Thursday, 5 September 2013

Courage to do nothing will balance the US budget in three years.

Although Canada is closer to balance, the same principle applies. Shrieks about savage cuts mean taking the foot off the gas, not driving the country backwards. Outrage over freezes isn't about living in igloos, it's about setting the thermostat a few degrees lower.

Consider that if Congress simply held total spending to this year’s level of $3.5 trillion, the budget would be balanced by 2016 as the growing economy generated rising tax revenue. ... Lawmakers have become so used to rising budgets that a spending freeze seems impossibly tight-fisted to them.
It's hard to believe that every sector of Big Government has built-in accelerated spending and pretends this is holding the line. It's called "Baseline Budgeting" but it's less about holding to a baseline and more about rules for cheating that say how much per year you can move the goal posts away from the baseline. 

"Projected levels of governmental receipts (revenues), budget authority, and outlays for the budget year and subsequent fiscal years, which is now approximately 6% increase per fiscal-year, assuming generally that current policies remain the same, except as directed by law". (From Wikipedia).
Have you earned a safe 6% interest on money in the bank any time lately? At 6% baked-in bloat, the budget will double every twelve years. At 2% it would double every 36 years. Unless inflation is 6% instead of 2%, the American government will within our lifetime consume all resources that their citizens don't fight to defend.

(The US sequester is a partial exception:  The military was hit with a small absolute cut while the entitlement machine was merely capped at a lower rate for a little while.)  Entitlements are "sacred" or whatever but there was a time when the entire budget was discretionary.

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