• http://news.yahoo.com/s/ap/20051118/ap_on_go_co/congress_budget_cuts

    Its so very difficult to cut just $50B from the deficit (a drop in the deficiet bucket), how will we ever balance the budget?

    Cutting taxes does spur economic growth, but as this growth increases revenue, the extra revenue gets spent.  I’m against new/raised taxes because this will just get spent by our dedicated congress as well…hardly a solution.  It worked under Clinton because the Republican controlled congress was still against big spending, but it seems they are now wanting to spend like democrats.  How can we control our spending problem?


  • The correlation between decreasing taxes and increasing growth isn’t very well established, just very popular.  It has much more to do with the targets of tax cuts.  For example, Clinton raised taxes on highest quintile but lowered it for much of the rest of the population.  Yet, the US still had record growth during the 1990s.  Of course a number of factors were involved, including a deficit-adverse Congress and White House, but it does cast some serious doubt about the correlation.

    I think a tax increase will have to be involved at some point.  The gains from economic growth have not translated into higher government revenues, partly because tax cuts have not resulted in increased consumption of domestic products and therefore fully-directed sales tax revenues.  The deficit is partly an accounting problem as opposed to evincing significant weaknesses in the US economy (although that is there).  More revenue simply means less deficits, and if you’re really aiming to cut deficits, taxes are the easiest place to start.  If however you’ve got another idea in mind, like offering sector or industrial incentives to spur productivity, then that’s a different story.

    Trade protections might be a partial solution, but are unlikely to have a significant impact since the trade deficit, while important, constitutes only a small proportion of the overall deficit.  If they can enhance productivity, that’s a different story.  However, the current round of international trade barrier reductions go specifically against revenue generating barriers.

    Finally, a small point, but I don’t think it’s possible to characterizes either party as being spend-thrift or wasteful per se.  The Republicans have always favored subsidies, but in a different form than Democrats’ subsidies and programs.  It was Reagan who quadrupled the national debt after all.  I won’t comment on the goals of that policy, but it should give some pause about who is spending how.


  • Problem was, this wasn’t really a bill intended to cut the deficit. It was labeled as that by both sides for political reasons. The Republicans wanted to cut specific taxes for specific groups, and pay for these cuts by cutting college loans (which I’m still trying to drum up dissent on campus for), food stamps, and some other things. The Democrats and 22 Republicans opposed it, effectively shooting it down.

    Viva la Revolution! Die Facta Est!

    This is all a result of Bush’s approval rating. Hopefully it continues to plumet.

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