Published: Wednesday, May 30 2012 12:00 a.m. MDT
Good letter, even Mitt Romney recently said that cutting spending would sink the
economy. He probably regrets saying it now, but it was true. That's the
definition of a gaffe: when a politician says something accidentally, that
happens to be true.
Excellent letter Eric. Thanks for making this important point. The tone of
your letter addresses the false impression being presented by Republicans,
especially the presumptive nominee, that spending has increased under the
current adminstration faster than ever before when the exact opposite is true.
"Spending has increased at a yearly rate of only 1.4 percent during
Obama’s tenure, even if you include some stimulus spending (in the 2009
fiscal year) that technically should be attributed to President George W. Bush.
This is by far the smallest increase in spending of any recent president."In Bush’s first term, by contrast, federal spending increased
at an annual rate of 7.3 percent; in his second term, the annual rise averaged
8.1 percent. Reagan comes next, in terms of profligacy, followed by George H.W.
Bush, Bill Clinton and finally Obama, the thriftiest of them all."Yes, the deficit has risen quickly but that is because of lower revenue caused
by unemployment and especially caused by the Bush tax cuts. As stated by the
auther, "Growing the economy will do more to decrease the deficit than any
misguided cuts in spending."Thanks for saying it.
The analogy I've heard is that the austerity measures advocated by the GOP
is, "Our house is on fire, but due to drought, we need to conserve water
first." It should be the other way around -- get the economy moving (put
out the fire) and then when people are working and tax revenues are flowing to
cover spending, we can engage in government auterity measures that will be
covered by a healthy economy.The GOP doesn't understand that
the government is a MAJOR component of the economy. When it builds roads,
bridges, and infrastructure, it uses local businesses to accomplish that work.
Too often I hear conservatives proclaim that all government spending is a waste.
Who built the Internet? Who built the railroads? Who built the
electricty transmission system? Who built the Interstate highway system? Who
built Hoover Dam and Tennessee Valley Authority? All were government projects
that benefited industry and economic development. Were their
failures and corruption in building the Internet and railroads? Of course, but
collectively, it was for the better for the public and economic good.Had the government NOT built the Internet, Google and Facebook would not exist
As we've seen in Europe — austerity doesn't work.Austerity in Europe is dealing with benefits provided to individuals, not
jobs. The reason it hasn't worked is the entitlement attitude of the
beneficiaries. Greece wants a bailout so they can pay their retirement
commitments that start in the early fifties. I can not get those same benefits
until I reach age 67. The revolt against austerity is a revolt about benefits.
The letter is correct. I keep hearing we are getting our grandkids into debt.
Well someone got me into debt too. In fact I have not been alive for one second
in this country where there was no debt. From the get go debt was used to
further this country. Don't stop now. Making a robust economy is
the best bet to curbing our problem. Getting out of debt isn't the issue.
Our sagging economy is. Once everyone has jobs guess who will be complaining
about the debt? NO ONE.
Eric,If we had a relatively low debt load, I might be more inclined
to agree. But high debt levels sends signals to the markets reference inflation
which, in turn, drives interest rates and investment decisions.I
certainly think that both spending control and some level of "revenue
enhancement" need to combine to get our debt under control. Doing so will
result in some short term pain but will also convince businesses and investors
that we have our house in order, that our economy will avoid strong inflation
(or worse, "stagflation") and that investments in both assets and people
are justified. None of this should be interpreted as justification for
draconian cuts.So, I think that getting our house in order (no small
challenge given the political chill) is our first priority. To be sure, it is a
long term, rather than short term play. But I think it wiser over the long run.
Let's cut all taxes on the wealthy. That way they can continue to create
jobs in China & India.
This letter brings to mind a well-known, but appropriate story told about Milton
Friedman told by a colleague of his:"Milton recalled traveling
to an Asian country in the 1960s and visiting a worksite where a new canal was
being built. He was shocked to see that, instead of modern tractors and earth
movers, the workers had shovels. He asked why there were so few machines. The
government bureaucrat explained: “You don’t understand. This is a
jobs program.” To which Milton replied: “Oh, I thought you were
trying to build a canal. If it’s jobs you want, then you should give these
workers spoons, not shovels.”Make no mistake about it: Mr.
Samuelson illustrates the thinking of economists currently in charge of Western
economies, including ours (think Bernanke and Krugman). These are the kinds of
people who created the mess we're in by emphasizing jobs over economic
stability. First you create economic stability, then jobs will come. Creating
jobs with money that doesn't exist is why we are where we are now.
Re: "We cannot create jobs by cutting jobs."Yeah, we can. As
long as we cut the right jobs.The largest anchor of the recession,
and the largest detractor from a sustained recovery is brutally unfair
competition from bloated, unaccountable, unproductive Big Government.Instead of seeking new, ever more deranged methods of filching and
sequestering capital away from the people and private markets, instead of
feeding a mutating, metastasizing, insatiable government beast, we should be
seeking ways energize the productive, private economy.The best way?
Get government out of the way!If growing government and gifting
unproductive, unsustainable bureaucratic jobs to the politically deserving were
a valid economic model, the East Bloc would still be in business and
euro-socialism would be flourishing.See any evidence of that?
