt fiscal rules that truly constrain them?

I wish I knew. Financial crises, staggeringly large debts, slow economic growth, and angry voters probably all nudge politicians to adopt fiscal rule. But the data show that even when politicians do take steps to address fiscal problems, more often than not they choose policies that don't work. Adopting the right rule—the kind that actually shrinks the growth of government—is what matters.

The same is true at the level of U.S. states. As my colleague Matthew Mitchell's work on tax and expenditure limits (TELs) demonstrates, the design of the rule is what explains whether these TELs will control spending or not: The ones that are effective all tend to be constitutionally codified, to focus on spending rather than revenue, and to include provisions that require majority support to override.

Some TELs work pretty well, but these are exceptions rather than the norm. In other words, state officials and legislators often avoid designing rules that would actually tie their hands.

The literature on "fiscal adjustments"—the combination of expenditure and taxation increases and decreases—shows the same result. Economists have demonstrated that the way to reduce the government's debt-to-GDP ratio is to adopt fiscal adjustment packages mostly made of spending cuts, preferably to entitlement programs. But in 80 percent of the cases where fiscal adjustment packages were put in place, politicians opted to rely more on tax hikes than on reductions in outlays.

The American Enterprise Institute's Benjamin Zycher looked at the failure of TELs to deliver on their promise to constrain spending. He concluded that "the limits themselves are the products of the same political pressures and election dynamics that yield [the] fiscal outcomes" they are supposed to battle. "Moreover," he wrote, "the competition among political interests that results in budget outcomes also is likely to weaken or circumvent limits that otherwise would be effective."

Basically, the same forces that result in the government growing, debt piling up, interest groups getting what they lobby for at the expense of everyone else, and budget process drama are at play during the making of government fiscal rules. No wonder the constraints more often than not fail to accomplish what they're meant to.

Yet some places do manage to overcome these forces. We can look to them for inspiration.

NEXT: Wow in the World

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  1. GREAT article! Knowing the details of how other countries have actually fixed problems is far more helpful than mere ideological stuff. And for big-L’s in particular, knowing this (both at country level and more importantly muni/state level, is exactly the way they might someday get elected and make good changes happen.

    1. GREAT article!

      Agreed. If Reason’s Open Immigration to TEL ratio were closer to 1:50 instead of 50:1 I might be convinced they were a Libertarian Magazine and would probably be more agreeable with some of their stances on Open Immigration.

      1. You damn Trumpistas have but one thing on your mind: minding my business. If your freedom to isolationist ration was just a bit better, you might actually have time to mind your own business instead of mine.

  2. There is a story that Sun Tzu told the emperor that he could take the emperor’s female servants and create a disciplined drill corps out of them and the emperor challenged him to do so. Sun Tzu assembled his “troops”, randomly selected some of them to be officers and instructed them on how to train their troops in close-order drills. When the time came for them to demonstrate their proficiency, Sun Tzu ordered the officers to command their troops, and the troops responded by giggling and shuffling around for they were, after all, silly little girls and how could they be expected to perform like soldiers? Sun Tzu then called the officers to the front of the parade ground, had their heads chopped off, and selected a new group of officers to train the troops. This time, the troops performed as well as if their lives depended on it. An early example of pour encourager les autres.

    I have no idea why that story just popped into my head or what possible relevance it might have to an article about legislators being unable to perform the most basic functions of their office.

    1. I believe you may be implying that we need to chop some politicians heads off so the next batch will take things more seriously? It’s probably the correct path.

  3. As far as a possible idea that might work in the US

    A constitutional amendment that explicitly prohibits one congress from binding a future congress by zeroing out spending would force each congress to consider the ‘mandatory spending’ as well as the ‘budgeted stuff’.

    In combo with this, on the tax colection side the Swiss approach works well. Their federal tax system is very broad-based (VAT, income, and wealth) and is based very much on an ‘everyone will ante up’ notion of fairness – but is also administratively tied up with the cantonal tax systems. An individual only files one tax form which includes both their cantonal/federal taxes – and the cantons/federals have established the legal rules/system behind the scenes for where that money goes. That’s really what impels the ‘double-majority’ when it comes to changing the federal tax system. Because the cantons are the ones who have to be ‘freer’ to adjust their local tax system to respond to local spending issues and they are responsible for roughly 70% of total govt spending. Federal is viewed more as a residual not primary.

