Tag Archives: Size of Government

Planet Moron: Historic Deficit Cutting Deal Q&A

open quoteGiven the historic nature of this week’s historic agreement to cut federal spending historically, we thought it would be useful to provide you with a FAQ on the deal:

. . . .

Q: Yes, but how severe?
A: So severe, you could even say they were sharp.

Q: Could you put a number on that?
A: Sure, the initial cuts amount to $917 billion!

Q: Well, that’s not too bad, but we’d still run a deficit next year.
A: That’s not $917 billion next year, that’s $917 billion over ten years.

Q: That’s barely $90 billion for 2012, then.
A: More like $22 billion next year. The really historic, sharp, severe cuts take place much later.

Q: This doesn’t sound very convincing.
A: Just take a look at this chart and you’ll understand.
Projected Spending Cap of 2011 Budget Deal

Q: I thought you said there were cuts.
A: There are! Look at them. We’re not sure how we’re supposed to run a government with cuts like these.

close quote (Read more from planetmoron.typepad.com)

The Marxist-Keynsian Truth about the Economy

I think this is a ridiculous combination of Marxism and Keynesianism typical of high-level government officials, with a stress on Marxism, perhaps indicative of a former Labor Secretary.

1) A Marxist devotion to egalitarianism. Good and bad are evaluated in terms of less equal and more equal. Marxisms relies on a fervent hatred of the rich. Here’s an example of why pure egalitarian analysis is flawed:

Imagine a rich town where infant mortality is 3/100,000, and a poor town where infant mortality is 6/100,000. Imagine some technological breakthrough which reduces it by one in each town. So infant mortality becomes 2/100,000 and 5/100,000. Normal people would hail this as an improvement. But Marxists see that it represents an INCREASE in inequality. Instead of infant mortality being twice as high in poor areas, it’s now two and half times as high.

2) He claims we should hate the rich and that there’s a budget deficit because the rich aren’t paying their share.

Shouldn’t the fact that government spending doubled under Bush, and tripled under Obama enter into this analysis? Isn’t that a no-brainer?

Even if the government slaughtered all the rich people and took their money (something which had been attempted in Ukraine and elsewhere), even if the government took 100% of the profits from all fortune 500 companies, we still couldn’t afford the 2011 budget.

Here’s Iowa Hawk’s wonderful illustration: www.youtube.com/watch?v=661pi6K-8WQ#t=2m29s

There’s also the fact the rich aren’t the same people from decade to decade. There’s a lot of mobility.

3) “instead of joining together” workers are competing

The Marxist dichotomy of all workers vs. all employers is bullshit. Workers compete against each other and employers compete against each other. Only politicians claim that the interests of huge groups of people are identical. Politicians need large groups of people to hate and/or fear other large groups of people.

4) The middle class can’t borrow, lacks purchasing power = high unemployment.

Spending does not drive the economy, and debt certainly doesn’t drive the economy. Savings do. When people spend less on consumer goods, it means they are saving more (ie planning for the future). In a free economy, this would mean that investment money becomes available for long term projects that will produce goods in the future.

Certain business need to close but opportunities are created for long term projects. The structure of production needs to change, and we ought to simply let it change.

In our Keynsian economy, the government tries to keep spending going, even though people are trying to save.

5) He’s also suggesting something completely ridiculous and wrong headed. He says that politically connected people have too much sway over government, and wants to fix this by giving the government more power. This would back fire if he ever had his way. Giving more resources and power to government means more incentive for people to control government. Letting people keep more of their money is a much better solution.

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Also, Austrian School economist Robert Murphy addresses of glaring falsehoods in the former Labo Secretary’s presentation:

CBO Says Budget Deal Will Cut Spending by Only $352 Million This Year

Ha!

open quoteA Congressional Budget Office analysis of the fiscal 2011 spending deal that Congress will vote on Thursday concludes that it would cut spending this year by less than one-one hundredth of what both Republicans or Democrats have claimed.

A comparison prepared by the CBO shows that the omnibus spending bill, advertised as containing some $38.5 billion in cuts, will only reduce federal outlays by $352 million below 2010 spending rates. The nonpartisan budget agency also projects that total outlays are actually some $3.3 billion more than in 2010, if emergency spending is included in the total.

The astonishing result, according to CBO, is the result of several factors: increases in spending included in the deal, especially at the Defense Department; decisions to draw over half of the savings from recissions, cuts to reserve funds, and mandatory-spending programs; and writing off cuts from funding that might never have been spent.close quote (Read more from nationaljournal.com)

Grover Norquist – Just Leave us Alone

Here’s an interview with the man who said “I don’t want to abolish government, I simply want to reduce it to the size where I can drag it to the bathroom and drown it in the bathtub.”

Personally, I think he’s an inside-the-beltway pseudo libertarian. He should watch the Hoppe Video I recently posted, The Impossibility of Limited Government.