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  • w.heinlein w.heinlein Oct 11, 2012 2:07 PM Flag

    The truth about federal spending

    You are confusing the growth in the national debt with the growth in spending.

    As the WSJ article indicates, Obama has ramped down federal spending growth to its lowest level in 60 years. But the national debt has continued to grow because even at the greatly reduced rate of increase in spending, spending still exceeds revenue each year, leading to annual deficits that are added to the existing national debt.

    In my companion post, I address the deficit. Obama has also reduced the size of the annual deficit by about 500 billion through the next fiscal year. But we will still have a deficit next year of around a trillion dollars and that deficit will be added to the debt.

    At this point, if anyone claims that the annual deficit can be eliminated solely through spending cuts, he is just selling snake oil especially if, like Romney, he is promising another round of massive tax cuts plus huge increases in the military budget. The Republicans have been telling us for over 30 years that "tax cuts pay for themselves" but the truth is they don't. There might have been a reason to buy that snake oil when it was first proposed by Art Laffer in the early 1980's but there is no reason to buy it today. We tried that experiment and it failed.

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