Starting to Paddle Back from the Cliff

April 11, 2011

Republican House speaker John Boehner and Democrat Senate majority leader Harry Reid appear to have reached a final deal on this year’s budget.

If you’re just joining us, the Democrats didn’t pass a budget last year for this fiscal year (October 2010 to September 2011), possibly because they could already see the rising tide of public sentiment against government spending and thought passing any kind of Democrat budget would only hurt them even further in last November’s elections.  So, even though Democrats held the White House and both houses of Congress last year, there is no budget for the year we’re in right now.

Instead, the new Congress this year (with a Republican majority in the House and a remaining Democratic majority in the Senate) has negotiated and passed a series of “continuing resolutions”, funding the federal government for a few weeks at a time.  With each round of negotiations, Republicans fought for more cuts in government spending, while Democrats fought to keep government as bloated and growing as possible.

The series of continuing resolutions ended when the parties’ leaders finally reached an agreement this past weekend.  Congress is expected to pass the agreed budget for what’s left of this fiscal year this week.  One writer at National Review Online praises the Republicans for the spending they were able to cut, and provides some more background and perspective.  Another argues that it didn’t cut nearly enough; a third offers an intermediate assessment, and a word on why opinions on this differ so  much.

My own take is that it’s a step in the right direction, however modest, and therefore very encouraging.  As I’ve discussed before, for about a century, the government has been growing—it generally moves in only one direction.  That’s terrible.  Now, the American people and one of the two parties seem to recognize that government has to shrink, and they seem to have the will to start moving in that direction.  That’s great!

10 Responses to “Starting to Paddle Back from the Cliff”

  1. jon from sandiego Says:

    It will be interesting to see if the budget does pass through Congress by the end of this week. If not we may be looking at a government shutdown.

    This past Friday I called the IRS and the message that played went something like this: “Thank you for calling the IRS, at this time we are closed because of the government shutdown. If you have an emergency please call the regional director (who I should note is in charge of all of San Diego and LA; one can imagine the number of calls she received), at this time we are unable to say when we will be opening again”.

    A government shutdown will only cost the government more money. With ever prior shutdown the government has okayed back pay to all furloughed employees, and these employees end up receiving overtime when they return due to the additional work that has accumulated.

    The only way a government shutdown could save money is if the cuts are big enough to offset this additional cost. Even if this occurs it would still make more sense to come to some sort of middle ground to avoid the additional costs of a shutdown. The government does need to address the budget deficit and I look forward to Obama’s speech this week relating to the budget.

    Unfortunately tax increases will likely need to occur. You and I both know that this country is too reliant on the government but that we can’t simply cut everyone off at once. With the National deficit over $14 trillion, at 6% interest we owe over $840 billion a year in interest. The interest alone is nearly $2500 a person per year. Lookout top income earners, Obama is coming for you, and with the economy finally turning around I have little doubt that Obama will be reelected.

    On a side note: if I were a Republican I would hope Trump disappears. He is attractive to a minority of individuals and really has a slim to 0 chance of winning. The things he has been saying lately (birther comments and that Oil prices are high because of Obama alone) do not help the GOP. I would consider voting for a Republican but not this lunatic.

    I was starting to think you won’t respond to my comments because through ignoring me you were hoping I would go away. I decided that you wouldn’t ever do that to your friend and therefore you must be not responding because I am correct. Thus you agree that homophobes have gay tendency and that my friend should abort her baby sooner rather than allow it to die at birth?

    – Jon

  2. Jon, God bless you, I was literally just now going to take the time to respond to both your and Leroy’s comments on homosexuality and abortion, but now if I do, will it look as if you had shamed me into it? I appreciate your thoughtful, serious arguments, but I don’t have an infinite amount of time to spend doing this, and anyway I think “outside observer” and I already pretty much covered the homosexuality debate; I’m not just going to keep responding indefinitely to keep you from having the last word.

