The Old John McCain reemerges for a brief minute

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I think many of the longtime Republican members of the bodies are finally starting to realize how much lower the IQ of the room has become after they blindly supported the Tea Party movement in 2010.

^^^^  This. 
Haven't seen him for a while (an evil, bitter twin seems to have since taken over most of the time), but I certainly do like it when the John McCain of ten to twelve years ago makes the occasional appearance.

[anvi]

Why haven't more people realized how dangerous a balanced budget amendment is for our economy? I can't even fathom why we are even seriously discussing it!

Very true.  I think government spending represents about 20% of GDP, and for those who would complain about how high this ratio seems, it's comparatively very low among other nations (it ranks somewhere around 140th on this scale).  Pulling some 40% of that spending out precipitously would suck a great deal of oxygen out of the economy.   A lot of government spending contributes directly to economic growth, for example in terms of infrastructure and boosting industries, as well as investing in education (hopefully making some sorely needed reforms in this area in our case). Plus, deficit spending is not necessarily a bad thing economically so long as it contributes to GNP growth and can be leveraged (and up to now the U.S. is the country that can most easily leverage its debt).  And, finally, while I am certainly not justifying the massive and growing size of our deficits by any means--we definitely do need to start bringing them down--, we have built an entire economy that depends on credit that is used to promote growth, from individuals to businesses to banks; it's really naive to think that the government ought to just "balance its books" between direct revenue and spending, which seems to be exactly what lots of people are calling for now, and finance nothing through borrowing.  

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CARL,

I got that impression from two sources, the first from March and the second posted a few years ago and not quite up to date, but not far off what I thought was the present line:

http://paul.kedrosky.com/archives/2011/05/government-spending-and-gdp.html

http://anepigone.blogspot.com/2008/03/government-spending-as-percentage-of.html

If it's higher, fine, but that only emphasizes the point.

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CARL,

I was aware when I made the original post that the figure I was quoting only represented federal government expenditures, and did not include state and local government expenditures, because I was assuming this debate was about federal government spending and a balanced budget amendment for the federal government.  But, however one wants to measure it, the point is that a balanced budget amendment to the federal Constitution would pull lots of money out of the economy.  I am aware that followers of Hayek think that would be a good thing, but I don't subscribe to that view.

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Well, CARL, if we're going to be literalist, I said that (federal) government spending represents "about 20%," and according to your own figure, it's at 23.82%.

Secondly, I never suggested we ought to reduce federal expenditures to 20% of GDP.  That is an idea floating around some corners of the GOP right now, but doing so would probably have some undesirable consequences.

http://www.businessinsider.com/slideshow-could-federal-spending-be-capped-at-20-percent-of-gdp-should-it-be-2011-1

Finally, I'm not going to get into a semantic war over what "creating wealth" means, but my argument was that government spending both can and does contribute to economic growth in many areas.  That's not to say that in some cases government spending both can and does restrict economic growth too, as it certainly does.  But the point I was making was, in response to Duke's post, that a balanced federal government budget would have noticeably detrimental economic consequences and, on top of that, is not very realistic.  I'll end with the final point that none of this is meant to deny that we need to reduce our federal government budget deficits over the long term, because I absolutely believe that we must indeed do this.

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CARL,

For some strange reason, your questions have inspired me to write a short manifesto and confession, so I'll just warn you and everyone of a far-too-long post now so you can please skip if you're not interested.

I've of course never designed a federal budget, and so probably couldn't do something that complex with any great level of expertise or mathematical precision.  On the other hand, federal budgets aren't made with much expertise or mathematical precision anyway, are they?  So, maybe I can throw a few ideas around after all.  

The various plans that have been floating around have identified, at their softest, targets on limits to federal spending, and at their hardest, caps to federal expenditures.  But, despite their softness or hardness, the suggested limitations on federal expenditures in the next ten years range from the 18% of GDP caps in Ryan's plan to the 21% targeted limits of something like Simpson-Bowles or the Gang of Six plans.  I'm suspicious of strict, legally enforceable caps because economic and national security conditions change in unexpected ways, and a government that is not able to respond flexibly enough because of arbitrarily pre-conceived caps could be quite dangerously limited in its ability to address suddenly emerging problems.  I think the historical federal average has been around 20%, and it seems to me that floating somewhere between 20-25% of GDP might be a good general target for federal government expenditures.  

