Why is the phrase "reduce spending" never anywhere to be seen with these awful takes?
The only solution is for the Gov to stop spending money it doesn't have. I don't know how you can insinuate that de-industrialization and taxes are a viable strategy without addressing the root of the problem. It would be like telling someone with a gambling problem that spending more time at the casino and less time at work would improve their finances.
Everyone has their pet projects is a part of it. I tried saying that we will need to raise taxes AND reduce spending and lemme tell you, it did not go over very well. Hell, in my home state of Illinois, in the face of federal cuts, our brave leaders tell us we should brace for increases to offset those 'losses'.
Both need to happen, and people hate both.
The data makes it clear though, taxes are low, spending is high both in comparison to GDP.
Any argument you can do one and not the other is insane.
> Any argument you can do one and not the other is insane.
Challenge accepted :).
The argument for lowering spending and lowering taxes is that the size of the economy and the tax base are inherently tied to tax rates and economic growth. Historically, federal tax receipts have hovered around 17 to 18% of GDP since the end of WWII, regardless of the tax rate[1]. Deep spending cuts paired with high taxes might increase the percentage, but it would be of a smaller economy, shrinking the overall tax base and making the debt ratio worse.
I don't know if that's true and I don't think we'll find out because the Republicans in Congress appear to be going for option C, lower taxes and larger deficits. The Democrats are in disarray and reflexively taking a contrary position, but even if they were in power I don't think this would be much of a priority. I think we get to see how far we can go. Maybe we'll beat Japan's debt to GDP ratio or maybe a failed auction or some debasement. The future has a lot of exciting possibilities.
Because the major categories are very hard to cut:
Social Security: 22%
Interest on the Debt: 14%
Medicaid: 14%
Medicare: 14%
National Defense: 13%
That's 77% of the budget in those categories.
Everything else is 23%. The Federal deficit is ~25% of receipts.
You could cut each and every function of the government other than the above and still be left with a deficit. And there isn't a lot of room to cut everything else, as they've already been squeezed for decades.
No one is insulated. If it isn’t taken from people directly, then people feel the spending in price inflation. Every time the government spends, they issue a treasury. That treasury is then used as the backing for loans from the FedRes to members banks. Those banks then lend a multiple of that.
The real issue with spending cuts is that the public will not accept any reductions to entitlements, the poor won’t accept cuts to welfare programs, and the donor class won’t accept cuts to military spending. This means there’s zero political will to fix the situation.
Most people are quite isolated because things like inflation are indirect. Seeing the link between inflation and spending is hard when it's easier for the average person to just see covid or greed or trade wars or simply fed policy and assign blame there.
The direct link between spending and taxes is far easier for people to understand.
So instead, raise taxes by 20+%. Setup automatic tax adjustments to cover spending changes to ensure the debt shrinks every decade.
The effects of inflation are felt. For example, the deterioration in product quality, packaging, and even product size are attempts of companies to prevent raising product prices. Where people absolutely see it are in those things usually funded by debt: houses, cars, university education. There are myriad reasons for rising product prices and decreasing product quality, but one of those reasons is monetary inflation.
As noted, however, these is zero political will to reduce spending, and I therefore believe the USA will suffer a monetary crisis in the mid-2030s. I hope to be incorrect, but I just don't see it happening. Raise taxes? Lose votes. Reduce spending? Lose votes.
Edit: Ah wait, rereading you're 100% correct. It's more difficult to see all of the cases I mentioned as being due to monetary inflation. So, while felt, people don't immediately attribute it as such.
I think you have it backwards. An average taxpayer has no reason to not be in favor in spending cuts as increases in that category translate to higher taxes. In other words, they don't need convincing. Your premise seems flawed.
because "reduce spending" sounds nice in a vacuum (sure, there are a lot of things our government spends money on that i don't agree with) but in reality it usually plays out as a cynical ideologically-driven misdirection with little basis in the needs of the country and the people inside it.
spending is a good thing. roads, schools, healthcare, research funding - we need these things in order for america and its people to thrive.
our representation just has this awful aversion to increasing taxes on those who can actually afford to bear the increases.
Research, roads, and schools do not make up a meaningful percentage of the federal budget at all. Healthcare makes a decent chuck with Medicare and Medicaid, and those badly need reform as many people receive aid who are fully capable of paying costs themselves. Social Security, defense spending, and debt service are the other big ones.
Ultimately, no idea what will happen when debt services consumes all tax revenues. This will come in the mid-2030s at the current rate. I figure that the Fed will just suspend the requirement of Treasuries and debt payments, print like crazy, and the USA will look like Zimbabwe.
The actual problem with healthcare is not that the wrong people receive it for free, but that it costs about 20 times as much as it should. Fix that, and they can easily afford to give it to everyone for free.
My wife and I were perfectly capable of paying for her transplant operation after some fund raising, and both the hospital and the insurance company knew this as for her to qualify for transplant they examined our finances. We also make more than enough to pay for the anti-rejection medication. We had zero need for Medicare. This didn't matter. As soon as she entered renal failure, she was forced onto Medicare. There are absolutely people receiving assistance who do not need it and in some cases do not want it.
Republicans (and probably most Democrats) will never allow the Pentagon's budget to be cut. Much of what's left are various social programs. Average Americans are already barely hanging on, if you cut the social programs then people will get (even more) desperate which tends not to lead to positive outcomes.
If the government stops spending money on programs, it looks bad.
If the government raises taxes, it looks bad.
Essentially people don't understand this, which is why grifters like Trump got elected who promise the impossible, make the economy seem good for 4 years then once shit starts going down the Dems win and have to deal with the outcome, which then they get shit for not being able to fix.
The only solution is for the Gov to stop spending money it doesn't have. I don't know how you can insinuate that de-industrialization and taxes are a viable strategy without addressing the root of the problem. It would be like telling someone with a gambling problem that spending more time at the casino and less time at work would improve their finances.