The strongest relationship, by far, was between people’s expectations about the budget deficit and their expectations about their own taxes. However, the direction of this relationship was precisely the opposite of what straightforward fiscal logic would suggest: people who expected higher taxes under Obama also expected a bigger budget deficit under Obama, other things being equal, while those who expected higher taxes under Romney also expected a bigger budget deficit under Romney. This peculiar association was strongest among people who were relatively uninformed about politics; but it was easily the most important single determinant of deficit expectations even among people with above-average levels of political information.If you think that your taxes will be lower, then you also think that the deficit will be lower. Huh?
It makes little sense, of course, if you think that budget deficits are the mathematical difference between federal government revenues and disbursements.
However, if you think of deficits as "economic bad stuff", then it makes perfect sense. Paying less taxes means less economic bad stuff, and therefore smaller "deficits." It also makes sense then that there's a correlation between economic growth and smaller deficits. Of course, that works using the real definition of deficits, too, since economic growth does in fact increase government revenues and therefore lowers deficits. But Bartels also finds only weak correlations between spending and deficits, which makes more sense under the "economic bad stuff" definition -- since public opinion in general is fairly split over whether government spending is a good or bad thing. The only bit which doesn't seem to work as well is that Bartels reports a somewhat higher association between Medicare and Social Security spending and deficits than between either domestic or defense spending and deficits, given that presumably Medicare and Social Security spending are more popular (although on the other hand, it doesn't really make sense that respondents would differentiate at all between different types of spending and the deficit).
So great stuff from Bartels and YouGov, and I definitely recommend that you read the whole thing, but I'm still waiting for some survey research which investigates what the public believes federal budget deficits are in the first place.
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Reminds me of the endless Republican ads against Obama that amount to "He raised taxes. The national debt exploded. Now the economy sucks."
ReplyDeleteThere was one ad I saw that opened with Obama's pledge to reduce the budget deficit...and then switched to showing the growing national debt. I wonder how many people could explain the difference between the two? How many people think it's ridiculous that one could simultaneously decrease the budget deficit while also adding to the national debt?
Devil's advocacy: there are certainly tax rates (e.g. the 90% top rate which Reagan inherited) for which reduction of taxes directly increases revenues, and thus reduces the deficit - with the opposite also obviously true.
ReplyDeleteThose Laffer effects are almost certainly minimal at the much lower top marginal rates prevailing today. However, its not categorically nuts to associate lower taxes with lower deficits - if you're a full-on Laffer disciple, you believe precisely that, and you have some theory behind your view, as well as some (not-especially-applicable) empirical data too.
Actually, it was Kennedy who inherited 90% marginal tax rates, though they were still quite high when Reagan came along, say 70%.
DeleteAs you move down the Laffer curve, the effect first becomes minimal and then reverses. Where that transition would come, I don't know, nor am I sure that Laffer does. In any event, the standard GOP rhetoric these days seems to suggest that the effect always applies, and I don't think Laffer ever said that.
The Laffer curve is not based on a formula, so there is no calculated sweet spot in the Laffer curve. It was basically a sketch on a cocktail napkin--no hard math involved.
DeleteHowever, it LOOKS scientific, so many people have accepted it as such. But the Laffer curve isn't scientific and isn't even based on collected data. It's just a rough idea, but Laffer sure has gotten famous on it.
Actually, according to some recent research by Emmanuel Saez, the revenue-maximizing income tax rate looks to be around 70%:
Deletehttp://voices.washingtonpost.com/ezra-klein/2010/08/where_does_the_laffer_curve_be.html
Scott, good point about Kennedy and Reagan, I blurted out the 90% point with vague uncertainty; I do believe your recollection is correct.
DeleteTo MP: the Laffer curve is not scientific in the "scientific method" sense, but it is scientific in the "objectively understandable" sense. At the 90% marginal rates Kennedy inherited, a cut of the max rate to 80% reduces immediate govt revenues by 11% (=10%/90%) while increasing individual purchasing power by 100% = (20%/10%, or the difference in takehome pay). I think its pretty easy to visualize how a 100% increase in purchasing power will generate economic activity eventually more than offsetting the immediate 11% drop in revenues.
