At least that is what most sane households would do, but this is the federal government we’re talking about.  Major news today.. tax revenue is plummeting.  Associated Press reports:

The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation’s plate and struggling to find money to pay the tab.

The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.

Other figures in an Associated Press analysis underscore the recession’s impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.  (read the rest)

Conventional wisdom says that when you lose income, you cut spending.  Oh, but fortunately our President and Democrat-controlled Congress is above convention wisdom.  They can just go to the magical money tree and get some more.  Well they can always print money – hey what’s the big deal if we see more inflation and see the value of the dollar drop more?  At least we’ll have our social programs.

And they’re not, ahem, going to tax the middle class.  Right.  I wonder when they’ll figure out raising taxes won’t help this problem either.

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  1. “Conventional wisdom says that when you lose income, you cut spending.”

    Not necessarily, depending on how the money is spent. For example, if spending supports the economy during a recession and reduces the time to an upturn then it can provide a net benefit. Note that during previous recessions the government did not decrease spending. Even Reagan did this during the 80’s to help stimulate the US economy. This is a well-recognized method (at least among economists) that governments have to steer their economies. Suppressing spending is actually a pretty darn good way of stalling a recovery. The real question is how much to spend and where to spend. That is definitely worth debating. Reagan put a lot of the money into the military, like a 1000-ship Navy. Myself, I’d prefer infrastructure investments that reduce the costs of future systems.

    1. @Argon, Actually what is well recognized was the tax cuts that took place in the Reagan administration.

      It really depends on the spending Argon… when you look at the stimulus package I don’t think it meets that criteria with all of the waste people are finding.

      1. @Shane Vander Hart, Reagan ran up a deficit. He reduced government revenue (or held it flat) while increasing spending (Keyensian economics).

        During a recession or war, running a deficit is not necessarily a bad thing. It depends on the specific situation. One key is to stop once the economy turns around (e.g. This is something Bush II didn’t do). This is why ‘sunset’ clauses can be crucially important.

  2. I am not an economist, but I I have good common sense. If I spent the way the government has been spending, I’d be in prison. Wasn’t America founded on the principle that Government serves the people? I feel like a working drone that supports the greed of so any special interest groups.
    Our representatives in government are “supposed” to represent us, but they in fact represent the highest bidder, and the highest bidders get what they want. If all of us would just stop paying taxes, they would really feel where the money is coming from.

      1. @Shane Vander Hart, No, I don’t support tax evasion, but I really can not allow the government to spend so very, very, recklessly, and assume that we, the drones, will bail them out. Especially when they allow Goldman Sachs to do whatever they want and make gazillions while doing it.

  3. Of course, if we all stopped paying taxes, there’d be no troops to support, and no administration of Social Security or Medicare. (ah, screw the fossils, anyway). Deficits never bothered conservatives during the Reagan or Bush II administrations, why the sudden concern now?

    1. @Adam Best, Sure it did Adam, you just weren’t paying attention. I criticized the first bailout under President George W. Bush, and one of my chief complaints toward him was spending. I wasn’t alone in that criticism.

      Also, I’ve never advocated tax evasion. Regarding screwing the fossils… have you looked at the current health care plan by the House Democrats?

      But you know what? Bush isn’t President anymore, and this is Obama’s economy. He’s going to have to deal with the tax shortfall, and raising taxes has been proven not to help. Inflated spending like this isn’t going to help either.
      .-= Shane Vander Hart´s last blog ..Journalists Pardoned By North Korea =-.

  4. I’d disagree: most conservatives remember Reagan as one of our greatest Presidents; they barely acknowledge his economic policies, but are very quick to criticize Obama utilizing the same. Hypocrites. Personally, I think Reagan was dead-on in using deficits; America was at a very precarious position, and the gamble paid off. Clinton paid down the debt, and all was well. Why shouldn’t the same thing be allowed for Obama?

    1. @Adam Best, FWIW, some of the policies enacted during the Carter years (e.g. rolling back the price controls of the Nixon and Ford administrations) also helped defeat the stagflation of the 70s.

Comments are closed.

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