  4. Interesting that de Rugy mentions entitlements numerous times as the biggest problem, but then uses the published debt numbers that don’t include future projected entitlement spending. Comparisons to our past debt levels and to other countries is meaningless unless this is included.

  5. It’s so hard not to borrow money from the rest of the world when the rest of the world is lining up to stuff our pockets with their cash. I’ve read that there are some $12 trillion tied up in negative yielding government bonds right now–and the ECB is letting everyone know that it’s willing to cut rates from here.

    I’ve been a big proponent of the idea that the government will never become so flush with cash that it will decide to cut spending, and a corollary like that might have to do with cheap financing.

    When I see that list of countries that are big on fiscal discipline, Denmark, Switzerland, the Netherlands, etc. (could have added Sweden), I can’t help but wonder about the influence of culture. Why do the people of some countries demand fiscal discipline when others don’t?

    Is it time to dust off the Max Weber books and start talking about the protestant work ethic? Is it about the homogenized populations in those countries? I’d like to believe there’s some great strategy that leads constituencies to want fiscal conservatism to the point that their politicians will start showing their own marginal propensity to save, and the ability to persuade my fellow Americans is one possibility.

    So, that’s the question for me: How did the people in these countries come to demand fiscal discipline?

    Other than that, all I’ve got is starve the beast by slashing taxes. California wouldn’t have saved the money it raised by repealing Prop 13. They’d only have spent more. The way to stop drunken sailors from spending our money is not to give them more money to spend. If the governments of Denmark, Switzerland, and the Netherlands were once so flush with cash that they decided not to spend it, I’d love to hear about how their people came to support that outcome.

    1. Fiscal discipline is an excellent idea, but we both know darn well both parties have no discipline when it comes to spending other people’s money, and any attempt to introduce this sound idea would be met with contempt, rage and defending the status quo of the ruling elites of both political parties.

    2. I like Jerrys

      1. Oops.

        I like Jerrys Sun Tzu idea better

    3. Honestly, it is cultural.

      Other than being in favor of blowing foreigners up for some reason, white Americans are strongly in favor of cutting government spending. A sizeable portion are even okay with entitlement reform, although the particulars would certainly matter here.

      In short, white American culture does support being fiscally prudent to a reasonable degree. A minority of whites, and the majority of everybody else, is in favor of spending money on dumb shit.

      1. Bullshit. And not only bullshit but that is racist deceitful diversion. The most fiscally responsible period of spending since the end of WW2 was during Obama’s presidency. FY2010-FY2014. The ONLY three fiscally responsible periods re multiyear spending – since 1900 – occurred during Coolidge, Obama, and Clinton’s prezs.

        The notion that ‘white Americans’ have only really been in charge of spending decisions for those few years in the last century plus is beyond laughable. Further, the notion that any of the countries mentioned in the article were motivated by racism/culture is also nonsense. The assertion is so transparently false that one can only conclude that YOU are a racist pile of shit.

        And bluntly, that racism is exactly the sole source of any ‘fiscal responsibility’ in the R party now. During the Obama prez, the animating notion among R’s was ‘don’t let the nigger Kenyan succeed’. During the Clinton prez, the only time R’s in congress got animated about spending was re welfare reform. When the racism leads towards increasing govt spending (eg during Bush and Trump when Muslims, Messicans, Chinese are painted as existential threats that require massive govt spending/intrusion), then spending/intrusion is the only item on the agenda for R’s. If fiscal responsibility can’t be painted in racial ‘other’ terms, then fiscal responsibility doesn’t fucking exist AT ALL for the R’s.

        Personally I am actually hopeful that there is room in our politics for a political party that is fiscally responsible and NOT primarily racist/identity driven. But it ain’t EVER gonna be the DeRps – and the L’s have far too large a contingent within their party of people who want to sabotage a party in favor of their ideologically exclusive church. Hopefully, milennials and Z’s can create that party before they get pulled into DeRp.

        1. LOL

          Obama WAS NOT fiscally responsible. At all. Basically every president pre Reagan was more fiscally responsible than him. Clinton was too, largely thanks to Rs having congress, but he still signed off on things.

