Help Wanted Fixing Budget Deficit (Spineless Need Not Apply)

BY Glen Tschirgi
5 years, 8 months ago

Although this information has been out since last year, in view of the $1.5 Trillion Deficit for 2011 projected by the Congressional Budget Office, it is well worth taking another look at this, updated report from The Cato Institute (and the accompanying video), titled, “New CBO Numbers Re-Confirm that Balancing the Budget Is Simple with Modest Fiscal Restraint.”

(Hat tip to Instapundit).

Here is the money quote:

Many of the politicians in Washington, including President Obama during his State of the Union address, piously tell us that there is no way to balance the budget without tax increases. Trying to get rid of red ink without higher taxes, they tell us, would require “savage” and “draconian” budget cuts.

The Congressional Budget Office has just released its 10-year projections for the budget, so I crunched the numbers to determine what it would take to balance the budget without tax hikes. Much to nobody’s surprise, the politicians are not telling the truth…

The chart below shows that revenues are expected to grow (because of factors such as inflation, more population, and economic expansion) by more than 7 percent each year. Balancing the budget is simple so long as politicians increase spending at a slower rate. If they freeze the budget, we almost balance the budget by 2017. If federal spending is capped so it grows 1 percent each year, the budget is balanced in 2019. And if the crowd in Washington can limit spending growth to about 2 percent each year, red ink almost disappears in just 10 years.

When was the last time that our political leaders found the spine to balance the budget?

… I also examined how we balanced the budget in the 1990s and found that spending restraint was the key. The combination of a GOP Congress and Bill Clinton in the White House led to a four-year period of government spending growing by an average of just 2.9 percent each year.

Mr. Mitchell perhaps gives Bill Clinton and the GOP Congress too much credit.  Recall that the 1990’s involved huge cuts to the Defense budget (which came back to haunt us later).  The savings in Defense outlays was plowed into all sorts of domestic goodies for both Clinton and Congressional constituencies, but the fact remains that the politicians somehow managed to keep overall spending down even in the midst of increasing revenues from a booming economy.

The lesson seems clear:  get the Federal budget in line with revenues and start reducing the overall, Federal debt.   This seems to be experience elsewhere in the world:

We also have international evidence showing that spending restraint – not higher taxes – is the key to balancing the budget. New Zealand got rid of a big budget deficit in the 1990s with a five-year spending freeze. Canada also got rid of red ink that decade with a five-year period where spending grew by an average of only 1 percent per year. And Ireland slashed its deficit in the late 1980s by 10 percentage points of GDP with a four-year spending freeze.

No wonder international bureaucracies such as the International Monetary fund and European Central Bank are producing research showing that spending discipline is the right approach.

As Mr. Mitchell’s article notes, fixing the deficit is not a complicated matter.  It simply requires our elected leaders to say no to the ever-growing wish lists of the Left and the President.

Hopefully the new Congress is up to the task.

  • http://biophilic.blogspot.com Burk

    Hi, Cap’n!

    I somehow recall government spending increasing at a rapid clip under recent Republican presidents. Why was that? Wars, drug benefits, homeland security.. Republicans have their porkulicious fixations, spending desires, and spinelessness as well. Not to mention all the tax cuts given to the wealthy, equivalent to spending decreases when you net it all out and value government functions.

    More importantly, however, one has to ask whether this fabled balanced budget is a valid goal anyhow. The answer is that no, it isn’t. If you understand economics, you also understand the nature of the fiat currency, meaning that we make it up as we go along. Taxes are burned as they are turned in, and government spending (federal, that is) is issued without any “financing” constraint, in principle. We can spend as much as we like, and indeed the government has to run net deficits to make up the vast amount of dollar leakage to our trade deficits, savings here and abroad, and economic growth. As long as the Chinese want to hold dollars, we have to make them. It’s hard work! We also don’t have to issue corresponding debt- that is a relic of the gold standard era and should be scrapped.

