The Third Way
Over at Modeled Behavior, Karl Smith points us to a Pew Research poll which seems to suggest that people want a balanced budget but they don’t want the government to raise taxes or cut spending which, of course, sounds nonsensical. In his post Smith goes into some of the problems of individual beliefs and the attempt to aggregate them into public “opinion”, and he makes a lot of sense. I suggest you go read the full thing.
Assume for a moment, though, that people actually did want a balanced budget but without any taxes or cutting. Would that be a contradiction? No, because there is a third option, an option I think could be put to good use in beginning to fix our fiscal mess. It’s quite simple really: Let the economy grow. If spending was held constant, eventually the economy would grow so much that increased tax revenue from higher incomes, profits and so forth could be used to pay down the debt and get rid of the deficit. It would take a bit of restraint, perhaps, but it’s one way to do it and it wouldn’t involve sacrificing people currently dependent on federal programs.
The CBO, in fact, has confirmed what I’m saying now. This graph says it all:
(This comes from the Cato @ Liberty blog)
We can see that with a spending freeze our budget would be balanced by about 2017, which isn’t too bad at all. With a 2% increase in spending each year we could balance the budget by 2021. That seems like an unnecessarily long time to me, but at least the sucker gets balanced. By the way, this is assuming the Bush tax-cuts remain in place permanently.
This seems to be a point missed by most of the commentators on our fiscal situation, but it really isn’t too terribly difficult to get our finances under control. The difficult part is politics. Most people of the liberal persuasion seem to assume that we can’t fix anything until taxes are raised which is patently false. It just takes some discipline. I can imagine a typical response by said liberals would focus on the “plight of the poor and unemployed”, or something to that effect. But remember, a large part of the increase in federal spending over the past few years is precisely due to the recession and unemployment, which has caused more people to take advantage of government unemployment and welfare programs than otherwise would have. If, in the next few years, the economy starts expanding at a healthy rate it would mean fewer people will be in need of government assistance. We won’t need to sustain such high amount of spending for this reason alone.
Although I personally think it would be best if we took a chainsaw to the federal budget over the next few years, this third way of getting federal finances under control is a happy medium I think many people from various political backgrounds could get behind.
On that note, I’m going to go dream about owning a private jet. Unfortunately, actually owning one is about as likely as a balanced budget.