Subject: Economic System

Posted by Dan Proctor on 10/15/2008
In Reply To:Economic System Posted by Jay Forrester on 10/15/2008

Message:

“Given the extreme degree of government financing that is now in process, the outcome may this time be different from the 1930s.”

On p. A2 of today’s Boston Globe, in the “Daily Briefing” column, under the headline,
“Mother charged with killing child,”
we find the first item describing a woman being indicted for killing her 3-year-old. The next item concerns a 267-lb “double murderer” who vainly argued that his obesity meant that death by lethal injection would constitute inhumane punishment. I quote the third item in full:
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Federal deficit more than doubles in '08

The federal budget deficit soared to $454.8 billion in 2008 as a housing collapse and efforts to combat the economic slowdown pushed the tide of government red ink to the highest level in history [but probably not as a % of GDP]. The Bush administration said yesterday that the deficit for the budget year that ended Sept. 30 was more than double the $161.5 billion recorded in 2007. Economists predicted a far worse number next year as the costs of the government's rescue of the financial system and the economic hard times hit the government's balance sheet.
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The U.S. has a 2-party system of electing legislators and executives. For the past 38 years, one of these parties (Republican) has attained power largely through a nifty way of buying votes: promising tax cuts, then enacting them upon being elected. The tax cuts are covered by increased government borrowing, meaning that posterity will eventually provide the money with which the votes were bought. The other party (Democratic) attains power by promising greater benefits to a broad coalition of segments of the society (comprising the middle and lower classes). These benefit increases (if they materialize) are likewise financed by greater deficits.

Thomas Jefferson has been quoted as saying that any government that can incur debt "will be speedily brought to ruin." He may have been wrong --- in choice of time frame.

~dan