Who is to blame?

by Russ Roberts on December 27, 2012

in Politics, Taxes

If you only read the Washington Post and certain bloggers, the Republicans are to blame if we go over the fiscal cliff. They’re unwilling to compromise–they refuse to raise taxes and only want spending cuts. Compromise is a word with positive connotation. In general it is good to give a little in order to get a little. But the issue is clouded by the fact that in 2005, federal outlays were 2.5 trillion and the estimate for this year is 3.8 trillion. That’s almost a 50% increase in nominal terms. The real increase isn’t chickenfeed. In 2005 dollars, the increase is from 2.5 trillion to 3.3 trillion. (Source.) I don’t remember voting for those increases. And a lot of Americans (I’m one of them), wonder what we got in return for the increase in future tax liabilities. So being stubborn about reducing spending makes some sense when there has been such a dramatic increase. But few writers seem to put it in context. They merely argue that the Republicans won’t compromise. I sure hope they continue to be stubborn.

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