Here's a map of the CBO projected budget deficit as a percent of GDP (via WSJ):
In 2010, the CBO projects a budget deficit that appears to be 10 percent of our GDP. Simon Johnson wants to cut that in half. That's a great idea. It's also a $700 billion idea. Where are we going to find that kind of money?Cutting $700 billion from an economy emerging from a recession is going to be painful, wherever you find the fat. So why not cut the freshest meat and seriously consider not spending most of the stimulus bill? I know, I know: It's a stimulus bill, we're in a recession, what am I thinking?
A January CBO report estimated that "only about $136 billion of the $355 billion that House leaders want to allocate to ... discretionary programs would be spent by Oct. 1, 2010." If Bernanke's right that the economy will trace the bottom of the U (or V, or whatever) late this fall, do we really need to see the stimulus coffer emptied 12 months later, especially with the $3-plus trillion budget being allocated to many overlapping areas like infrastructure?
I think the stimulus bill was the right thing to do at the time. It told consumers and employers that the government was going to throw an industrial-sized kitchen sink at the recession, and I think it helped keep consumer confidence buoyant. But given that the actual spending and effect has been plodding, and given that we can't paper-cut the deficit down unless we make some big, potentially painful decisions, it seems to me that Obama could do worse than quietly agreeing to sunset stimulus spending.
They also got embroiled in an expensive war.
Oh crap. We ARE the soviet union.
Hah. Yes Simon Johnson pointedly left out the part about drowning resources and soldiers in Afghanistan. But that's another question for another blog.
Even though I voted for Obama...
This would cause some pain. Is he ready to step on people's toes? SS and Medicare/Medicaid are off-limits, so he could either cut defense or raise taxes. Any tax raise will be wildly unpopular among Republicans for obvious reasons.
Are you saying that cutting short the stimulus spending is the best of bad options? Or an equally bad option among bad options?
As Chalmers Johnson has been pleading for years - stop assuming that
the U.S. empire can continue. Cut the military significantly, and pull out of the hundreds of military bases worldwide. The USSR could not continue as an empire, and neither can we.
Retool, relocalize, radically conserve, and prepare for oil's end.
Stop the stimulus spending and the bank bailouts will save $trillions. Stop bailing out GM and Chrysler and let them build whatever they want to make money.
Trim the military a bunch. Rumsfeld had a lot of good ideas about how to do that. Keep on doing the weapons research because it provides good jobs and saves lives when we are at war.
Increase the tax on gas to depress demand but decrease the income taxes correspondingly to make it revenue neutral. If we don't depress the demand for gas, it will be back to $4/gal very soon.
Legalize marijuana (saves money on prisons, increases taxes, and instantly adds a $50B industry to the USA).
Do much more out sourcing on government projects.
Tell the Fed gov mgrs that they have to make do with 5% less next year. It happens all the time in private industry and we make it happen.
If I were charitable, I'd grant you that marijuana legalization would save money on prisons, although I'd guess that a relatively small number of domestic drug convictions center on marijuana when compared to criminal offenses related to other, harder drugs.
Lastly, everyone I've heard advocate this (I live in California, where it is in fact 'legal' under the guise of 'medical marijuana') simply ignores the economic deadweight loss imposed by the lack of economic participation by stoners. This effect is small now, because marijuana is illegal.
But if it were legal, lots more people would be smoking weed on a regular basis. You'd have lots of young people sitting in their parents basement getting stoned out of their gourd instead of working hard in school preparing for the SATs, or keeping and holding down a job. And that would cause a serious decrease in national productivity, which would, given the above, outweigh the increased tax collections and reduced prison expenditures.
In short, it sounds like a good idea to the crowd that reads "High Times" magazine on a regular basis, but it wouldn't make a dent in the U.S. budget deficit.
Hoboy, another braindead antidrug rant. Exactly how many "stoners" do you know? I know quite a few people who use marijuana and exactly none of them fit the "stoner" image of someone who smokes a joint and lays back on the couch doing nothing. That sounds more like people who use alcohol or zanax/librium, etc. And pot certainly hasn't impaired any of the many PhD's I know all of whom smoked it regularly while in college and grad school. Most of them also used LSD.
What we would find I think if marijuana were legalized is that we'd have a population that would be much more creative, and much more cooperative with one another, and we'd also have one heck of lot less violence and car accidents.
Wow, amazing how conversations migrate. While I am an advocate for the legalization of the green leaf, I have serious doubts about its positive effects on the US economy. Might help us all feel better but it will in no way make a dent in our current situation. We as a nation are going to have to tighten our belts and get to work. And we're going to have to STOP supporting those indolent aristocrats and imbicilic politicians at the "top" of the money tree. Start taking care of ourselves, eliminate the medical insurance industry and quit pretending that medical doctors are worth $500K a year to read X-rays. I've been there, a medical education just isn't that hard. But I digress, there is, ultimately, a small chance that we'll be able to get out of this mess. But, personally I don't think we Americans are out of the denial closet yet.