HomeEconomyWhat Is Causing the Deficit?


What Is Causing the Deficit? — 2 Comments

  1. I would question the wisdom of looking at the deficit (income less expenses) rather than simply spending (expenses only).

    Two of the large items (both blue) are “Economic downturn” and “Bush-era tax cuts”. These both represent taxes that the government would have liked to collect, but isn’t able to. Using this logic, one could also blame the deficit on any policy anyone claims could generate revenue–drilling in ANWAR, for example.

    Governments will try to collect as much tax from the current economy as they can. When this isn’t enough, they will borrow against future tax collections. If they want more and have control of the monetary system, they will simply issue new money and use it to outbid anyone else in the market for the goods and services they want under their control.

    “Current government spending” is a more direct way to measure the growth of government. I won’t look up the figures now, but I believe the Republicans spend about one and a half times what the Democrats do when their guy is president, for what its worth.

    –Mark (whom you would think would have better things to do on Christmas, but is waiting for a home DVD to copy on his computer!)

    • Mark,

      Well, I’m not a logician, but I think your example of ANWAR vs. expected income doesn’t work very well. Correct me if I’m wrong, but I don’t think there is any drilling in ANWAR – yet. A business (which government is, if you think about it) budgets for the future based on the past. In this case, the government projects revenue in the future based on revenue received in the past. Both the economic downturn and the Bush-era tax cuts took money out of the till, money that the government cannot spend. If government is a business, its only option now, if it wants to continue to spend, is to borrow, which is what deficit spending is. I’m not an economist or a logician, but this chart looks reasonable to me. I wonder if perhaps you are looking at this issue through your libertarian glasses and seeing more than is there?

      Nota Bene (note well): I’m not getting into whether government is legitimate, efficient, or anything else. We both have our opinions about that – opinions that don’t have much to do with the points made in this report. I haven’t read the report, but I don’t think that it concerns itself with “the growth of government.”

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