    “You and I both know that this country is too reliant on the government but that we can’t simply cut everyone off at once.” Yes, I do agree; if we both agree that people are too reliant on government, that’s really something. I also agree that entitlement programs should ideally be phased out, or otherwise reformed, gradually. Congressman Paul Ryan’s new budget proposal would do exactly that; perhaps we can agree that his proposal is a good starting point?

    It may well be that taxes must increase, but spending has to decrease a lot more. According to this site (which cites its sourtces), even if the federal government confiscated the entire net worth of every billionaire in America, that would amount to only $1.3 trillion—not even enough to cover this year’s deficit, much less eliminate the debt. According to this site (which also cites its source), even doubling the top two income-tax rates—to to 66% and 70%—would cover less than a fifth of the projected 2011 deficit.

    You also mention President Obama in connection with the deficit. Would it be indelicate of me to point out that he was promising to cut spending before he was even president, in the debates with McCain, but has instead increased spending hugely? During his first two years as president, he called for a debt commission to propose serious solutions for America’s budget problems, and then promptly ignored the commission’s work. As you’ll recall, President Obama was still pushing to increase spending hugely at least as recently as his State of the Union at the end of January.

    Paul Ryan and the Republicans are the only ones coming up with any kind of plan or idea for how to deal with the deficits. For their trouble, they get attacked by the Democrats (Pelosi, Reid on Ryan’s previous-draft “Roadmap”, the Obama White House). The Democrats have so far been worse than totally unserious about the deficit; they’ve been trying to blow out the political kneecaps of everyone who is trying to address the problem.

  3. Snoodickle Says:

    If I do recall, Democrats wanted to raise taxes on the wealthy which would have cut the deficit considerably. The Republicans wanted to extend the tax cuts, which is bad for the deficit. “Worse than totally unserious”? Give me a break.

  4. Snoodickle Says:

    On the subject of deficits and budgets, the state of Massachusetts, led by Democratic governor Deval Patrick, has had four straight balanced budgets, all delivered on time.

    Imagine that, four straight balanced budgets, all delivered on time. And this is all without cutting any essential public services. As a matter of fact, Massachusetts has the second best public school system in the nation, and the best health care system in the nation – 98% of its citizens have health insurance.

    By all accounts, Massachusetts has been the most fiscally responsible state in the union for the past four years, all under a liberal democratic governor. And this fiscal responsibility has not come at the cost of public services. Quite the contrary, Governor Patrick has poured billions into the public school system and has achieved nearly unparalleled success. Did I mention that 98% of Massachusetts citizens have health coverage?

    Given that Massachusetts is widely considered a bastion of liberality, isn’t it interesting that one of the nation’s most liberal states, led by one of its most liberal governors, is the nation’s most fiscally responsible? You might wonder how Governor Patrick achieved this mind-blowing success. The answer is simple, by raising taxes to help balance the budget, and by not cutting essential public services such as education and health care.

    Massachusetts should be a model for every state in the nation – its budget is always balanced, its schools are among the best in the nation, and nearly every citizen has health care.

    The success story that is Massachusetts should also be a wake up call to all misguided conservative thinkers. The liberal model of raising taxes to balance budgets, and investing heavily in things like education and health care clearly works best. If you want to argue otherwise, you are arguing against four straight balanced budgets, some of the best public schools in the nation, and 98% health care coverage. Good luck.

  5. Did you read the first item you linked to? Governor Patrick’s Web site sure makes it sound as if he had balanced the budget by cutting spending, not by raising taxes. E.g., “To maintain a balanced budget, the Governor has made more than $4.5 billion in cuts, implemented cost-saving reforms and efficiencies, eliminated 2,600 state jobs, and required state employees to contribute through higher health care contributions and wage cuts.” He sounds like a regular Scott Walker!

