Fiscal Follies
Years of spending, inflating, taxing, and redistributing has left the US economy teetering on a recession that our best and brightest -- meaning the ones who created this mess -- claim requires a multibillion-dollar economic-relief package to quell fears, promote confidence, and spur recovery.
And, one might add, to keep things calm past election time, which is the real purpose of this bipartisan proposal.
It leaves you wondering about what happened to the 1990s boom, a credit-fueled expansion also influenced by a peace dividend. The end of the Cold War produced a floundering federal government that lost its rationalization to grow and found itself unsure of its purpose, thus promoting an era of relative peace and prosperity.
Oh, how things changed in the 2000s, with new monsters to destroy and new justifications for centralized power! FULL ARTICLE
Comments (4)
Steve Hogan
While the overall message of this article is hard to refute, I suspect that the budget "surplus" claimed in 2000 is an accounting fiction. The feds were no doubt cooking the books to arrive at this number, as they've been doing so for decades.
Their favorite trick is to raid the Social Security "trust fund" (other than being an anti-social, completely insecure income redistribution scam run by unscrupulous politicians, it's accurately named), which is the primary reason why the unfunded liabilities of this government-sanctioned Ponzi scheme run into the tens of trillions.
Of course the same accounting gimmick holds true for 2007, albeit with a lower surplus, so the overall change in percentage between 2000 and 2007 is probably slightly lower than what's stated.
Published: January 28, 2008 2:14 PM
billwald
The operation of the SS trust fund hasn't changed since the day FDR signed it into law. The money received from the payroll tax was always traded for govt securities and the money spent for current budget items.
Published: January 28, 2008 3:05 PM
Larry Ruane
I have a question about this part of the article: "Say you run an automobile factory and no one is buying your cars at the average price of $20,000 each. Your dealers' lots are growing and your supply chains are getting clogged — both indicators of a downward pressure on prices. You can either (a) cut back production and lower your average price, or (b) wait for consumer demand to increase."
Seems like the alternatives should be (a) keep up production and lower your average price, or (b) maintain price, cut back production and wait for consumer demand to increase.
In the author's case (a), if you're lowering price, then quantity demanded should increase, so why would it be necessary to cut back production?
Published: January 28, 2008 6:39 PM
chris
Larry - You may or may not have to cut back production. My point here was simply that there is an excess supply developing bcs the market prices have not adjusted yet. Firms often do both in a market correction. Demand-side, consumption-based policies allow you to avoid both.
As an aside, I see that Steve Landsburg made a further point over the weekend in the WashPost: "Ultimately, the only solution to unemployment is for displaced workers to get retrained and find their way back into the workforce. The new stimulus package only delays that process by propping up dying industries for a while and postponing the day of reckoning. Ultimately, there will be just as much hardship because the stimulus package can't last forever. Why spend all this money trying -- and probably failing -- to delay the inevitable?" In Austrian terms, he means that by allowing firms not to cut back production, the government allows malinvestment that started during the boom continue during the bust.
Published: January 28, 2008 8:15 PM