Wednesday, November 14, 2012

Fiscal Cliffs


I don't know why Washington is all atwitter about the fiscal cliff. It seems to me we've already jumped off. The gap between outlays and receipts since January 2009 (just to pick a random month) is 4 trillion, 763 billion and 469 million dollars. $4,763,469,000,000.

Federal Government Outlays and Receipts ($ in Millions)
Source: Monthly Treasury Statement

I know, I know, Obama, like Christ, is without sin and the deficit is all Bush's fault (two wars, tax cuts, unpaid for mandate, whereas in contrast Obama had two wars, three if you count Libya, tax cuts and a disingenuously paid for mandate).

There is a historical precedent for significant cuts in spending and balancing of the budget along with a rapid growth in the economy and extraordinary labor force growth. After WWII that is exactly what happened. But the key, at least in my mind, was the radical liberalization that took place with the removal of wage and price controls and removal of rationing. I think we should do the same now.

There is plenty of evidence to suggest our sluggish growth is a direct function of the shackles placed on the economy over the past 30, (more like 70) years. Growth is what is needed, and none of the discussions (by Republicans or Democrats) about the fiscal cliff addresses the necessity of radical liberalization if we care to have high growth rates again.


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