          I don’t even try to defend most Rs in national politics, because the ones that make it to DC are shit heels. As I say below, the actual R voters ARE in favor of smaller government… But the assholes who get to DC never follow through. BUT at state and local levels, you do in fact see Rs who come in, cut spending, balance budgets, etc all the time.

          Whatever the REASONS, white Americans ARE far more fiscally conservative. I’m not saying saaaay Hispanics can’t be. Countries in Latin America have thrown in a lot of hard right guys over the years who came in and cleaned house. Asians have also shown to be fiscally prudent in many of their own countries. I’m just saying in America white Americans are consistently more tight fisted than any other group. I suspect most groups support bigger government because they tend to disproportionately receive transfer payments from it, excepting Asians and Jews who also pay in more than they receive.

          This may be some cultural carry over from days gone by, and that cultural carry over may descend from things that have their roots in Europe… Especially protestant Europe. Or maybe it originated in the ideals of the American Revolution and has mostly stuck. Or maybe it’s all just because. I don’t know. But the statistics back up that there IS a huge difference, whatever the cause.

          1. Obama WAS NOT fiscally responsible

            And the FACTS – from OMB prove you wrong.

            Total spending by year:
            FY2009 – $3.52 trillion
            FY2010 – $3.46 trillion
            FY2011 – $3.60 trillion
            FY2012 – $3.53 trillion
            FY2013 – $3.45 trillion
            FY2014 – $3.51 trillion
            FY2015 – $3.69 trillion
            FY2016 – $3.85 trillion

            That’s six years of zero growth in total spending before it started increasing. Zero growth in total spending over even four years was previously achieved during Calvin Coolidge’s prez.

            the actual R voters ARE in favor of smaller government… But the assholes who get to DC never follow through

            So are you saying that elections have been rigged? That aliens have taken over the bodies of R pols – and when elected they shed their human skins once inside the beltway to vote for moremoremore – and that actual R voters are deceived when the pols come back to the district cuz they put the human skin back on so the righteous R voters can’t hold them accountable?

            But the statistics back up that there IS a huge difference, whatever the cause.

            No the statistics do not back you up at all. Not one fucking bit. Your biases and prejudices back you up – and those need no facts at all. The FACT is that both Social Security and Medicare are mainly entitlements for middle-class WHITE voters because of differences in life expectancy at all ages and differences in population growth (and hence average age). THAT fact is why the R’s are never gonna touch entitlement reform which is the heart of spending reform. And they ain’t gonna touch military either which is most of what’s left.

            1. That’s cherry picked data. You left out the data from the years immediately before Obama took office and including that data is important to the total picture.

              Year Revenue Deficit
              FY2001 $1.86 trillion $128 billion
              FY2002 $2.01 trillion $158 billion
              FY2003 $2.16 trillion $378 billion
              FY2004 $2.92 trillion $412 billion
              FY2005 $2.47 trillion $318 billion
              FY2006 $2.66 trillion $248 billion
              FY2007 $2.73 trillion $161 billion
              FY2008 $2.98 trillion $458 billion
              ….
              FY2009 – $3.52 trillion $1,410 billion
              FY2010 – $3.46 trillion $1,294 billion
              FY2011 – $3.60 trillion $1,299 billion
              FY2012 – $3.53 trillion $1,077 billion
              FY2013 – $3.45 trillion $680 billion
              FY2014 – $3.51 trillion $485 billion
              FY2015 – $3.69 trillion $442 billion
              FY2016 – $3.85 trillion $585 billion

              There was only 1 year in the Obama presidency where the deficit wasn’t higher than any year in the Bush Presidency. IE the lowest Obama deficit was slightly under the highest Bush deficit.

              Average deficit for Bush: $283 billion
              Average deficit for Obama: $909 billion

              1. You left out the data from the years immediately before Obama took office and including that data is important to the total picture.

                Only if you are trying to further prove my point. Controlling spending is the ONLY thing that govt can directly control. They can’t control tax revenues directly – only tax rates – and with tax rates there’s a ton of accounting games between those tax rates and the tax revenues that result. Playing accounting games is what R’s do. Controlling spending is NOT what R’s do (see Bush years).