But as Scott said, the effect begins to fade as the top marginal rate declines; eventually it reverses. Where does it happen? Hard to know for sure, but quite likely before you get to the sub-40% top rates prevailing today, since the govt's % increase in revenues is greater than the taxpayers percent loss at all marginal rates below 50%.
doc, thanks for that reference. It strikes me as interesting that so many conservatives refused to answer the question and that someone like Mankiw stresses that he's never studied it. The liberals seem to be the only ones interested in the Laffer curve (maybe because the wrong answer comes out). The distinction between "revenue-maximizing" and "growth-maximizing" also raises valid questions, though. I wonder who's studied that.
DeleteLots and lots of words, but I think you better save yourself the trouble. Obama and Pelosi are massive spenders, and jacked deficits and debt through the roof, which is what brought on the 2010 shellacking.
ReplyDeleteAnd Obama's claims that that was what was needed to promote prosperity? The results don't support that claim.
Debt and spending are subjects that the Obamabots should probably steer clear from. Stick to the class warfare stuff, and let it go at that. It's a loser otherwise. They can defeat Romney with that smarter strategy, although they'll likely lose ground in the Congress.
Thank you for that demonstration of the failure of our public education system.
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DeleteSorry botched my prior comment, so trying again.
DeleteThis is not an public education system issue. This is a media issue. My guess is most of the people don't understand the basic math watch Fox.
Is it not self-evident that the secret to recovering from a collapse in aggregate demand is a collapse in aggregate demand?
Delete(Hey, at least I don't work managing bleeders in a trauma unit.)
I don't think you give people enough credit in this area. Everyone knows that the meaning of "deficit" is a shortfall. But they've been also told for years by the GOP that cutting taxes increases government revenues, which means it should also lower the deficit.
ReplyDeleteThere's also a GOP ad running this cycle that says FOR JOB GROWTH, LOWER THE DEBT. It makes zero sense, but when people are told that kind of thing over and over again, eventually they'll start believing it.
You could be right! The problem is that we really don't know, and survey research which assumes that people know what deficits are could be missing something if I'm right.
DeleteOverall, however, I'd be very, very wary about what "everyone" knows.
Maybe you guys have the causal arrow in the wrong direction, i.e., people are saying that a higher deficit will bring tax increases, not that tax increases will cause the deficit to increase.
ReplyDeleteNot saying that makes a lot of sense, but it makes slightly more sense than the exisiting explanation...
For uninformed people, I think it's the case that they do not have coherent views about what is so bad about deficits (and the debt generally) either. The people I talk to pretty much stop at "we can't afford it" or "China owns all our debt." They just associate it with bad stuff with no real analysis. They don't know what it is and they don't know why it's (allegedly) bad. It's just words with scary music accompanying them.
ReplyDeleteI wonder what is going on for those with above-average political information, though, since the pattern is still significant for them. It's easy to see how emotional rhetoric can fill in the blanks with low-information folks. What's happening with high-information people? Is it really the case that they are simply swayed by emotional rhetoric as well? That seems incredible.
I wonder what is going on for those with above-average political information...
DeleteNo small number of them also have an above-average propensity to being bought off with decreases in the top marginal tax rate, or with decreaases in taxes on non-wage income, or both.
And they vote. And contribute to campaigns.
Politicians respond to incentives.
I've brought this up before, but one striking example of having a poor understanding of what a budget deficit means and how it relates to the larger economy came from Tea Party Nation founder Judson Phillips, in a 2010 Washington Post interview:
ReplyDeleteQ: If cutting taxes did so much to raise revenues, why did we always find the federal deficits ballooning immediately after they were implemented. Think Ronald Reagan, GW Bush. Tax increases under Clinton also raised revenue and actually brought the budget into balance.
Judson Phillips: Kennedy cut taxes and the economy boomed in the 60′s
Reagan cut taxes in the 80s and the economy boomed.
Bush cut taxes in the early 2000s and the economy boomed.
The Clinton balanced budget came mostly after the GOP took over the house in 2004 and he could not spend all the money he wanted to.
There are numerous problems with Phillips' response (and his confusion between 2004 and 1994 is the least of them). The question was entirely about how deficits rose after Reagan and W. cut taxes and fell after Clinton raised them. But Phillips, in his response, completely ignores the question of deficits and starts talking about economic growth. He gives the strong impression that he doesn't understand the two concepts are separable--he seems to think "revenue" is just another word for economic growth and "deficits" just another word for a lagging economy.
His economic literacy is a symptom of the propaganda that conservative media feeds to its audience daily. This crowd pays enough attention to politics to be categorized as high-information voters, but in no way does this mean they're well-informed in any reasonable sense.