But, I also think that it's more than just a matter of spending caps themselves.  What the federal government cumulatively spends a huge percentage of its budget on is health care payments, and the underlying reason for the high level of spending in this sector is the incredible increase in health care cost inflation.  I think one of the keys to getting our spending under control doesn't just involve imposing caps, but aggressively tackling health care cost inflation in ways that politicians have generally been unwilling to do in this country. Speaking for myself, I favor Bismarck systems of health care such as exist in Germany and Japan, where governments have broad powers to annually negotiate price-caps with provider industries and where the private, multi-payer insurance industry is non-profit.  But, I know such a system is not politically possible in the United States, and so I think a variety of intelligently crafted cost-cutting proposals would have to be designed for our very unique health care market, in which some combination of tort reform, curbing of legally required testing, health insurance mandates to eliminate most uncompensated care, and pooling of high-risk and chronically or gravely ill consumers, among other things, would be combined.  But without dealing with this health care cost inflation issue aggressively, federal spending cannot be brought under reasonable control in the coming years without just ejecting large numbers of people from federal entitlements.  I would prefer the cost-cutting options to the people-cutting options.  

With regard to taxes, my general view is that we have to broaden the tax base in our country in some way.  Personally, I favor a tax system that is somewhat more regressive than the one the United States currently has, which means I think the middle classes, even down to the 40th to 50th percentile, should pay larger shares on an appropriately graded scale than they do now.  What many liberals in the United States who favor more socialist-style economies don't appreciate  is that the tax systems in such countries collect the revenues for high redistribution largely from more regressive tax systems than the ones they are willing to see in the U.S.  The thing is, once again, that I realize very well what the political realities are as well as what is not politically possible in the U.S., and on this issue too I don't believe a markedly more regressive tax plan would get much political support in this country, as many would argue that it would restrict consumption, and thus reduce both demand and growth.  (And we all know that, ultimately in the United States, money matters a very, very great deal more than people do.)  So, absent the more regressive solution in the U.S., I am quite sympathetic to the idea of lowering tax brackets on marginal rates in exchange for ending deductions and closing loopholes.  I find myself reasonably persuaded that such lowered brackets would produce greater economic growth, because they would allow businesses to target their investments toward industry- and sector-specific opportunities rather than work their planning around loopholes that lobbyists and politicians dream up and collude over.  The economic growth that would result from this would in turn bring in more revenue to the federal government than our current system does.  I liked the targets in the Gang of Six plan that had top brackets at 29%, which projected an increase of $1.2 trillion in total federal government revenues over the next decade, but I'm not really qualified to do the math on how much revenue this would raise, and even if I were, it would all be mere speculation if gamed out over a ten-year period.

To your question about whether I really believe government creates wealth, my answer is "yes."  Even if all government did for the economy was guarantee property rights and build transportation infrastructure, it would be creating the conditions for the accumulation of wealth, and thus making wealth a possibility.  But in fact governments usually can do a great deal more to create the conditions of building wealth, but since I'm sure you would disagree with anything I would want to illustrate from here on, I won't bother.  I'll repeat that this is not meant to deny that there are many instances and many ways in which government can also restrict the creation of wealth, and so policy-making on this score is always a delicate balance between these two possibilities.  But even only admitting that the government can create the conditions for restricting economic growth concedes, it seems to me, the point that some set of opposite measures can create the conditions for building wealth.  

I freely admit that I could be quite wrong about all of this; I'm just as much at the mercy of what I read and what my own experiences have been as anyone else around here, and I've never done anything as remotely challenging as projecting outlays and revenues for a federal budget.  I'm just not qualified for that kind of thing.  But these are, however incoherent they may turn out to be in the end, my general ideas.

But, CARL, really, you don't need to take any of my comments so seriously.  I am hoping in the next year or so, if I can find full-time teaching employment or employment as a writer , to move to Canada and at long last join my fiance so that we can have a happy-ever-after there.  So, honestly, you should argue with others who have more of a stake and more of a voice in the American political future than I do; I don't have any influence over anyone in the U.S. anyway, so picking an argument with me is truly a waste of your valuable time.  I'll soon contribute my best bit to this country by exiting it, so my opinions should really be the least of your worries. 

And, even if this weren't the case, all one has to do is look at the present circumstances to know that Republicans have a very, very bright political future in the United States.  Republicans are experts at grabbing power and are also experts at making Democrats fold.  So I'm sure, and get ever-more-sure by the day, that Republicans will find ways to emerge clear victors on all the hot-botton issues that are being discussed here.  So, CARL, relax and be of good cheer; you are on a team that certainly knows how to win.  

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lol CARL isn't going to read your post.

I know, King.  Probably no one should.

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When can we have the old Obama? You know, the one who talked about change, and didn't seem like he'd be a 100% pathetic pushover.

I don't think the "old Obama" ever existed.  The Obama of 2004 is the same guy as the Obama of 2011; he talks a great game, but...you know the rest.

You remember the line from an old Mario Cuomo song: "We campaign in poetry and govern in prose"?  Nobody knows the other line of the chorus, which happens to be: "From friends we take money, and make deals with their foes."