Tuesday, July 12, 2011

Democratic Death Wish?

I think I see what President Obama is trying to do on the debt ceiling crisis. He is trying to get the House Republicans to agree to a tax increase and thereby split the Republican Party. Maybe. It's worth a try, anyway.

But maybe he should be looking at the big picture. A debt deal that increases taxes now and promises smoke-and-mirror spending cuts tomorrow will continue the present economic malaise of low growth and high unemployment. Will that get the president reelected in 2012?

The chaps at the American Enterprise Institute took a look at recent efforts to fix government budgets. In "A Guide for Deficit Reduction in the United States Based on Historical Consolidations That Worked", Andrew G. Biggs, Kevin A. Hassett, and Matt Jensen found that successful budget deals featured mostly spending cuts. Here is Arthur Brooks's report on their findings:

On average, failed attempts to close budget gaps relied 53 percent on tax increases and 47 percent on spending cuts. Successful consolidations averaged 85 percent spending cuts and 15 percent tax increases. Some of the most successful financial comebacks—like Finland’s in the late 1990s—involved more than 100 percent spending cuts, so that taxes could be lowered. The spending cuts by the successful countries centered on entitlements and government personnel.

It really isn't that hard. Government spending is a weight on a nation's economy. If you want to get the economy moving then you have to reduce government spending. Everything else is smoke and mirrors.

I wonder if the president isn't missing the forest for the trees. It's possible he could get the Republicans to bollix themselves up and agree to a tax increase. And maybe that would get the president reelected in 2012. Or maybe not.

But the fact is that we are coming up to a crisis point where the American people are going to have to decide what kind of country they want the US to be. I just feel that the best way for liberals to keep their high-tax, high-spending state is to avoid budget crises. The liberal line works best if we are just considering one issue at a time, so that we can focus on the emotional appeal of the usual victims suffering from a lack of health care or housing or counseling. If we have a big crisis then people are going to be ready for a big deal and they are going to be more receptive to deep cuts in wasteful spending.

Just saying.

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