The Old John McCain reemerges for a brief minute

[CARLHAYDEN]

Nothing new, nothing old, John McCain has always been awful.  He doesn't want tax cuts or balanced budgets for the simple reason it might prevent the funding of his favorite activity (PUTTING BOOTS ON THE GROUND).

Actually McCain simply opposes tax cuts and balanced budgets because he is awful.

[CARLHAYDEN]

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.  

Where in the world do you get the information leading to your impression that "government spending represents about 20% of GDP"?

The truth is that it represents approximately 39.97% of the GDP:

http://www.usgovernmentspending.com/us_20th_century_chart.html#usgs302

[CARLHAYDEN]

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.  

Where in the world do you get the information leading to your impression that "government spending represents about 20% of GDP"?

The truth is that it represents approximately 39.97% of the GDP:

Federal spending ALONE accounts for approximately 23.82% of the GDP!

http://www.usgovernmentspending.com/us_20th_century_chart.html#usgs302

[CARLHAYDEN]

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.

Well, its approximately TWICE what you believed!

Now, I have no problem with government (properly designed) accounting to 25% of GDP, but 40% seems high to me.

So, if you reduced the spending of the government 40%, that would make it 24% of the GDP, which is more than you assumed it was.

Now, except for Illinois, most states are taking steps to get their fiscal budgets inorder, as are most local governments.

The problem is that the federal government expenditures grew explosively under Obama-Pelosi-Reid.

Even with the cuts called for by Republican proposals, the federal budget would be more than 20% of the GDP!

Oh, and your sources have a common problem - they both only deal with federal expenditures.

[CARLHAYDEN]

First, here is what you said:

“I think government spending represents about 20% of GDP.”

Second, if we were to reduce the federal expenditures (which you now tell me is what you meant to say), to 20% of the GDP, that would amount to an annual savings of approximately $553 billion dollars.  Every plan I have seen has average annual savings of under $300 billion!

Third, let me further suggest to you that the federal government does NOT create wealth.  I realize that some people have the mistaken impression that the government creates wealth by spending and spending and spending, but, they are wrong!

[CARLHAYDEN]

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.

Anvi,

First, I quoted you, and your original statement did NOT include the qualifier of (federal), although now you say that's what you intended to say. 

Second, you stated that since you believed that the government (you now say federal government) spending amounted to 20% of the economy, and you argued that it should not be significantly cut below that level, I suggested that we merely reduce federal expending to the 20% of GDP level which you seemed to find satisfactory.

Third, do you REALLY believe that government creates wealth?!?

Fourth, why and how do you propose to reduce federal deficits?  If federal spending is generally good, why reduce it?  Also, just how much do you intend to increase taxes?

[CARLHAYDEN]

lol CARL isn't going to read your post.

I know, King.  Probably no one should.

I read it.

It was rather long, and wandering.

Yep, everywhere that government has seized control of the economy, it has propered.  Just look at North Korea.

When the old Soviet Union overthrew Communism, was it because they were tired of the affluence that government brought them?

How about Cuba, where they are slightly reducing government?