Its curious how, when we discuss stimulus, there's a near-universal liberal consensus that more (Keynesian) stimulus is appropriate today, with a concession, sometimes tinged in condescension, that we'll of course pay down the resulting debt later. Its not often stated, but there's an implied suggestion that the glorious economic situation of tomorrow will make deficit reduction a lot easier for future politicians to do.
ReplyDeleteTo his credit, Scott Monje pointed out recently that deficit reduction is always and everywhere anti-stimulative. I'm not sure that the uber-Keynesians have ever grappled with this fact, specifically that deficit reduction four years out, which knocks 200 basis points off an otherwise healthy 4% GDP, by math brings us back to the type of anemic ~2% growth we're worried about today.
Our uber-Keynesians are confident, almost to the point of condescension, that our future politicians will fall on that 200 basis point GDP sword, so much so that we should not fear any bad motivations on our future politicians' part in undertaking more mad spending today.
All of which is to say: if you want to point your finger at the other guy for irrational views about deficits, realize there's a good chance you're also pointing four at yourself.
CSH, you stumped me with this one, maybe because I'm not familiar with Scott's analysis. My understanding is that in a boom, tax receipts rise and some categories of spending fall (unemployment, Medicaid, etc.). So it's then possible for the government, at reasonable rates of taxation, to run a surplus. Why would that surprlus need to be spent on continuing stimulus? We're in a boom, so what harm does it do to spend it paying down debt? Wasn't that Keyenes' own idea?
DeleteNow if what you're saying is that in reality, some clown like George W. Bush will come along and say that any surplus is over-taxation and must be immediately refunded to his rich friends.... I mean, to "the People," then yes, debt reduction won't happen. But that's a political problem, not an inherent fact about economics. Right? What am I missing?
I can’t speak for other uber-Keynesians, but I look at it like this. We have a structural deficit that began in the Bush years (tax cuts, unfunded wars, unfunded Medicare prescription drug program). The structural deficit is compounded by above-inflation rise in health care costs (this predates Bush). From there the deficit got blown up by the Great Recession – tax receipts plummeted, social welfare spending necessarily spiked. We currently have an annual deficit in the range of $1 trillion, down from about $1.3 trillion in FY 2009.
DeleteI think we can halve that deficit through economic growth. To get the economic growth in the near term requires stimulus now. (Would it work? Yes, our main economic problem is a shortfall in demand. Stimulus is government filling the demand gap. And yes, more stimulus would initially add to the debt, but because of the conditions we face, it would generate more growth for relatively little debt. Remember, well-designed stimulus is one-time spending. Contrary to conservative belief, ARRA (the 2009 stimulus) added a couple of points to growth and 2.5 million jobs and was not a big contributor to our national debt.)
That leaves the structural deficit, which could bottom out at about $500 billion per year (if I got my way on stimulus) but then would begin to rise again absent other action (because of aging population and rising health care costs affecting Medicare and Medicaid spending). Personally, I would raise taxes on the wealthy, cut defense spending by a third and double-down on the health care cost reforms in Obamacare. From the standpoint of growth, it would be better to do this later, when the economy is stronger. But no, we can’t count on future politicians doing this at the right time. So the best solution would be a political package deal now including immediate stimulus and deferred long-term deficit reduction along the lines mentioned above (taking effect in 3-4 years). As of now, we are due for major structural deficit reduction at the end of this year (expiration of Bush tax cuts, sequester becomes effective). The timing is bad, but ideally (to me) it would force the kind of deal I'm talking about.
Deficit reduction might always be anti-stimulative to some degree, but that does not mean that deficit reduction is equally anti-stimulative at all times and in all circumstances. Timing matters. Deficit reduction in 2009-10 would have thrown us into another Great Depression. Deficit reduction in the 1990s coincided with 4% growth (more accurately, was caused by 4% growth). We want to get back to that dynamic, if we can.
Now, is that irrational?
Thanks for the comments, guys, I got a bit twisted up in my knickers, so I appreciate your taking up my points. First, Jeff, an aside:
DeleteWhenever I think of the traditional Keynesian argument, including the "surplus-pay-down-debt" side, I always think of Joseph and the Amazing Technicolor Dreamcoat, in particular the song (maybe Pharaoh's Dream or the one after?) where the narrator tells us "Seven years of bumper crops happened just as Joseph said/Joseph saw that food was gathered, readied for the years ahead". Keynesianism meets Broadway.
