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How liberals would fix the federal budget

Despite what you may have heard, liberals are just as invested in eliminating the federal budget deficit as conservatives are. The difference is that conservatives want to fix it in the context of not raising taxes, whereas liberals are more open to both spending cuts and tax increases.

Matthew Yglesias talks about one proposal, and explains how it differs from others, like the Simpson-Bowles plan:

First and foremost that means explicitly situating the “budget” problem in a broader economic context. You see this two ways. One is the heavy (and appropriate) emphasis in the short term on mobilizing excess capacity to increase growth and decrease unemployment rather than austerity budgeting that will only increase resource-idling. The other is the principle they call No Cost Shifting, namely “Policies that simply shift costs from the federal government to individuals and families may improve the government’s balance sheet but may worsen the condition of many Americans, leaving the overall economy no better off.”

My general takeaway from all of the plans that have been floating around is that there are many, many ways of eliminating the budget deficit, given the will to do so. It’s a completely fixable problem. What we lack is the maturity to fix it.

4 Comments

  1. I think Atrios’s oft-repeated point is the salient one here: the only way to fix the deficit is to fix the economy. Create jobs and you can spend less on unemployment and collect more in taxes. That will solve most of the deficit right there. What’s left can be addressed later. True, there will be less political will to “fix” something that’s barely a problem, but that’s fine, too. The immediate crisis that’s stirring political discontent and growing the deficit is 9.5% unemployment. The deficit is a symptom.

    Of course, getting the tax rates back to where they were in the 90s wouldn’t hurt. Luckily, all we have to do for that one is just wait.

  2. I have a post rattling around in my head about economic growth being the source of everything good politically, but that point may not deserve its own post. Economic growth makes the deficit easier to tackle, makes people more receptive to progressive change, and generally makes people more patient with attempts to solve big problems. The thing I really blame the Democrats for over the past two years is not pulling out all the stops to return to economic growth. It didn’t help them and it sure doesn’t help us.

  3. I see no way that deficit spending will lead to prosperity. We have added $8 trillion to the national debt over the past decade, $5 trillion in the last four years, and $3 trillion over the past two years.

    I do agree that economic growth is the best way out of our current problem, but that isn’t going to happen with top down, government directed deficit spending. It’s been tried for most of the past decade and it’s failed.

    Instead we should be focusing on making the US a better place to do business. Making the US a desirable place to do business. Yet everywhere I look I see politicians making it more difficult and more cumbersome to do business in this country.

    I’m not a Libertarian calling for the Wild Wild West, but it’s crazy the roadblocks put up against new businesses in this country. Between health insurance reform, financial reform and food safety reform we continue to increase the burden of starting and running a business. It’s gotten to the point where all I can do is laugh and cry about it. I fear for the future our children will inherit.

  4. We have more than 50 years of history demonstrating that no political party has made a dent in the federal debt – http://josephscott.org/archives/2009/04/history-of-the-federal-debt/

    So far I don’t see anything to convince that this will be changing anytime soon.

    It is hard to do much when the economy is down, but when it is up and going well it also seems hard to resist the urge to do use it for anything but reducing the debt.

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