Thursday, August 25, 2011

The Angry Bureaucrat




I was going to reply to a couple of recent comments and when I went to do some research, I found this at The Angry Bureaucrat.

Why Balanced Budgets Are Stupid, for Both Governments and Families

”Because the Republicans seem keen on trying to keep this idea on life support, I thought I'd take a minute to explain why a balanced budget amendment is a terrible idea, both for the government and for a household (since Republicans [and, distressingly, Obama too, as of late] are such big fans of comparing government finances to household finances, even though the two have almost nothing in common).”

I liked that. I liked it a lot. So I kept reading and found this:

Cheaper-Than-Free Money: Why the U.S. Government Should Be Borrowing and Spending Even More, Not Less

”Why would I say that in the middle of a fight that has the Republicans and Democrats tripping over each other to see who can cut more government spending? Simple - the real interest rate on (some kinds of) government debt are currently negative:”

And I found this:

Pie Chart of the Day - What do the Unemployed Spend Their Time Doing?

”Most people who pay attention to what's going on know that the unemployment rate is high - just over 9% at the moment. In addition, another 16% of workers are underemployed - i.e. they are only working part-time when they'd like to be working full time. So, 25% of workers have a lot of time that they'd like to be working but aren't - what do all of these people spend their time doing?”

I’ve decided it would just be easier to add him to the blog roll. (My! I’m getting to be positively spontaneous aren’t I?)

Keep those cards and letters coming folks. The recommendations are always nice and even a negative comment will either inspire me to do better or...cause me to find a great new blog.

Don Brown
August 25, 2011

4 comments:

The Angry Bureaucrat said...

I'm glad you enjoyed the blog - I'll do my best to make sure that you continue to!

-The Angry Bureaucrat

Tired of Liberal Lies said...

The overly simplistic and very partial reasoning on the family budget is way off. The average family does not increase its total debt every month. They may buy a house or a car which puts them in debt, but the budget must be balanced over the long term or bankruptcy comes. Here is an excellent example if a family budget copied the US government budget would look like.

"If the US Government were a family & their household income was $55,000 per year, they’d actually be spending $96,500—$41,500 more than they made! That means they’re spending 175% of their annual income! So, in 2011 they’d add $41,500 of debt to their current credit card debt of $366,000!" - Dave Ramsey

Don Brown said...

Dear Tired,

I can't get anybody to pay me to "borrow" money from them.

http://www.businessinsider.com/negative-tips-auction-2010-10

Hence, we are back to the premise ...

" people / households / families can't spend more than they make, so the government shouldn't be able to, either."

Don Brown

The Angry Bureaucrat said...

Tired:

I wasn't trying to argue that the current U.S. debt path is sustainable, which seems to be what you think I said. I don't think the current path is sustainable. I simply said that balanced budget amendments don't make any sense, either for governments or households, which is true.

As I say in my post, the problem is that the U.S. government never saves money in good times - most recently, when the U.S. government began to run a surplus, the Republicans decided to spend the surplus (largely through tax breaks for the wealthy, and then through two unfunded wars) rather than saving it. That was dumb, and that's the kind of short-sighted thinking that has put the U.S. on its current unsustainable path.

In fact, almost all of the short and medium term deficit problems were created by the combination of the current economic downturn and Bush-era policies: http://www.cbpp.org/cms/index.cfm?fa=view&id=3490

(In the long run, the U.S. deficit problem is largely a function of ever-increasing health care costs, but that's not just the U.S. government's problem, and it's not terribly relevant right now.)

Oh, and finally, I wanted to note that (again unlike a household) government debt CAN continue to grow forever - it just can't continue to grow faster than a country's overall economic growth forever. That is, if a country's economy grows at 2% a year, then government debt can continue to grow at 2% a year, forever. If you want the technical explanation behind how this works, check out this paper - http://goo.gl/OW33d (PDF warning).

Hope this clears things up for you.

-The Angry Bureaucrat