red states rule
03-21-2013, 03:41 AM
The spending on both sides is insane and the debt continues to grow - and we only have 2 choices
The House of Representatives is expected to take up Paul Ryan's budget (http://townhall.com/tipsheet/guybenson/2013/03/12/new-gop-budget-46-trillion-in-deficit-reduction-balance-by-decades-end-n1531565) today, as the Senate begins debate on Democrats' first fiscal roadmap in nearly four years. The House GOP version balances in ten years, without raising taxes, by reducing the rate of spending growth and reforming entitlement programs. Senate Democrats propose (http://townhall.com/tipsheet/guybenson/2013/03/14/confirmed-senate-democrats-budget-accelerates-spending-never-balances-n1532870) $1.5 trillion in tax increases and hundreds of billions in phony savings, yet their ledger never approaches balance. The president's offering is still nowhere to be found. Ryan's plan would shave $4.6 trillion from deficits over ten years, compared to the current spending path; the Reid/Murray approach actually raises overall spending by hundreds of billions. As these contrasting paths forward are discussed on Capitol Hill, read through this Wall Street Journal op-ed (http://online.wsj.com/article/SB10001424127887324532004578362603354690818.html) by two Stanford University economists. They argue that their thorough analysis suggests that the House budget would boost the economy and inspire confidence in American employers, investors and creditors:
According to our research, the spending restraint and balanced-budget parts of the House Budget Committee plan would boost the economy immediately. With the Budget Committee's proposed tax reform included, the immediate impact would be even larger. The entire plan would raise gross domestic product by one percentage point in 2014, equivalent to about a $1,500 increase for each U.S. household. Ten years from now, at the end of the official budget horizon, we estimate that the entire plan would raise GDP by three percentage points, or more than $4,000 for each U.S. household...
The long-run economic gains from restraining government spending would not, despite what critics claim, harm the economy in the short run. Instead, the economy would start to grow right away. Why? First, the lower level of future government spending avoids the necessity of sharply raising taxes. The expectation that tax rates won't need to rise provides incentives for higher investment and employment today. Second, since the expectation of lower future taxes has the effect of raising people's estimation of future disposable income, consumption increases today. This change comes thanks to Milton Friedman's famous "permanent income" hypothesis that the behavior of consumers reflects what they expect to earn over a long period. According to our macroeconomic model, the higher level of consumption induced by the House budget's effect on consumer expectations is large enough to offset the reduced growth of government spending.
Third, the new budget's reduction in the growth of government spending is gradual. That allows private businesses to adjust efficiently without disruptions. Still, our macroeconomic model likely underestimates the positive impact of the House budget plan. The model doesn't account for the greater economic certainty that results from preventing the national debt from soaring to dangerously high levels and from stabilizing the federal tax burden.
Meanwhile, what would the Senate budget accomplish? Ta da (http://budget.senate.gov/republican/public/index.cfm/files/serve?File_id=4e240cd0-1bfa-4d5c-acb7-144c3c09e86d):
http://budget.senate.gov/republican/public/index.cfm/files/serve?File_id=4e240cd0-1bfa-4d5c-acb7-144c3c09e86d
Republicans on the Senate Budget Committee summarize many of the budget gimmicks we've covered and conclude that Democrats' plan amounts to "virtually no deficit reduction whatsoever" -- a far cry from Murray's claim (http://thehill.com/blogs/on-the-money/budget/287625-senate-dem-budget-includes-nearly-1-trillion-in-new-taxes) of $1.85 trillion in lowered deficits:
Even the claimed deficit reduction is a fallacy because it relies on several egregious gimmicks and accounting tricks. The largest such gimmick is that the budget eliminates the sequester but does not count the elimination of these cuts as the spending increase that it is. (Chairman Murray’s staff conceded under questioning that, properly accounted, their actual deficit reduction would be closer to $700 billion.) Other gimmicks further reduce that figure, including an unrealistically low estimate of war spending and a doc fix that is assumed but not paid for. Altogether, the Senate Democrat budget contains virtually no deficit reduction whatsoever. Underneath all the gimmicks and spin is more a fundamental issue: what’s actually in the Murray budget? What are the actual policies and reforms? They don’t exist. The never-balancing budget contains no actual fiscal reforms of any kind—just a massive tax increase to fuel a massive increase in government. http://townhall.com/tipsheet/guybenson/2013/03/20/house-senate-debate-dueling-budgets-today-n1543928
