2009-06-09

From the U.S. Department of Oops I Crapped My Pants

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I largely supported the 2009 fiscal stimulus package for reasons outlined elsewhere, but felt that the whole conversation was a non-starter as it largely boiled down to which narrative you chose to believe.

That being said, the revelation in last week's USA Today that the leap in U.S. debt hits taxpayers with 12% more red ink forced one blogger (who shall remain nameless) to make a quick run to Walgreen's for some TUMS. But not for the reason you might think:

Taxpayers are on the hook for an extra $55,000 a household to cover rising federal commitments made just in the past year for retirement benefits, the national debt and other government promises, a USA TODAY analysis shows.

The 12% rise in red ink in 2008 stems from an explosion of federal borrowing during the recession, plus an aging population driving up the costs of Medicare and Social Security...

Ha ha USA Today, you got me. 2008, that's crazy. Wait you're serious? But that means...


Now in all seriousness, I get the basic argument that during a time of intensely depressed demand, some form of fiscal stimulus (be it tax breaks or increased government spending) is needed, and that now may not be the best time to discuss cutting the budget. But I also understand that $547k per household is absolutely ridiculous. And with the bulk of the $787b stimulus plan still waiting to be spent and politicians of all stripes unwilling to seriously discuss budget cuts, I shudder to think about what this graphic will look like in the very near future.

My two cents, here's a great place to start.


UPDATE #1:

Turns out things may be worse than I originally thought.


2 comments:

Leah on 10/6/09 said...

Does anyone really want to live in countries like China, Russia, France, North Korea, or Iran? Are we really comparing the US to those countries in regard to military spending or in any other way?

(This obviously in reference to the chart you posted on your blog linked here.)

I don't know about you, but I don't want America to be like those countries, so maybe they aren't the best for comparison?

China, Russia, N Korea, and Iran all have oppressive governments and/or tyrannical leaders. Meanwhile France won't fight in wars... ever.

Mike on 10/6/09 said...

From personal experience I can say that yes a lot of people want to live in France (including me though only for a couple years), and professionally I know a lot of people who love living in Russia. Andrew Polk could speak on China's behalf as that seems to be the country of choice for his classmates at Johns Hopkins.

I agree that N. Korea or Iran wouldn't stack up very highly on a "place people want to live" chart, but then again that's not what I was reflecting (that chart would like something like this http://travel.latimes.com/daily-deal-blog/index.php/un-picks-best-and-wo-1122/).

My point was that any serious conversation about cutting the deficit should include entitlement spending and defense spending (not simply a spending freeze on discretionary spending) as those are currently the largest government expenditures.

To quote Milton Friedman, "The widespread enthusiasm for reducing government taxes and other impositions is not matched by a comparable enthusiasm for eliminating government programs -- except programs that benefit other people."

I think that's truer now more than ever.


France is an interesting case study for other reasons however, namely that their unwillingness to engage in foreign wars is at least partly due to their current tax situation (they're over-taxed), and perhaps their negative experiences in Indochina and Algeria back in the 50's and 60's.

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