Thoughts on the deficit crisis

[chris_gerrib]

Much of official Washington is screaming about the "out-of-control" deficit. Well, Paul Krugman provides useful facts as usual.  Two specific facts:

1) During the recession of 2008, GDP slowed from 5.1% annually to 1.7% annually. This slowdown artificially made the deficit appear twice as big as it would have barring a recession.

2) The massive growth of government spending is entirely due to things like Medicaid and unemployment payments. In other words, the government's normal response to recession increased spending. Spending on everything else (including military) is down over the period 2007-2010.

Yes, we need to get a handle on deficits. But that means:

1) Growing the economy
2) Raising taxes
3) Cutting spending

Comments

[jetfx.livejournal.com]

Your solution seems so simple, but really its going to work out more like this:

1)Increasing corporate profits
2)Lower taxes on the rich
3)Slashing social programs while increasing military spending to make up for it

[baron-waste.livejournal.com]

Just remember - FDR's Brain Trust Comrades may have told him that taxes could be increased without damaging the economy - and when you're talking an increase from 2% to 5% of whatever income you feel like reporting, it might even have been true - but C. Northcote Parkinson (http://en.wikipedia.org/wiki/C._Northcote_Parkinson)'s brilliant The Law and the Profits (http://www.amazon.com/Law-Profits-Cyril-Northcote-Parkinson/dp/1568491018) speaks of what has happened since.

Increase the taxes still more. Watch what happens to your economy.

- That book will rock your boat. Prof Parkinson, inventor of Parkinson's Law, looks at political and economic history and perceives a pattern: Nations flourish until their governments tax them into oblivion. Great nations become great only because they avoid this, and remain great only so long as they do… but eventually all succumb. Remember Britannia Rules the Waves? Remember Columbia, Gem of the Ocean? Guess what happened to each in turn. Remember also that this nation was founded in large part as an act of tax rebellion. (Can you say, “Tea Party”?)

Ah, but it's for the Greater Good, of course.

[chris-gerrib.livejournal.com]

We've been at the tax level proposed before. It was a tax level lower than under Reagan. It was a hell of a lot lower than in 1960, when Parkinson was writing. Not only did the economy survive, it thrived.

Again, you're acting like we're cutting off people's heads when we're really suggesting that they get a haircut.