Posted by: Jeff | February 16, 2011

Get the Nation’s Economic House in Order

Fred Bauer at FrumForum, on the true nature of the current fiscal crisis:

This increase in unemployment has also hit tax receipts. Government revenue fell from a high of 2.7 trillion (in 2010 dollars) in 2007 to 2.1 trillion in 2010. If tax receipts reached 2007’s levels, we would cut $600 billion from the deficit. A drop in the need for unemployment assistance could easily cut federal spending by at least $150 billion. That’s already about half of last year’s deficit taken care of without making a single cut to any program. (And those figures do not take into account other areas where unemployment has increased federal spending.)

The fastest, politically easiest way to reduce the deficit would be to restore the health of the labor market (which might be the same thing as saying that the fastest, easiest way to reduce the deficit would be to rub a lamp until a genie come out). This is not to say that there is not a cloud in the fiscal future of Medicare or Social Security, or that there is not waste in federal expenditures, or that making certain budget cuts would be a bad idea, or that taxes should not go up (it’s worth noting that we have had nowhere near a balanced budget since the Bush tax cuts passed). This is not even to say that there are no hard choices that face us in dealing with mounting debts. But the focus should be less on trying to shave off a billion here or there and more on getting the nation’s economic house in order so that it can get its fiscal house in order.

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