    Anyway if you want to judge liberalism and conservatism by the states they’ve run, I’m confident that liberalism won’t clearly come out ahead. According to this site (which, admittedly, I’ve never heard of), 32 of the 50 states are insolvent, but the worst three are California, Michigan, and New York. According to this guy, Illinois is also in very bad shape: “There, the current deficit accounts for more than half of the state’s annual budget — easily the highest percentage in the nation.”

    As to “investing” in education, I’m told that, in relative international terms, America spends an enormous amount per pupil and gets very little return on her investment. I think part of the problem with “The liberal model of raising taxes to balance budgets, and investing heavily in things like education and health” is that it contains no limiting principle—How heavy an investment is heavy enough? How high a tax is high enough? It looks to me as if liberal ideology were liable to lead a person blindly in one direction, until it runs him right into a wall. I think another problem is that when government is the one doing the investing—as opposed to, say, parents, making independent private choices—it’s much easier for the amount of money invested to be all but entirely disconnected from the amount of benefit obtained.

    Some of the other things I was going to say in response are no longer just arguments against you; they’re also arguments against our president. Accordingly, you’ll find them in my latest blog entry.

  6. Snoodickle Says:

    I know the Governor’s press release made it sound as if he didn’t raise taxes (smart politics), but one of the first things he did when he took office was raise the sales tax from 5% to 6.5%. He cut spending as well, which I acknowledge is necessary to balance the national budget (i.e. defense spending), so I think he struck the proper balance, as President Obama is trying to do.

    Instead of bombarding me with your typically abstract economic arguments (nothwithstanding you pointing out that 4 of the 32 states that are insolvent are perceived to be liberal – though California’s Rebublican governor got them in their mess (terminator)), I challenge you to find me a traditionally conservative state, led by a conservative governor, and governed by conservative fiscal policies (i.e. no tax hikes), that has had four straight balanced budgets, is top 5 nationally in education, and has 95%+ health coverage. Can you do that Chillingworth?

  7. I decline your gimmicky challenge. Getting one other state to match your very specific anecdote would be an artificial and not very informative exercise. A much more useful approach would be a broader inquiry about conservative and liberal states throughout the nation, including more comprehensive measures both of their fiscal health and of the quality and value of their services. (95% health-insurance “coverage” would be worth less, for example, if it turned out that Massachusetts’s socialization of health care was leading to an exodus of doctors from the state and a decline in the quality of care for those who are “covered”.)

    I’m willing to grant that that’s more work than either of us has time for, but to the extent that I’ve given us a start in that direction: “perceived to be liberal”? As you would say, “Give me a break.” If you want to argue that New York, California, and Illinois aren’t very liberal states—if not the very epitome of liberalism—I’ll happily take that argument. I agree with you that Governor Schwarzenegger has (from what I’ve heard) done a poor job, but I think that only helps my case, rather than hurts it—California is so liberal that only a liberal, fiscally weak Republican can win the governor’s office.

    Other than that, I’ll just remind the readers, if any, that you haven’t identified any limiting principle in liberalism.

  8. Snoodickle Says:

    So you concede that you cannot find such a state?

  9. There may or may not be a state that matches your precise description; I’m saying that it’s not worth the trouble to find out.

    Let’s say, for example, that the top ten most conservative states in the country each had a nominal budget deficit—I don’t know what’s usual, let’s say they averaged $500,000. Let’s say that of the ten most liberal states, nine had a $5,000,000 deficit each, while Massachusetts had a perfectly balanced budget, for an average deficit of $4,500,000. (Also suppose for purposes of this example that the two groups averaged the same quality of health care and quality of education.)

    In that situation, there would be no conservative state that could meet your challenge, but the liberal states would be nine times as fiscally irresponsible, so to speak. (Of course I’m also saying that even that would still be oversimplifying way too much—the state with the higher budget deficit this year could be the one that’s on more secure fiscal footing for the next decade, etc.)

  10. Snoodickle Says:

    Vermont, another liberal bastion, balancing budgets through a combination of tax increases and spending cuts. That sounds a lot like President Obama’s plan, doesn’t it?

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