Why have the attitude that we need to spend - at any cost?Government
does not create private sector jobs. Government jobs do not increase revenues -
they require revenues.The only way out of this fiscal mess is to
have more tax payers. The only way to have more tax payers is to have more
jobs. The only way to have more jobs is to reduce the amount of money flowing
from the individual taxpayers to Washington so that the individual taxpayers can
buy those goods and services from private enterprise.The federal
government has been charged to handle 17 duties. ONLY SEVENTEEN. It does not
take 2,500,000 government workers to handle those seventeen duties. Spending
must be slashed. People on the government payroll must be fired. Wages to
government workers must be cut. There should be no incentive for people to
leave the private sector to get a job in "government".When
jobs are cut, when spending is cut, when taxes are reduced, when restrictive
regulations are reversed, then the private sector can build businesses and hire
people. Those people will be adding to government revenues instead of spending
"The largest anchor of the recession, and the largest detractor from a
sustained recovery is brutally unfair competition from bloated, unaccountable,
unproductive Big Government."Spoken by someone who has no
knowledge of the contracting policies and procedures of the federal government.
During the Iraq War there were many instances of no-bid contracting and that was
rationalized by the White House as necessary for the circumstances. But in
normal times, government contracting bends over backwards to insure competition.
It is one of the reasons that procurements take such a long time in the
contracting phase. Federal contracting rules were put in place by Congress who
tried to address every contracting injustice ever experienced by their
constituents in private industry.Despite these obstacles that
"bureaucrats" have to overcome, the government has been instrumental in
contibuting to the needs of the private sector as mentioned by Baron Scarpia.
Another success of the federal government is the agricultural extension program
working through land grant universities to help American farmers become the most
productive farmers in the world.Instead of always trying to tear
down government we should recognize the good that can come from government and
private industry working hand in hand.
Re: "Spoken by someone who has no knowledge of the contracting policies and
procedures of the federal government."Actually, my last
active-duty assignment was to a multi-agency OIF/OEF contract fraud task force
[20+ arrests, recovery of $100M+]. I'm quite familiar with "contracting
policies and procedures of the federal government."But
that's beside the point.Unfair government contracting -- as
rampant as it is -- is not the anchor to the recession. Rather, it's
government's brutal, unfair, unseemly competition with the private sector
for capital.It's unfair because bloated, unaccountable
government just takes it. In taxes. No sales pitch, no demonstration of mutual
advantage, no persuasion.Don't pay? Go to jail.And
every nickel brutally expropriated by bloated, unnecessary government is a
nickel that then becomes unavailable to the private sector, except as a reward
to "deserving" friends of government decision makers, either through the
contracting or the appropriations processes.Good CAN come from
private industry and government working together. Now, if we could just convince
politicians and faceless, motherless government bureaucrats.
>Twin LightsSo you're saying that high debt drives up interest
rates? Uh, have you noticed where interest rates are right now? Like the
interest rates at which government is borrowing? Aren't you essentially
saying that cutting spending will conjure up the confidence fairy? Is there any
real difference between so called business confidence and Santa Claus? If the problem was that high interest rates were choking off investment, your
argument might have some merit. But interest rates are low, businesses are
profitable, and there's plenty of investment capital available for
entrepreneurs or business growth. So the deleterious affect of debt has yet to
make an appearance in any discernible way. What absolutely is driving
unemployment has been budget cuts in state and local government. Those data are
not in dispute. As for cutting debt being what's best in the
long run: well, Keynes said it best: "in the long run, we are all of us
There is an excellent article in the Money Watch section of the Wall Street
Journal that does a fine job of debunking the GOP myth that Obama has increased
government spending. Unfortunately, DN's censors won't allow the link
to post here.So try Googling "Money Watch Wall Street
Journal." You'll need to hunt around a bit, but you'll find it.
Rex Nutting is the author.
Spot on Eric. This debt talk is plain and simple nothing more than setting the
stage to default on our obligations, specifically Social Security and Medicare
and lowering taxes on the privileged few. Both parties misread the results of
the 2010 elections. The issue was jobs jobs jobs and neither took it seriously.
It will be through growing the economy that we get it through these times and
you can't grow the garden by starving it. If tax cuts worked it would have
been done. It will be middle America that gets us out and forcing them into
serfdom won't help.
Spend during recessions, employ austerity measures during the good years. Even
Romney understands it since he basically said as much a few days ago (I'll
give him a week to flip his position). There can be some cuts made but the fact
is unemployment would be 7.2% if we didn't cut a million gov't jobs
the last few years between the various levels of gov't, instead of the 8.1%
Re: ECR just as a point of fact the no bid contracting continues today in the
Obama administration and to many of the same companies. It is just not reported
because of the media agenda to support this administration no matter how
much corruption or incompetence.
Helloo - Since the media doesn't report contracting abuses by the Obama
Administration perhaps you could provide us with some specifics about such
violations. Is Halliburton still putting out oil well fires by subcontracting
the KBR who subcontrats to Boots and Coots? If you want to waste and excessive
overhead check out that contract.So please, give us some detail with
some references. Thank you.
Advocates of capitalism are very apt to appeal to the sacred principles of
liberty, which are embodied in one maxim: The fortunate must not be restrained
in the exercise of tyranny over the unfortunate.
It is true that some public sector employees will lose their jobs. For the
longest time, the public sector has been the last bastion of life-long
employment. Maybe government will run better and be more efficient if
government employees have the same ax hanging over their head that private
sector employees have every day. In other words, if you fail to perform to
acceptable standards, you may not be employed tomorrow. It's about time.
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