The real danger is that they’d find ways to run deficits even in years in which they produced a “balanced budget”. The “doc fix” is an ongoing scam, started in the Clinton years, in which they claim $30 + billion in anual savings on Medicare and Medicaid by saying that next year they’re going to slash the price of a doctor visit to levels that would drive many primary care physicians out of business (many of them are hanging on by their fingernails as it is). Every year Congress votes not to make the cut, and then says the cut WILL happen “mañana”. The unified budget is another huge scam, as is the fact that Congress ignores all the future liabilities it creates, in clear contradiction of generally accepted accounting principles. The deficit is much bigger than the published number, which looks bad enough.

This year we’re expected to raise $2.6 trillion in taxes, and spend $3.8 trillion. And the true spending number is much higher.

As for the idea tht we need to raise taxes, yes we can. That $2.6 trillion is probably 16% or 17% of GDP, and we’ve raised as much as 20%. The bad news is that we’ve never raised more than 20% of GDP (see Facts and Figures, in the blue bar at the top of the page), and this year we will again spend about 25%. Raising taxes is not, by itelf, going to close the deficit. You could install a VAT to get us up to that 25% figure, but that still wouldn’t be enough to cover the future cost of Medicare.

JL

We nevertheless embrace gloomy forecasts of all kinds . . . .

Thanks Alan!

I have read in this blog that the $2.5 trillion surplus has been completely spent on non-Social Security government programs.

I also read here that if we are going to be paying taxes to redeem the U.S. Treasury Bonds in the Trust Fund, we will be paying twice for the same benefits – pretty scary, huh? America’s citizens get to pay $5 trillion for $2.5 trillion of Social Security benefits.

I’m trying to picture it this way – a $2.5 trillion infusion of cash into the American economy, $50 billion to $100 billion a year for forty years, at the level of households and S-Corporations and sole proprietorships and C-Corporations – into personal consumption and retirement savings and debt reduction, innovation, hiring, plant expansion, product development, marketing programs, sales promotions, salaries and bonuses, and growing the brand – and the leveraging effect those would have to create a strong, growing economy.

It boggles the mind.

So, hypothetically, if none of these programs existed, $2.3 trillion EACH YEAR would remain in the economy, to be spent as citizens best see fit: on investment, retirement savings, prudent debt reduction, education, consumption.

And this, without the slippage effect of the cost of government (read: salaries, benefits, pensions) to administer the programs.

And further: this without the risks of political mischief (read: targeting favored constituencies).

Far, far better to have a beach full of bathers, each holding a Senior Lifesaving Certificate, than to have a that same beach with a whole lot of people who cannot swim, and are dependent on the lifeguards to keep them out of trouble.

Which begs the question: who do we want to be??