But never the beltway. We've never gathered food, readied for the years ahead. We only recall a scant few years of surplus in any of our lifetimes. Those surpluses, in the last few years of the Clinton WH, were almost certainly driven by crazy fools like you and me flipping redenvelope.com twenty times a month and tossing epic short-term capital gains at the feds. How do we know this? In part, because neither the Clinton WH nor congress planned for the surpluses. If they had, being politicians, they would have found a way to spend them, no doubt.
Returnin to Joseph again: we don't store up our food for lean years. We don't pay down debt. Paying down debt means accepting less economic growth than spending money. Even if we're rolling in growth, even if its baseline forecast is 6% (impossible, but go with me) with surpluses arising from it, we won't forego the opportunity to goose that number to 8% - possibly dropping it to 4% - to cover off against the sins of 2012. We won't, because we never have in the past.
Shifting a bit to cgw's point, sure it would be better to pay down debt in a 6% growth environment than a 2% growth environment - that goes without saying, since the cost of debt reduction leaves us in a better place in a 6% growth environment. We still stumble on the fact that the American government has no track record, in any environment, of significant long-term structural debt reduction - except the 1830s, which sparked a depression.
This is going to be hard. It will always be harder. It gets a bit harder with every day that passes. Thinking that it will get easier, and that we will trust our future politicians to do the right thing, when everything inclines them to do the wrong - that's a bit irrational, it seems to me.
Right, OK, thanks. So basically you're talking about political constraints on debt reduction. I don't doubt that those are serious. On the other hand, in 2000 the guy promising tax giveaways lost the popular vote (and the election, IMHO) to a guy who campaigned on putting the surplus in a "lockbox." So I think that's one contrary data point, anyway.
DeleteAlso, it wasn't redenvenlope.com I was flipping in the '90s. It was Yahoo (no gain) and eBay (decent gain) among others. Where I really got socked was on Little Golden Books. I mean, Little Golden Books! How could you go wrong with a brand on which generations of children have grown up? Well, I found out how. :-/
CSH touches on a real problem. It will always be difficult to agree on an appropriate time to pay down the debt, but it's not impossible. For one thing, a time will come when inflation may become a real threat and not just a bugaboo, and then slowing down the economy could be the appropriate thing to do. There is also the example of the 1990s, but as CSH says, it's not highly encouraging. When G. W. Bush came in, he simply declared that the surplus was the people's money and it should stay with the people. Even a profligate liberal tax-and-spender like me found myself wondering "but what about the people's debt?" After all, we wre making progress on something that hadn't been done in 30 years. Greenspan, of course, chimed in that we were running the risk of paying off the debt too fast and thereby undermining the prospects of monetary policy (apparently because the economy and the subsequent tax revenues were never going to slow down again) and for some reason that had to be stopped immediately rather than later when the risk of paying off the debt was a little closer.
DeleteThe 1990s also had some sobering aspects. The debt reduction was, in a sense, a bipartisan affair, but apparently not the one we usually think of. Thomas Mann and Normant Ornstein recently commented that the debt-reduction deal worked out between Clinton and the GOP Congress did virtually nothing; its only debt-reducing aspect was the "Doc fix" and that was never implemented. The real drivers behind the surpluses were the tax increases initiated under G. H. W. Bush in 1990 and Bill Clinton in 1993, combined with the economic upswing that the tax increases somehow failed to stifle. (When confronted with that, the anti-tax gurus point out that these economic dynamics are really more complicated than that, but when they're asked for a solution to real economic problems, the situation seems to become simple again and lower taxes are the answer. Perhaps there's some subtlety that I'm missing.) But the Republicans have never gotten over the 1990 tax hike, and none of them has ever voted for a tax increase since--even though it's been 22 years, nearly a generation. That's the sobering part of the story.
Dude, when Clinton left office, federal spending was at 18% of GDP.
DeleteThat's what alleviated the deficit problem, not "taxes".
Obama and Pelosi have rammed spending up to nearly 27% of GDP. And we have massive deficits as a result. Duh.
It's the spending, stupid.
Anonymous Dude, the current deficit is what stopped the freefall and prevented the Great Recession from becoming the Second Great Depression. It's not an oversight.
DeleteThis turned into an interesting conversation, better than I deserved for grumpiness. For what its worth, there is at least one difference between right and left-wing irrationality: at least the left is being irrational given the constraints of American politics; the right is irrational in the face of the constraints of simple logic.
DeleteAfter all, Joseph is good campy off-broadway fun, and its obviously lifted from the last few chapters of Genesis, which text seems to have done alright over the millenia. It would seem that Keynes read, and was influenced by, Genesis, and Keynes was a fairly smart fellow.