                I REPEAT for emphasis. There have been only 9 years since WW2 with even ONE year of spending reduction – 3 in WW2 demobilization, 2 in Korea demobilization, LBJ’s first year before election, and 3 during Obama. Once you get to two or more consecutive years of spending reduction or zero growth, then you are left with Obama, WW2 demob – and Coolidge.

                1. Can you not see the almost 800 BILLION dollar bump is the 2 previous years genius???????

                  He started with an inflated baseline you fucking half wit. I mean I guess we should be thankful he didn’t piss away even more money and all… But to say he was fiscally responsible is a joke. I will outright given Clinton a gimme for being willing to sign off on things that got us on the level. I’m not a total partisan hack at all… But to do so for Obama is preposterous.

            2. Ugh.

              The reason Obama doesn’t look like shit is because he inherited a sky high, should have been one time only massive deficit. But then turned it into a permanent one.

              Keep in mind, I AM NOT supporting Bush. He is a useless piece of shit that I probably hate even more than Obama, because he was a liar and a traitor to things he claimed to support… At least Obama was slightly more honest about his horrible values.

              As for Rs… I think the reason we have such shitty Rs is the same reason we have such shitty Ds… The 2 party system. The fear of losing to the other EVEN WORSE side is what keeps getting these awful people elected.

              I know VERY few Republicans who would not jump for joy if the federal budget were slashed 50%. Many of them ARE pro war, which is dumb. But it is what it is. The R pols in DC don’t ever do this though, because they’re pieces of shit. YET somehow Rs at the state and local level actually do this all the time.

              IMO it’s simply because those that get backed in primaries for federal offices are largely picked by the establishment, and they’re tools. But there are too many offices at lower levels to control to that degree, so true believer conservatives win these all the time.

              As for SS reform… Look up polls dildo. Honestly, nobody is HUGE on reforming that shit, unless it is minor tweaks… But white conservatives are more likely to support it than anybody else. So fuck right off with your nonsense.

        2. Just for the record, you guys have veered way of what I was talking about by “culture”.

          You don’t need to be white or protestant to be influenced by the protestant work ethic. Culture is much bigger than that. Gay, Indonesia Buddhists who grow up in our culture are influenced by the predominant culture just like the rest of us. And make sure you understand what we’re talking about:

          “The Protestant work ethic, the Calvinist work ethic[1] or the Puritan work ethic[2] is a work ethic concept in theology, sociology, economics and history that emphasizes that hard work, discipline and frugality[3] are a result of a person’s subscription to the values espoused by the Protestant faith, particularly Calvinism.”

          https://en.wikipedia.org/wiki/Protestant_work_ethic

          Calvinism has pretty much gone the way of the Dodo bird, but it’s influence is still felt in the cultures it influenced–just as there are differences between cultures that have been influenced more by Catholicism than Protestantism. I don’t think anyone who studies such things argues that Irish, Italian, and Spanish culture aren’t alike in ways that are different from the ways that English, Swedish, and Norwegian culture tend to be the same–because of the influence of Protestantism. Again, this isn’t to say that people of any race or religion who grow up in Sweden are fundamentally different culturally from other Swedes–quite the contrary. It’s just that Swedish culture was influenced by Protestantism.

          The other point I was making about homogenization wasn’t about different races being resistant to frugality either. I suspect homogeneous cultures actually have an easier time with government spending on social services. When you start forcing people to pay for each other’s welfare, the racists, especially, tend to get picky about the kinds of people who are benefiting from the largess. The point I was trying to make with the homogenized culture bit was that when it comes to time cut those benefits, more homogenized cultures don’t need to contend as much with charges of racism, etc. In a more diverse culture, if one group is disproportionately benefiting from the taxpayers’ generosity, the charge of racism will be made. I bet those charges carry a lot less weight in a culture that’s a lot less diverse.

          Thus both of those factors might contribute to the reason why countries like Denmark, Switzerland, and the Netherlands had an easier time of waking up one day and deciding to defy the government’s lack of a marginal propensity to save. I understand why Hong Kong might have ended up in that group. The society was built on exploiting the Chinese mainland for the benefit of entrepreneurial activity. Add the fact that Hong Kong both doesn’t need to pay for its own national defense and is a port sitting in the middle of the biggest growth story in history, and it’s no wonder that they have little trouble with fiscal discipline.

