![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
essentialsaltesThis image encapsulates what's wrong with the government's fiscal policy:
For a less funny analysis, check out Time's article on the deficit.
Assuming we want the government to do something other than these four things, this is not sustainable. We need to cut expenditures, or raise revenues, or both. That is all.
For a less funny analysis, check out Time's article on the deficit.
Let's look more closely at budget revenue and outlays. In a normal year, our federal tax system takes in around 17% of GDP — less in the current recession and more in years of financial bubbles, when capital-gains-tax collections are high. It's important to understand what that revenue buys us. Military spending accounts for around 5% of GDP. Health spending (including Medicare, Medicaid and veterans' health) is around 5% of GDP, as is Social Security (retirement, disability and veterans' benefits). Interest payments on the debt will soon reach 2% of GDP. In short, the Federal Government collects tax revenue sufficient to cover just four budget items. The rest of the budget is funded by borrowing.
Assuming we want the government to do something other than these four things, this is not sustainable. We need to cut expenditures, or raise revenues, or both. That is all.
no subject
Date: 2010-02-11 03:11 pm (UTC)Wait a minute -- are you saying that if wages go up 100% that it's okay for the government to raise taxes by 200%? What happened to the "grumpy fiscal conservative"?
Donovan
no subject
Date: 2010-02-11 04:09 pm (UTC)1958: $14802 (in 2005 $)
2008: $43714 (ditto)
An increase of 195%. Quite close to the increase in spending you decry. Over 50 years, the growth rate of spending has been 2.269%, while the growth in GDP has been 2.164%. (So the actual increase in tax rate amounts to 0.1% annually. If only we'd avoided that, the world would still look like Leave it to Beaver.)
Anyway, fiscal conservative means different things to different people. When I use a word, it means just what I choose it to mean -- neither more nor less.
To many it means to be a pre-transformation Scrooge. To me it means that you should not spend more than you earn. There is nothing inherently wrong with spending a lot of money for something you want very much. But there is something wrong with doing so without a viable plan to pay for it.