$146 bil is tiny compared to current deficits. Sure you should adjust for inflation and real growth, but even after doing that its still a small fraction of today's deficits. If the current deficit was $146bil I probably wouldn't be complaining about it.
Looking at the link a bit more and the post I replied to I see that the $146 bil was not a deficit figure, but was an estimate of the reduction of revenue from a tax break, but not the estimate for one year, but rather the estimate for 2010 through 2019. So for a ten year period the cost is $146bil. That's $14.6bil a year. Do you understand why I might be more concerned about a deficit more than 100 times as large as that figure than I would be about that figure. Is in your opinion two orders of magnitude enough of a difference to have a different level of concern? It is in mine.
The important issue is to reign in spending. (Not necessarily cut it year for year, but at least keep it growing slower than the economy over time, or at very least slower than it is projected to grow just from the automatic increase in entitlements, which will gobble up the budget even if other spending doesn't grow) If spending is lower the burden of the government on the economy is lower. If spending is high, then the burden is high, whether the burden is met through higher taxes, or more borrowing. For normal levels of deficits, higher borrowing just means more taxes later. Starting from very high levels of deficits higher borrowing can lead to a fiscal crisis.
The entitlements are going to cost so much if they aren't reformed, that they will cost more than any reasonable tax increase, or any tax increase just on the wealthy, can support. Also the existing trend line of government growth in this decade is unsustainable. So we have to cut spending growth going forward.
While doing so it would be good to also cut deficits, because they are so huge, and while the US, as the world's biggest economy, and as a country who's debt is denominated in its own currency, is more resistant to falling in to a fiscal crisis than say Greece, eventually it will happen if we keep on the way we have been going. So I wouldn't cut spending growth and put all of that in to tax cuts. We would be better off doing that than having the same size deficits with higher taxes (because if we start off with lower taxes, there is more scope to raise them as needed, and because the lower taxes would promote growth and in this case that effect is not countered by higher deficits, because the deficits would be the same), but still the deficits are too high. So I wouldn't push tax cuts now. But I would oppose tax increases. Our situation now is not that the tax burden is so low (in terms of rates, or in terms of %of GDP take either before, or once the economy gets out of the recession), but that spending is too high, above the modern norm as a percentage of GDP, and projected to go higher and stay higher.
I don't really think the spending should have to stay at the modern norm (about 20% for federal spending) as a percentage of GDP, as the country gets richer, you don't automatically, directly, or inevitably get a need for bigger government from that economic growth. I'd rather keep it fairly steady or at most on a very slow growth path in terms of real-per capita spending, and not rely on a percentage of GDP. Yes that applies to defense spending as well, I reject the idea that was proposed within the last year or two, that defense spending should have a floor as a percentage of GDP, if our economy grows faster than our defense needs, I'd be fine with spending dropping by that measure, even over the long run dropping to a small fraction of what it is today, that's what its been doing since WWII, and I see no reason for the trend to stop. But if we are going to have a steady percentage of GDP, with the government growing along with the economy, at least that would be better than a growing percentage of GDP. |