So you could argue that the irrationality of the expectation that we conform to the full-on Keynes/Joseph is as much an indictment of our polity as the ideology behind the expectation. That wouldn't be a bad argument to defend, in fairness.
BTW, Jeff, Little Golden Books, sorry about your luck. Mine isn't in the bubble per se, but I have this painfully distinct memory of hanging with some academic friends, early summer 2002, and arguing vehemently that, the bursting of the tech bubble be damned, there had to be serious residual value in the Amazon equity. It had to be a buy, I argued, regardless of the death of the other tech equities.
Someone asked me sneeringly why I didn't take a big position in it.
I remember that conversation really really well :\
CSH and Scott - Is it really necessary to pay down the debt? Should that be the goal? I assume we will always have national debt, and a large one at that. We're a big country with a big economy. We potentially run into a problem when the debt gets too high relative to our GDP (which indicates our ability to service the debt). Our national debt currently is about the same as our GDP (about $16 trillion). That's a high ratio in the context of our history, though a better ratio than during WWII. GDP has more than doubled in the last 20 years. Let's say GDP doubles again in the next 20 years, to $32 trillion. If in 20 years our debt has grown by 25% to $20 trillion, because we've enjoyed a good patch of economic growth (some surplus years, but more deficit than surplus) in those 20 years, I would consider our fiscal house to be in order. We can probably service that debt pretty easily, even though the raw debt is huge, because the size of our economy is also huge. Am I wrong?
DeleteIt's the spending...you know, on things keeping that GDP going up instead of continuing to go south, as they did in 2009 for the first time since 1960 (as far back as the data I'm looking at go). Oh, and let's use % of GDP as our baseline, since that went down, making any % go up. Oh, and neglect that about half of that "ramming" was done by the GOP under Bush (Iraq? Medicare Part-D? Etc.) And we should ALSO ignore the cutting of revenues (as a % of GDP) going down by about 25% during the Bush years.
DeleteA deficit exists whenever tax revenues are lower than expenditures. Expenditures HAVE gone up under Obama, and they also went up under Bush. Taxes were lowered under Bush, and they've been lowered under Obama (same rates, plus various tax holidays on SocSec).
Spending DID go down (relative to GDP growth) in the 1990s. In that SAME period, revenues (as a share of GDP) went up. No deficit because spending went down AND taxes (effectively, in addition to the absolute levels, which are produced by a combination of tax rates and the way they interact with the economy--progressivity, income distribution, corporate profits, capital gains...all that) went up.
For some reason, the valid point of "taxes were higher" is just to be ignored. Yes, spending was lower...the economy was better, so there was less stress on the social safety net. We can have a reasonable debate about whether that should be the case. But why can't we include taxes being higher as part of the discussion?
Oh, and CGW: your logic was implicitly accepted by every president between WWII and now, with three exceptions: Reagan, Bush II and Obama. Every other president saw the debt/GDP ratio shrink, even though the debt grew in absolute terms under most of them. Only those 3 grew the debt in real terms.
Delete(One can argue about what Obama would like to have happened, but that's what has happened)
Also, Anonymous Dude, federal spending is about 24% of GDP, not 27%. When Obama took office, GDP was in freefall (down more than 8% in the fourth quarter of '08 and more than 6% in the first quarter of '09). Spending is by definition higher as a percentage of GDP when GDP is falling. It also rises further in recessions because more people suddenly qualify for unemployment, Medicaid and food stamps. Those programs were in all in place before Obama and Pelosi. And then there were the bank bailouts, which were a response to the crash and were originally Bush policies. Even including those, federal discretionary spending rose by one and a half percent of GDP from 2008-2010, and has now dropped back by about one percent. So Obama has "rammed up" spending by a whopping 0.6% or so of GDP. You're off by more than an order of magnitude. Dude.
DeleteCSH, I had a similar conversation with a friend about eBay and how it was too late to buy it. This was, IIRC, shortly before the first of five splits in quick succession. Somewhere in all that I did get in on it and made a few bucks, but nothing like what I could have. In general I found that losses were less painful than the big gains you shoulda had. But then, you have to remember that Amazon was trading so low in '02 because everybody and his dog were making the same collective mistake at that moment.
Deletelosses were less painful than the big gains you shoulda had
DeleteThe sad thing about that Amazon night was, after the social event, the wife and I were discussing how my frenemy contested my bullish forecast by predicting that Amazon would soon drop to the low-single digits. We're geeks, so in the car ride home there was some discussion of Kahneman and Tversky's famous loss aversion theory, with the application being that a great equity like Amazon dropping to the low teens must be the result of general irrational loss aversion.
