Re: The 112th Congress: Debt ceiling edition
Why? If the nation / state / locality is living beyond its means, shouldn't it take steps to tighten its belt before asking its citizens to pony up?
Wow, that's such a loaded question that there's about 10 different holes to shoot and I don't even know where to start, let alone keep it short enough for a message board without glossing over points so much that they're rendered meaningless.
First off, there's 2 issues at play. One is the debt, the other is the bad economy. Unfortunatly, the solutions to each are diametrically opposed. If you want to cut the debt, you have to raise revenue and/or cut spending. But the solutions to a bad economy are deficit spending (if you're a Keynsian) and loose monetary policy (if you're a Chicago Schooler).
To the extent that the Tea Party has forced the government to make the debt a priority rather than the weak economy, we're then stuck with either cutting spending or raising taxes. Thanks to things like the multiplier effect, and for the same reasons that show the necessity for a progessive taxation system in the first place, increased taxes tend to harm the economy less than outright spending cuts.
As to your assertion that a government is spending beyond its means, well, that's almost entirely a political question. You're essentially saying we're spending more than we can afford. Which might be true, but probably not to the extent you are trying to say. Considering we're currently taking in 14% of GDP in taxes when we historically take in 18-19% of the GDP, there's about $600-$750 billion dollars (based upon a $15 trillion GDP) our government would normally collect but is leaving on the table at the present time for whatever reason. Other countries take in well more than that and seem to be doing just fine. So the notion that we're beyond our means is based on an assumption (we can't afford to spend more) that is far from universal. We could afford it, the question is are we willing to.
"Tighten its belt before asking the citizens to pony up" - that's another political question. Do you like government spending or not? One man's fat is another's necessity. Polls show Americans hate taxes, but also show they don't want to give up their government programs (whether they recognize it as such or not - like the 44% of people collecting social security who then say they aren't participating in any government program) and normally, when faced with specific choices of higher taxes or cutting "_______" (whatever _______ is), they'll take higher taxes.
From an economics point of view, you don't do either right now or you risk 1937 happening again. When the economy is better, you probably do both. But since the Tea Party has forced the issue at a remarkably bad time, the better option is to have at least some tax increases.