    The danger, of course, is inflation. How’s that doing right now? Not a problem, indicating that the government is spending too little, not too much.

  • http://www.captainsjournal.com/ Herschel Smith

    You really need to pay much better attention. Address your concerns to Glen. However, you are still a believer in statism and Keynesian economics (bless your heart). That’s failing us now, just as it has in the past, just as it will in the future. The state cannot decide what value is, any more than they can create value and wealth. You god will always let you down and forever disappoint you. It’s just an idol made in your image.

  • TS Alfabet

    Burk,

    Inflation is very much a problem and, with the price of oil pushing steadily up to the $100/barrel mark, it is inevitable.

    See http://www.dailyfinance.com/story/energy-raw-materials-and-medical-costs-rise-will-inflation-bal/19801896/

    Are you Obama by any chance? You have the same annoying habit of dodging the issue by essentially saying, “Well the guys before me did it, too!”

    Take a look at the EU. For some strange reason, all of the economies there that abandoned fiscal discipline and balanced budgets are in the trash can while the one economy that was relatively disciplined and balanced (Germany) has shown impressive growth over the last 16 months or so. Even spendthrift Britain has abandoned the discredited notion that government can spend its way out of a recession, especially a deep one like this.

  • Dave

    Burk’s economic points may qualify him for service on Obama’s Council of Economic Advisors, but nothing else. He ignores the opportunity cost and loss of economic activity associated with taxation. In the world according to Burk, we are just as good off with 100% taxes as we are with 10%, because we are just as well off with the government spending dollars as we are with free people interacting in free and fair markets. Not even Christina Romer could make that logic work, but then perhaps Obama ‘just doesn’t have enough steel in his spine’ and needs to be more like Pelosi.

    The trade deficit is a symptom of a capital deficit in the country. The Chinese are not hungry for dollars. They have excess savings, and we have a savings deficit (i.e. a federal budget deficit). If we were not ‘burning tax receipts’, those yuan/dollars would find work elsewhere.

    So far as a ‘financing constraint’, it seems the peripheral European economies are finding out that there is, in fact, a financing constraint. In addition, in the world according to Burk, there should be no such constraint because the inflation is ‘not yet problematic’. So what is the problem there? Return to the capital deficit, and the source of the plug – the excess savings in the world no longer wishes to finance Greek, Irish, and Portuguese deficits, and is seriously thinking about Spanish deficits.

    Burk is not even competent enough to be called ‘Keynesian’, because Keynes at least knew what he was talking about. He was just wrong in a Ricardian world.


You are currently reading "Help Wanted Fixing Budget Deficit (Spineless Need Not Apply)", entry #6188 on The Captain's Journal.

This article is filed under the category(s) Uncategorized and was published January 29th, 2011 by Glen Tschirgi.

If you're interested in what else the The Captain's Journal has to say, you might try thumbing through the archives and visiting the main index, or; perhaps you would like to learn more about TCJ.