But the story had a sad ending, cause we knew Kahmenan and Tversky in our minds, but less so in our wallets. You're absolutely right, though - that sort of thing does leave an indelible mark.
Dragging the discussion back to deficits and Keynes, I agree (and hardly anyone could disagree) that slowing spending and paying down debt isn't easy to do in good times. That's what the history of the last 40 years tells us.
DeleteHowever, how long can the deficit spending go on? We've had stimulus-level spending for 3 years, with not a lot of pullback on the deficit as the debt mounts higher. Keynesian stimulus isn't the only issue we have to worry about here.
As for Anon Dude, who deserves all the criticism he's gotten, I have a bit more to add. Spending, like pay rates, can be quite inelastic. The GDP, however, changes quite a bit. We can't change our spending every year to match a defined percentage of our GDP without massive upsurges and declines. That is just plain dumb. (Yes, I mean dumb.)
In the 90's, our deficits went down not because of spending cuts, but because of massive economic increases and concomitant increased revenue. Spending isn't what changed. It was revenue. Dude, you were completely wrong in your analysis and you need to learn something about economics.
.....that sort of thing does leave an indelible mark.
DeleteYes, especially on the forehead, from constantly smacking it. ;-) Anyway, I've been out of that game for a long time now and don't miss it.
I just get a kick out of a lefty blogger titling a discussion with the question: "What's a Deficit?"
ReplyDeleteIt's so fitting, and explains so much.
I think you are over-analyzing things.
ReplyDeleteFrom the Republican perspective spending increases cause deficits. (That is why the only way to reduce a deficit is to cut spending.) Spending increases also cause tax increases. So higher taxes and higher deficits go together.
Revenue increases do not reduce deficits.
Jonathan:
ReplyDeleteI mostly agree with your post, but there *is* a logical long-term meta explanation that undoes the apparent contradiction/paradox: citizens view the state as incapable of doing anything but overspending against available funds. Therefore, any increase in revenue will quite quickly be matched with new and seemingly vital ways to spend the money.
This, of course, is not a new idea. During the first month of so of the republic, one of the Reps --- I think it was Matthew Lyons --- said something to the effect of "if we fill the Treasury with money, ways will undoubtedly be found to spend it."
I'm not endorsing that view, but I don't think it's crazy to view government as comparable to the junk filling up your desk drawer, no matter how big of a drawer you buy. Spending programs naturally expand as tax revenue increases?
m
The same thought occurred to me, but the data indicates it is not spending, but simply taxes that is the most important variable:
Delete"The three questions tapping expectations about federal spending were all positively related to expectations about the deficit; but the relationship was modest for expected spending on defense and entitlement programs and even more modest for expected spending on domestic programs. Wherever budget deficits come from, in the public mind, they do not seem to come primarily from higher levels of government spending."
Plus it's harder to explain why higher taxes would be correlated with greater deficits and not simply more spending without greater deficits. In other words, if people believe the politicians are willing to deficit-spend indefinitely, what would be the point of raising taxes and thus getting more revenue in the first place? They'll spend more than this increased revenue, in the respondents minds, anyway, regardless of the revenue coming in.
Matt -
ReplyDeleteThe rejoinder is this: even if we don't fill the treasury with money, we'll find ways to spend it anyway. The notion that increased revenue leads to increased spending underlies the claim, for example, that the Social Security Trust funds were created to no avail, because spending, not savings, rose commensurate with increased FICA revenue. But this is basically impossible to demonstrate. People believe it because they choose to. And believing it's more likely to happen, I guess, is just an assumption about bureaucracy; but viewing it as an iron law of politics is totally bonkers, because of COURSE you can cut spending while you raise taxes, thereby reducing the budget deficit. It's happened!
The link between the two, I think actually makes sense. I think when tea party folks rail against the deficit they are really fearful that they are going to see higher taxes. They don't really care about the deficit per se, they care that it will increase what they consider the burden on them.
ReplyDeleteI'm still getting a kick out of you lefties asking "What's a deficit?"
ReplyDeleteKids, it's not very hard. You get deficits when Pelosi and Obama ram spending up from Clinton's less than 18% of GDP to Obama's 27% of GDP.
Whine and cry about that all you want, and twist the numbers up all you want... but it's the spending, stupid.