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by 100k
5675 days ago
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On the whole, this is a ridiculous article. No one except rich elites cares about the deficit (including the bond market: 30 year treasury notes are yielding 4.5% right now). Republicans may have made noises about it in the last election, but one of their major planks was that the Affordable Care Act cut Medicare benefits! We are in the middle of a global economic contraction, it is not the time to be reducing spending (redirecting spending to useful infrastructure, sure). The calls to cut Social Security are especially irritating. Thirty years ago, Reagan increased Social Security taxes to save the system. It worked, and the Social Security benefits are fully funded until 2037. For 30 years, workers have paid extra into Social Security to keep it solvent long-term. Now a bunch of rich elites demands that benefits -- that they don't need, but millions depend upon -- be cut. That is a bait-and-switch of the highest order. He doesn't even talk about Medicare, which is the real budget problem. You can tell if someone is serious about reducing the budget deficit if they have a real plan for Medicare. Despite my disagreement on entitlement spending, I appreciate that he thinks military spending could be cut and tax rates on the wealthy need to be raised. Since he's wealthy, I appreciate that he is willing to make a personal sacrifice. |
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I disagree. It's time to put Keynesianism to bed again. The only reason it came back to life was because it told politicians what they wanted to hear a couple of years ago. What it's time to stop doing is pretending that the solution to the problem is for the government to suck a dollar out of the economy to generate 75 cents of wealth and 50 cents of debt. In the real world, the Keynesian government multiplier is less than 1, and that cracks the entire theory wide open. And once you plug that number into the theory, it'll tell you the same thing.[1]
We absolutely need to cut government spending. Government can move dollars but it has proved incapable of generating wealth. It boggles my mind that after the past couple of years we're even talking about this. The final test of a theory is that it makes correct predictions, and the predictions based on Keynesianism have been repeatedly and continuously wrong. It's time to stop pretending it's because we're still not doing it hard enough.
[1] (Also, the multiplier is not a static universal constant. Like pretty much everything else economic, it reacts to conditions; if government were actually too small it might indeed be over 1 to grow it some more. So it's not that the optimal answer is to cut spending to 0, that's typical first-order thinking. It's just that today, the multiplier is way less than 1, and we've got a lot of shrinking to do before that's even close to changing.)