On airy "long-range deficit projections":
GROWTH is the KEY to eliminating federal deficits. (Just as Reagan and all the 'Laffer-ites' used to argue.)
INCREASE the NATURAL GROWTH RATE for the American economy (for example: by tax simplification that slashes complicating loopholes and special ta=x preference items and subsidies and such while focusing on producing low nominal rates, not just low real rates, under a simplified and more efficient tax system), WHILE RESTRAINING SPENDING LEVELS, and federal deficits will vanish.
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...First, ten year projections are notoriously irrelevant. Remember Ross Perot? In 1992, he predicted that the federal budget deficit was on track to end to the world as we knew it. In fact, the rapid growth of the economy during the following years reduced the deficit to zero (neither Bill Clinton's famous deficit-cutting nor Republican insistence on a balanced budget was responsible; the deficit reached zero before any major fiscal changes kicked in).
Second, deficits and debts mean just about nothing anyway -- at least out of context. In 1945, the federal debt was 120 percent of the entire U.S. economy. Yeegads! Yet only a few years later, the debt as a proportion of GDP had been tamed -- and not primarily because of cuts in government spending. Yes, of course, wartime spending ended. But the big change was in the denominator of the equation. Economic growth kicked in big time, and reduced the debt as a proportion of the economy to manageable levels.
Robert Reich's Blog
Tuesday, August 25, 2009
robertreich.blogspot.com
Robert Reich was the nation's 22nd Secretary of Labor and is a professor at the University of California at Berkeley. His latest book is "Supercapitalism." This is his personal journal. |
