Opinion Forum

Budget Myths versus Reality

November 7th, 2011

Myths Busted Robert J. Samuelson has been thinking and writing about business and economics for more than 40 years, but he isn’t an economist. That’s in his favor because he’s free to research and evaluate facts unencumbered by the vague theories and detachment from reality that plague economics, known for good reason as “the dismal science.”

Samuelson has an excellent article in The Washington Post that anyone interested in solutions to the nation’s current economic mess should read and think about. Common sense dictates that we can’t get out of the financial mess we’re in without both increasing revenue at all levels of government and reducing spending, especially in the key entitlement and welfare areas — Social Security, Medicare, and Medicaid.

We’re nowhere near arriving at reasonable answers because of the financial and budget myths that have hamstrung Republicans and Democrats alike for many, many years. In Samuelson’s words,

The conservatives’ fiction is: We can reduce deficits and cut taxes by eliminating “wasteful spending.”

The liberals’ fiction is: We can subdue deficits and raise social spending by taxing “the rich” and shrinking the bloated Pentagon.

You will notice one similarity. Both suggest that reducing deficits involves little real pain. No one, after all, favors “wasteful spending.” Similarly, taxing “the rich” doesn’t threaten most people who aren’t rich. Liberals and conservatives alike can reconcile all good things: fiscal rectitude (for both), tax cuts (for conservatives) and high social spending (for liberals). I wish it were so.

Samuelson goes on to debunk these myths, along with the solutions most favored by each side. The bottom line is that we can’t get back on the path to national solvency unless both sides are willing to open their minds and embrace solutions that may not endear them to their constituencies.

It’s obvious that isn’t happening, and it’s highly unlikely to happen. That’s clear from events of the past few years, leading to the present situation of near-paralysis. In an abject surrender, Congress turned the whole mess over to a so-called supercommittee of the House and Senate, a body aptly described by Newt Gingrich, who ought to know:

I think this super committee is about as dumb an idea as Washington has come up with in my lifetime. I used to run the House of Representatives. I have some general notion of these things. The idea that 523 senators and congressmen are going to sit around for four months while 12 brilliant people, mostly picked for political reasons, are going to sit in some room and brilliantly come up with a trillion dollars, or force us to choose between gutting our military and accepting a tax increase, is irrational.

Here’s Gingrich’s entire statement:

Erskine Bowles, who co-chaired the fiscal commission that long ago proposed useful solutions but was ignored by President Obama, warned the supercommittee in a hearing. He said, “I know most of you…. I have great respect for each of you individually. But collectively, I’m worried you’re going to fail. Fail the country.”

As Samuelson points out, most people who know what they’re talking about don’t subscribe to the competing liberal and conservative myths that have paralized politics at every level. However, there’s not much they can do to overcome the myths. Democrats will continue to believe that government is the answer to everything, and they will continue to bow to those who support them, such as unions, trial lawyers, and minority groups. Republicans, some of whom have signed an inane Boy Scout-level pledge to never raise taxes, will continue to suck up to their own narrow-minded, unsophisticated constituency.

The supercommittee won’t do anything useful, and Congress won’t implement the draconian alternatives dictated for that possibility. Does that mean that there’s no hope of reaching a substantive set of solutions? Yes.

Articles written by Tom Carter
Tags: budget, Congress, conservative, default, liberal, myths, supercommittee
Categories: Economics, News, Politics | Comments (2) | Home

2 Responses to “Budget Myths versus Reality”

Tom Carter | November 8th, 2011 at 2:58 pm

Good article here titled “Why The Super Committee Is Heading For Super Catastrophe.” Two weeks until they’re due to report their work, only a couple of days until their scheme has to be submitted to CBO to be scored. They aren’t going to make it, at least not in any useful way. Surprise, surprise.

Dan Miller | November 8th, 2011 at 5:00 pm

Gosh darn, Tom! Congress is an important deliberative body and the states~~men~~persons we elect to represent our interests there have so many more crucial things to do. Economics is terribly boring and difficult to understand; besides, the 2012 election campaign is in full swing. They need to powder their ideological noses and do what’s right (or left, or maybe middle as the case may be) so they can come back and do it ~~to us~~ for us some more. It’s not as though what they do really matters is it?

Oh? It is? Well, looked at from the proper perspective that’s irrelevant.

Totally off topic and irrelevant, once when I was arguing a case before the FCC’s Review Board, then an intermediate appellate body, I commented that something raised by opposing counsel was irrelevant. The Chairman of the Board said, with a straight face, “Ah, but Mr. Miller, an Irrelevant [he pronounced it sort of like “an elephant] never forgets.” We had become sailing buddies and occasionally took walks together at lunch time. He had a bad heart and unfortunately died young.