          To the extent that Denmark, Sweden, Switzerland, and the Netherlands are excellent examples of fiscal discipline, it’s hard not to notice that Italy and Spain are excellent examples of countries that spent way too much. There are differences between those cultures, and the differences may help explain why the voters in one groups of countries embraced fiscal discipline when the others did not.

          1. I wouldn’t say that people growing up in America of any ethnicity aren’t effected by American culture at all… That is absurd… BUT there ARE cultural carry overs that some people probably don’t have.

            A personal example is that my family is overwhelmingly German on all sides. My grandpa NEVER called in sick a single time in almost 40 years of working. He was very proud of this. That was because he was raised to not be a pussy, and to work his ass off like a fucking man.

            This got beat into my dad, and beat into me. I will beat it into my children. Somebody from a different background may get plenty of Anglo-Germanic culture rubbing off on them in various ways, but not ALL ways and in equal proportions.

            You are correct about the homogeneity thing re spending. Supposedly less homogenous populations are more opposed to social spending. Your assertion that it ALSO makes them able to cut spending may be valid too.

            I still wouldn’t fully discount that other, deeper, cultural things play into it too though. People were viciously shamed for using the welfare state in most northern European countries until recent years, when that cultural aspect has slowly died out, even as they’d pared back the actual welfare state. But it’s still there to a higher degree than other nations, as per polls that had been done internationally. Fiscal prudence is woven deep into northern European thought and culture, and things like that take a long time to die out fully.

            Keep in mind people say and do things in everyday life that are based off of myths/folk beliefs that sometimes date back hundreds or thousands of years, without even knowing it! You think fiscal prudence as a cultural aspect would be any different?

  6. Simple really. A constitutional amendment.
    Any year in which the legislatively mandated process is not complete by the deadline, all sitting members of both house forfeit all pension, the full value of any campaign contributions still held, and become ineligible for any future political office at any level.
    Good times for all.

  7. Why do the people of some countries demand fiscal discipline when others don’t? Is it time to dust off the Max Weber books and start talking about the protestant work ethic?

    No But I’m sure the R’s would love to yap on about something that they can paint in racial or culture war terms. Since that’s all they got at this point.

    Rather than address anything about our love of global empire – which absolutely affects both defense and entitlements. ‘Defense’ directly and via the OCO/warfighting/offbudget stuff. And entitlements via the bribery of a major portion of our voting peeps that THEY can have their butter too so no need to question whether both guns and butter are possible.

    1. But at this point, the butter costs far more than the guns. I’m opposed to empire-building, but that’s simply no longer the gigantic hole in the budget–that prize goes to entitlements.

    2. As I said above, other than being pro big ass military, white Americans are overwhelmingly fiscally conservative.

      IMO it’s elected R politicians at high levels of government who don’t have the stomach for budget cuts, not rank and file voters. How many people here would LOVE to see spending cut by 50%? TONS. Same would be true over at Foxnews.com or whatever comment section.

      The reason we can’t cut spending is because shitty politicians are shitty, and a minority of whites, and everybody else in the USA, doesn’t want to cut spending. Where that root cultural thing comes from I dunno, maybe it is a hold over from being protestant zealots… But it’s there either way.

  8. Here’s one way to contain a county budget.
    Eliminate public schools.
    At one time, and I don’t know if its still true, Denver County’s budget allotted about 60% of their budget to public education.
    Gee, I wonder what would happen if Denver County residents voted to terminate public education and let the parents pay for their kids education themselves and how much money the average homeowner would save.

  9. Here’s my plan: take annual federal spending each year and divide it by the number of adults residing in the 50 states. That’s how much everyone owes in taxes. Right now around 20K each.

    If spending goes up, so does the tax bill for every American resident.

    That might motivate people to vote for spending cuts.

    1. And it’s totally fair. Everyone pays the same amount.

    2. Amen, I’ve been advocating a head tax for years and completely eliminating all income, sales, corporate, captial gain, dividend etc… taxes. If we can’t eliminate public education, public roads, etc… that should be paid for by user fees effectively making them a business. For one, a head tax really is the only truly fair tax (if you work under the assumption that everybody benefit from govt services equally, which isn’t remotely true nowadays). It would eliminate class warfare overnight when everyone would have skin in the game. When you can’t just do the democrat thing and propose having the 1% pay for it all, everybody would want government to shrink.