26th MEU (10)
Abu Muqawama (12)
ACOG (2)
ACOGs (1)
Afghan National Army (36)
Afghan National Police (17)
Afghanistan (677)
Afghanistan SOFA (4)
Agriculture in COIN (3)
AGW (1)
Air Force (31)
Air Power (9)
al Qaeda (83)
Ali al-Sistani (1)
America (7)
Ammunition (22)
Animals in War (4)
Ansar al Sunna (15)
Anthropology (3)
Antonin Scalia (1)
AR-15s (68)
Arghandab River Valley (1)
Arlington Cemetery (2)
Army (44)
Assassinations (2)
Assault Weapon Ban (26)
Australian Army (5)
Azerbaijan (4)
Backpacking (2)
Badr Organization (8)
Baitullah Mehsud (21)
Basra (17)
BATFE (51)
Battle of Bari Alai (2)
Battle of Wanat (17)
Battle Space Weight (3)
Bin Laden (7)
Blogroll (2)
Blogs (5)
Body Armor (17)
Books (2)
Border War (7)
Brady Campaign (1)
Britain (27)
British Army (35)
Camping (4)
Canada (2)
Castle Doctrine (1)
Caucasus (6)
CENTCOM (7)
Center For a New American Security (8)
Charity (3)
China (10)
Christmas (8)
CIA (12)
Civilian National Security Force (3)
Col. Gian Gentile (9)
Combat Outposts (3)
Combat Video (2)
Concerned Citizens (6)
Constabulary Actions (3)
Coolness Factor (2)
COP Keating (4)
Corruption in COIN (4)
Council on Foreign Relations (1)
Counterinsurgency (215)
DADT (2)
David Rohde (1)
Defense Contractors (2)
Department of Defense (124)
Department of Homeland Security (13)
Disaster Preparedness (2)
Distributed Operations (5)
Dogs (6)
Drone Campaign (3)
EFV (3)
Egypt (12)
El Salvador (1)
Embassy Security (1)
Enemy Spotters (1)
Expeditionary Warfare (17)
F-22 (2)
F-35 (1)
Fallujah (17)
Far East (3)
Fathers and Sons (1)
Favorite (1)
Fazlullah (3)
FBI (3)
Featured (176)
Federal Firearms Laws (17)
Financing the Taliban (2)
Firearms (464)
Football (1)
Force Projection (35)
Force Protection (4)
Force Transformation (1)
Foreign Policy (27)
Fukushima Reactor Accident (6)
Ganjgal (1)
Garmsir (1)
general (14)
General Amos (1)
General James Mattis (1)
General McChrystal (40)
General McKiernan (6)
General Rodriguez (3)
General Suleimani (7)
Georgia (19)
GITMO (2)
Google (1)
Gulbuddin Hekmatyar (1)
Gun Control (410)
Guns (958)
Guns In National Parks (3)
Haditha Roundup (10)
Haiti (2)
HAMAS (7)
Haqqani Network (9)
Hate Mail (7)
Hekmatyar (1)
Heroism (4)
Hezbollah (12)
High Capacity Magazines (11)
High Value Targets (9)
Homecoming (1)
Homeland Security (1)
Horses (1)
Humor (13)
ICOS (1)
IEDs (7)
Immigration (45)
India (10)
Infantry (3)
Information Warfare (2)
Infrastructure (2)
Intelligence (22)
Intelligence Bulletin (6)
Iran (169)
Iraq (378)
Iraq SOFA (23)
Islamic Facism (38)
Islamists (63)
Israel (18)
Jaish al Mahdi (21)
Jalalabad (1)
Japan (2)
Jihadists (80)
John Nagl (5)
Joint Intelligence Centers (1)
JRTN (1)
Kabul (1)
Kajaki Dam (1)
Kamdesh (9)
Kandahar (12)
Karachi (7)
Kashmir (2)
Khost Province (1)
Khyber (11)
Knife Blogging (2)
Korea (4)
Korengal Valley (3)
Kunar Province (20)
Kurdistan (3)
Language in COIN (5)
Language in Statecraft (1)
Language Interpreters (2)
Lashkar-e-Taiba (2)
Law Enforcement (3)
Lawfare (6)
Leadership (5)
Lebanon (6)
Leon Panetta (2)
Let Them Fight (2)
Libya (14)
Lines of Effort (3)
Littoral Combat (8)
Logistics (49)
Long Guns (1)
Lt. Col. Allen West (2)
Marine Corps (240)
