James Pethokoukis

Politics and policy from inside Washington

America’s addiction to deficit spending

September 18, 2009

Bruce Bartlett makes the case that a) either taxes need to be raised or spending cut to bring America back to fiscal solvency, b) there is little historical evidence that spending can be cut, and thus c) taxes are headed higher. Certainly Congress has show itself willing to raises taxes (1982, 1991, 1993) by large amounts and not cut spending. Both the 2005 effort by the Bush administration to fix Social Security and the current effort to reign in healthcare costs are further evidence. Yet you certainly wouldn’t want to close the hole purely by raising taxes, would you? I think they would have to rise by 50 percent, IIRC.  We would definitely be on the wrong side of the Laffer curve then. Spending is really Obama’s Nixon-to-China opportunity …

Comments

It’s not just his oppurtunity, it was his most common campaign promise. He said he’d go through the budget line by line and cut fat.

 

Oh, he’s cutting already. Defense! An awesome plan, for reals.

Posted by Jana | Report as abusive
 

I haven’t seen any political will to cut spending – in fact, Obama explicitly claimed to seniors that their Medicare benefits ‘would not be cut’ even though the program has a massive structural deficit. And he’s repeatedly claimed that he will not raise taxes on the middle class. Huh, no changes to long-term structural entitlement deficits, no middle class tax raises, new entitlement programs, increases in annual government spending, increased commitments to Afghanistan, and lots of stimulus and subsidization of the economy (see quantitative easing, FHA guarantees, student loan guarantees, FNM, FRE, etc., etc.). And now we’re talking about extending (and maybe even increasing) the first-time home buyers tax credit, sweeping under the rug the problems with FHA, etc. We’ve solved our over-spending and over-borrowing problem with…(drum-roll please),,,more spending and over-borrowing. The immediate cure to all of this would be a dramatic reduction in spending and to raise taxes, and to dramatically restructure our economy and political structures. But since there is no will to do this we’ll kick the can further down the road, run up even more debt, and then…? Default? Hyper-inflation?

Posted by John Thomson | Report as abusive
 

Would you mind viewing the following videos about the laffer curve? Care to comment for all to see on your blog? your opinion is greatly appreciated.

http://www.freedomandprosperity.org/vide os/laffercurve1-3/laffercurve1-3.shtml

Posted by Orphe | Report as abusive
 

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