The House of Representatives is expected to take up Paul Ryan's budget (http://townhall.com/tipsheet/guybenson/2013/03/12/new-gop-budget-46-trillion-in-deficit-reduction-balance-by-decades-end-n1531565) today, as the Senate begins debate on Democrats' first fiscal roadmap in nearly four years. The House GOP version balances in ten years, without raising taxes, by reducing the rate of spending growth and reforming entitlement programs. Senate Democrats propose (http://townhall.com/tipsheet/guybenson/2013/03/14/confirmed-senate-democrats-budget-accelerates-spending-never-balances-n1532870) $1.5 trillion in tax increases and hundreds of billions in phony savings, yet their ledger never approaches balance. The president's offering is still nowhere to be found. Ryan's plan would shave $4.6 trillion from deficits over ten years, compared to the current spending path; the Reid/Murray approach actually raises overall spending by hundreds of billions. As these contrasting paths forward are discussed on Capitol Hill, read through this Wall Street Journal op-ed (http://online.wsj.com/article/SB10001424127887324532004578362603354690818.html) by two Stanford University economists. They argue that their thorough analysis suggests that the House budget would boost the economy and inspire confidence in American employers, investors and creditors:
According to our research, the spending restraint and balanced-budget parts of the House Budget Committee plan would boost the economy immediately. With the Budget Committee's proposed tax reform included, the immediate impact would be even larger. The entire plan would raise gross domestic product by one percentage point in 2014, equivalent to about a $1,500 increase for each U.S. household. Ten years from now, at the end of the official budget horizon, we estimate that the entire plan would raise GDP by three percentage points, or more than $4,000 for each U.S. household...
The long-run economic gains from restraining government spending would not, despite what critics claim, harm the economy in the short run. Instead, the economy would start to grow right away. Why? First, the lower level of future government spending avoids the necessity of sharply raising taxes. The expectation that tax rates won't need to rise provides incentives for higher investment and employment today. Second, since the expectation of lower future taxes has the effect of raising people's estimation of future disposable income, consumption increases today. This change comes thanks to Milton Friedman's famous "permanent income" hypothesis that the behavior of consumers reflects what they expect to earn over a long period. According to our macroeconomic model, the higher level of consumption induced by the House budget's effect on consumer expectations is large enough to offset the reduced growth of government spending.
Third, the new budget's reduction in the growth of government spending is gradual. That allows private businesses to adjust efficiently without disruptions. Still, our macroeconomic model likely underestimates the positive impact of the House budget plan. The model doesn't account for the greater economic certainty that results from preventing the national debt from soaring to dangerously high levels and from stabilizing the federal tax burden.
Meanwhile, what would the Senate budget accomplish? Ta da (http://budget.senate.gov/republican/public/index.cfm/files/serve?File_id=4e240cd0-1bfa-4d5c-acb7-144c3c09e86d):
http://budget.senate.gov/republican/public/index.cfm/files/serve?File_id=4e240cd0-1bfa-4d5c-acb7-144c3c09e86d
Republicans on the Senate Budget Committee summarize many of the budget gimmicks we've covered and conclude that Democrats' plan amounts to "virtually no deficit reduction whatsoever" -- a far cry from Murray's claim (http://thehill.com/blogs/on-the-money/budget/287625-senate-dem-budget-includes-nearly-1-trillion-in-new-taxes) of $1.85 trillion in lowered deficits:
Even the claimed deficit reduction is a fallacy because it relies on several egregious gimmicks and accounting tricks. The largest such gimmick is that the budget eliminates the sequester but does not count the elimination of these cuts as the spending increase that it is. (Chairman Murray’s staff conceded under questioning that, properly accounted, their actual deficit reduction would be closer to $700 billion.) Other gimmicks further reduce that figure, including an unrealistically low estimate of war spending and a doc fix that is assumed but not paid for. Altogether, the Senate Democrat budget contains virtually no deficit reduction whatsoever. Underneath all the gimmicks and spin is more a fundamental issue: what’s actually in the Murray budget? What are the actual policies and reforms? They don’t exist. The never-balancing budget contains no actual fiscal reforms of any kind—just a massive tax increase to fuel a massive increase in government. http://townhall.com/tipsheet/guybenson/2013/03/20/house-senate-debate-dueling-budgets-today-n1543928