Marines in Bakwa (1)
Marines in Helmand (67)
Marjah (4)
MEDEVAC (2)
Media (23)
Memorial Day (2)
Mexican Cartels (23)
Mexico (30)
Michael Yon (5)
Micromanaging the Military (7)
Middle East (1)
Military Blogging (26)
Military Contractors (3)
Military Equipment (24)
Militia (3)
Mitt Romney (3)
Monetary Policy (1)
Moqtada al Sadr (2)
Mosul (4)
Mountains (14)
MRAPs (1)
Mullah Baradar (1)
Mullah Fazlullah (1)
Mullah Omar (3)
Musa Qala (4)
Music (16)
Muslim Brotherhood (6)
Nation Building (2)
National Internet IDs (1)
National Rifle Association (17)
NATO (15)
Navy (21)
Navy Corpsman (1)
NCOs (3)
News (1)
NGOs (2)
Nicholas Schmidle (2)
Now Zad (19)
NSA (1)
NSA James L. Jones (6)
Nuclear (53)
Nuristan (8)
Obama Administration (216)
Offshore Balancing (1)
Operation Alljah (7)
Operation Khanjar (14)
Ossetia (7)
Pakistan (165)
Paktya Province (1)
Palestine (5)
Patriotism (6)
Patrolling (1)
Pech River Valley (11)
Personal (31)
Petraeus (14)
Pictures (1)
Piracy (13)
Pistol (2)
Police (207)
Police in COIN (3)
Policy (15)
Politics (242)
Poppy (2)
PPEs (1)
Prisons in Counterinsurgency (12)
Project Gunrunner (20)
PRTs (1)
Qatar (1)
Quadrennial Defense Review (2)
Quds Force (13)
Quetta Shura (1)
RAND (3)
Recommended Reading (14)
Refueling Tanker (1)
Religion (107)
Religion and Insurgency (19)
Reuters (1)
Rick Perry (4)
Rifles (1)
Roads (4)
Rolling Stone (1)
Ron Paul (1)
ROTC (1)
Rules of Engagement (74)
Rumsfeld (1)
Russia (28)
Sabbatical (1)
Sangin (1)
Saqlawiyah (1)
Satellite Patrols (2)
Saudi Arabia (4)
Scenes from Iraq (1)
Second Amendment (159)
Second Amendment Quick Hits (2)
Secretary Gates (9)
Sharia Law (3)
Shura Ittehad-ul-Mujahiden (1)
SIIC (2)
Sirajuddin Haqqani (1)
Small Wars (72)
Snipers (9)
Sniveling Lackeys (2)
Soft Power (4)
Somalia (8)
Sons of Afghanistan (1)
Sons of Iraq (2)
Special Forces (24)
Squad Rushes (1)
State Department (17)
Statistics (1)
Sunni Insurgency (10)
Support to Infantry Ratio (1)
Supreme Court (2)
Survival (12)
SWAT Raids (53)
Syria (38)
Tactical Drills (1)
Tactical Gear (1)
Taliban (167)
Taliban Massing of Forces (4)
Tarmiyah (1)
TBI (1)
Technology (16)
Tehrik-i-Taliban (78)
Terrain in Combat (1)
Terrorism (92)
Thanksgiving (5)
The Anbar Narrative (23)
The Art of War (5)
The Fallen (1)
The Long War (20)
The Surge (3)
The Wounded (13)
Thomas Barnett (1)
Transnational Insurgencies (5)
Tribes (5)
TSA (13)
TSA Ineptitude (11)
TTPs (1)
U.S. Border Patrol (5)
U.S. Border Security (13)
U.S. Sovereignty (15)
UAVs (2)
UBL (4)
Ukraine (3)
Uncategorized (42)
Universal Background Check (3)
Unrestricted Warfare (4)
USS Iwo Jima (2)
USS San Antonio (1)
Uzbekistan (1)
V-22 Osprey (4)
Veterans (2)
Vietnam (1)
War & Warfare (210)
War & Warfare (40)
War Movies (3)
War Reporting (18)
Wardak Province (1)
Warriors (6)
Waziristan (1)
Weapons and Tactics (57)
West Point (1)
Winter Operations (1)
Women in Combat (17)
WTF? (1)
Yemen (1)

September 2016
August 2016
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016
December 2015
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006

about · archives · contact · register

Copyright © 2006-2016 Captain's Journal. All rights reserved.