Two Budgets

by Russ Roberts on April 8, 2011

in Budget Issues

Arnold Kling points out the paradox of government:

Somehow, we could ratchet up spending by hundreds of billions at the drop of a hat. Reducing spending by less than $100 billion becomes Armageddon.

And he references this picture from John Taylor that says it all:

 

The Administration proposal ratifies the past “emergency” measures as the new baseline.

Notice that the vertical axis starts at 18% of GDP which magnifies the difference between the two proposals. But the bottom line is 24% of GDP going through Washington versus something under 20%. That is a lot of money.

The other point to make is that even the House budget doesn’t get close to that historical average until 2015.

Why can’t we go back to the draconian, ancient days of 2007 when government was 19.5% or so of GDP sooner rather than later. We know the answer, alas. It is embodied in Arnold’s observation that increases and decreases are not symmetrical politically.

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