Fiscal optimism
Posted by Richard on April 13, 2006
Libertarians and fiscal conservatives, myself included, have been complaining about the spendthrifts in both the Bush administration and Congress since "No Child Left Behind," if not longer. When you look at size of the federal budget, the humongous spending growth in category after category, the egregious lists of earmarks and other pork, and the utter failure of the Republicans to exercise even a modicum of self-discipline and restraint, our complaints and criticisms certainly seem well-founded — perhaps even not loud or harsh enough.
Basically, however, I lean toward optimism, so I’m pleased to report that it’s not all doom and gloom on the fiscal front. I ran across some interesting fiscal information that, while it in no way excuses bridges to nowhere, did suggest that the glass may be half full. Possibly more than half full.
Item one was a factoid pointed out by Rush Limbaugh today on his show: As a percentage of gross domestic product (GDP), the federal budget today (about 19%) is significantly smaller than it was in 1984 (over 22%). Of course, 19% is still an absurdly high burden on the economy. But the difference between the two rates is a pretty hefty 15%, so it seems only fair to temper the wailing and gnashing of teeth with a bit of perspective.
Item two is some information about fiscal trends from an interesting blog called The Skeptical Optimist, which is the work of Steve Conover. I learned of it from Dymphna at Gates of Vienna, who justly praised Conover’s Debt Clock, which figures into the fiscal trends information.
Conover’s Debt Clock (top of his right sidebar) contains three counters, not one. The first shows the rapidly growing public debt, and you’ve probably seen one like it — the number updates twice a second, getting bigger at a dizzying rate. The second counter shows the rapidly growing GDP — it, too, is getting bigger at a dizzying rate. The third counter shows the Debt-to-GDP ratio, and Conover points out that waiting for it to change is "worse than watching grass grow." If you’re patient enough, and if current trends continue, you’ll eventually see it inch lower.
But the really interesting fiscal information from Conover is in the post October Surprise, 2008, and its accompanying graph. Conover charted GDP, total federal outlays and receipts, and general fund outlays and receipts, projecting current trends into the future. Subject to two "big ifs," Conover suggested the following possibility:
“Big If” number one:
If federal spending continues to increase at exactly the present rate…
“Big If” number two:
If federal tax receipts continue to increase at exactly the present rate…
Then:
On October 12, 2008, annual spending would become exactly equal to annual tax receipts. In other words, the federal budget would move into balance, three weeks before election day.
The explanation for this potentially fortuitous development is simple: Once again, tax cuts are working exactly as supply-siders predicted. Contrary to the critics, we don’t have to figure out how to "pay for" the Bush tax cuts because they’re more than paying for themselves. GDP and tax receipts are both growing significantly faster than spending, and thus the deficit is shrinking rapidly.
Of course, a balanced budget in 2008 may be good news for the country, but it sure wouldn’t be good news for the Democrats. It thus behooves them to drive spending up and to obstruct all attempts to extend the Bush tax cuts that are the source of the good news.
Fortunately for the Democrats (and unfortunately for the rest of us), they can probably count on considerable help from the (rapidly growing) "useless idiot" wing of the Republican Party — such as Jerry Lewis, Trent Lott, and the usual RINOs. If Rove has any sense, he’ll schedule some hunting trips with Dick Cheney for these folks — maybe send a little message.
Chenry said
This is an excerpt from the Government Accountability Office Report
(http://fms.treas.gov/fr/06frusg/06gao2.pdf)
Report was issued (12/15/06)
The Nation’s Fiscal Imbalance
“While we are unable to express an opinion on the U.S. government’s consolidated
financial statements, the following key items deserve emphasis in order to put the
information contained in the financial statements and the Management’s Discussion and
Analysis section of the 2006 Financial Report of the United States Government into
context. Despite improvement in both the fiscal year 2006 reported net operating cost and
the cash-based budget deficit, the U.S. government’s total reported liabilities, net social
insurance commitments, and other fiscal exposures continue to grow and now total
approximately $50 trillion, representing approximately four times the Nation’s total
output (GDP) in fiscal year 2006, up from about $20 trillion, or two times GDP in fiscal
year 2000. As this long-term fiscal imbalance continues to grow, the retirement of the
“baby boom” generation is closer to becoming a reality with the first wave of boomers
eligible for early retirement under Social Security in 2008. Given these and other factors,
it seems clear that the nation’s current fiscal path is unsustainable and that tough choices
by the President and the Congress are necessary in order to address the nation’s large and
growing long-term fiscal imbalance.”
hmmm… does anyone else see a problem?
Chenry said
Great format
Anonymous said
”hmmm… does anyone else see a problem?”
Yep. Among others, George Bush. That’s why he proposed Social Security reform. Granted, I wish he’d done a better job of selling his plan. But the Dems screamed bloody murder about even that modest degree of privatization and insisted there’s no fiscal problem, and most of the GOP hid in the weeds, trembling with fear.
W’s a mixed fiscal bag, for sure (prescription drug entitlement??), but give him credit for seriously trying to address Social Security when no one else would.
Thanks for dropping by!