Wednesday, April 14, 2010

How High Is Up?


So, when someone says "Porkulus was not BIG enough," we point to the above chart.

Just dump Education, Energy, EPA, and a few others and we'll talk.

5 comments:

J. Strupp said...

The vast majority of that spike in the deficit is the collapse in tax receipts from the financial crisis (and the mass unemployement that insued), TARP, and the increased cost of unemployment insurance.

IOW, most of that spike was unavoidable unless you feel that Uncle Sam should have to told the 6 million+ laid off workers to get a job and stop sucking off the tit of the goverment.

Deekaman said...

Struppster....that may have been a better long-term solution. (This coming from one who probably would have been let go). Of course, let a few million government workers "share the pain", instead of giving them raises and this number becomes a bit smaller. Kills a cool couple billion deficit $$$$$.

Yeah, that's harsh. Tough. A big fat Chinese loan is worse.

J. Strupp said...

But it won't kill a cool couple billion dollars in the government deficit. You assume that firing a couple million government workers would cut government spending and reduce the deficit by a ratio of 1 to 1. What you don't take into account is the lost tax revenue once those couple million people lose their source of taxable income. Then you don't take into account the fact that those millions of people will apply for unemployement insurance. Then you don't take into account that those couple million people will negatively impact consumer spending which drives down GDP. Then you don't assume that the further loss in GDP will cause more unemployment as capacity is trimmed to meet reduced demand. Then you don't take into account that this process repeats itself in another negative feedback loop described above.

There is a myth out there, adopted by people who hold Austrian theory dear to their heart (if Austrians have an actually workable theory that is), that if we purge the rotteness, we'll be better off in the long run. But as Keynes said, in the long run, we're all dead........

J. Strupp said...

P.S. our debt, financed by the Chinese, is a Chinese problem.

Deekaman said...

OK, so it's 70% of what I quoted.

It's more our problem than theirs.