  10. I think Ron Paul is right. He came to the conclusion years ago that we’ll never restore fiscal sanity until we have an economic collapse. That could be something like Great Depression 2.0, maybe just insane inflation without TOTAL collapse of the real economy like the 70s on steroids.. But SOMETHING along those lines that really snaps people back to reality.

    The only way it won’t be the above is if we have a massive political upheaval that isn’t specifically economic, but part of that upheaval involves fiscal sanity. But any which way, it will require earth shattering change. People seem to be too fucking stupid to just limit growth in spending to saaay 1% a year for a decade or something and magically watch the debt melt away in terms of percentage of GDP. That’s literally all we’d have to do and we’d be golden. But it’s toooooo damn hard apparently.

    1. That too is just bullshit. Ron Paul is just a guy who found it far easier to snipe from the sidelines (and raise money from like-minded) than to actually DO anything about fiscal responsibility. If he had actually tried to do anything, then he would have a)had difficulty getting elected and b)lost his virginity to the messy world of making things happen and c)failed to achieve his own personal ideal of ancapatopia.

      Ancaps (and most of the ‘Austrian’ school) WANT an economic collapse so they can say ‘I told you so’ and break their arms patting themselves on the back for how ‘smart’ they are. They also don’t want the responsibility of driving the car because in all likelihood they aren’t actual nihilists.

      1. I mean kinda. RP wasn’t perfect, but he generally voted for decent things, and against bad shit. The fact of the matter is if congress was full of people like him we’d be a LOT better off.

        He was just a man born into the wrong era. It’s not his fault 98% of people in congress are idiots and would never pass anything sane, like the kind of stuff he would have voted for. He put up bills, they never passed. He spoke out with correct opinions on MANY subjects, from being anti war to spending issues… There’s only so much one guy can do.

        He is NOT an AnCap either. Honestly, he’s a libertarian leaning conservative, or conservative leaning libertarian. But he is not nearly as purist libertarian as a LOT of people on many issues. Mostly I tend to agree with him where he breaks from purist dogma, so I don’t mind.

    2. People seem to be too fucking stupid to just limit growth in spending

      People aren’t stupid at all. People rationally maximize their individual utility through the political process. When you have a a nation that includes a large and growing underclass, printing as much money as possible, issuing as much debt as possible, and transferring as much money as possible from productive groups to unproductive groups.

      The only way to change that would be to break up the US into independent nations along socioeconomic lines. Small government, low taxes, balanced budgets, and free markets only work in democracies with fairly homogeneous populations.

      1. That’s what I’m totally in favor of!

        I saw split at least the west coast off, if not the northeast as another chunk of its own. That would be ENOUGH to save America as something resembling what it was founded to be. Without that, we’re done.

        I would also be okay with splitting it more ways than that, but that would be the minimum.

  11. Interest in how to design a better budget process—one that actually limits the growth of government—isn’t new.

    Countries have massive deficits because it has a large voting population who believe they are entitled to lots of free crap, and because issuing debt is highly profitable to politically powerful groups. That’s it.

    These fiscal rules are broadly effective. Comprehensive data covering many years show that countries with such rules have annual budget deficits that are smaller by an average of 0.5 percent of gross domestic product (GDP) when compared to countries without such rules.

    You’re confusing cause and effect there. It’s not that the budget rules are broadly effective, it’s rather that countries that are forced to constrain spending by circumstance anyway adopt such budget rules.

  12. You know, I’m hardly a fan of western Europe and their welfare states, but they really are more adult than the average American these days. They understand that in order to have massive government benefits their standard of material wealth cannot be very high and that everyone including the poor has to be taxed at levels that put the top US income tax brackets to shame. Many Americans now foolishly believe that they can have top notch free healthcare, free college, years of paid maternity leave, 2 month paid vacation a year and a 4 day work week while still having 3000 square foot houses, a $50k SUV, gasoline under $3/gallon while owning the latest iPhone and the only people who would pay an appreciable amount of tax would be multi millionaires.

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