My good good buddy Dr. Newk Mindshaftgap has written a juicy little report, attached below, in which he politely exposes the emptiness of the fact-free fiscal debate that is now electrifying the synapses of the pols, pundits, and courtiers in Versailles on the Potomac. To be sure, our nation has a debt problem, but, as the chart the below shows, the big elephant in the room is private debt, which must be paid off, or written off, or repudiated. This is not the case with federal debt, which can be rolled over in perpetuity, as long as the U.S. has a sovereign currency. The reality of the private debt bomb, particularly that of the financial institutions, may well explain why the Federal Reserve is busily struggling to dump private debt, especially the shakey debts undermining the balance sheets in the financial sector, onto the Federal Gov't (that is, on you, the public) via its policy of quantitative easing. Such is the nature of welfare in the neoliberal world where the mentality of Citizens United reigns supreme.
President Obama is on the verge of selling out Medicare and Social Security, punting on tax increases to the top 1 percent, while protecting huge and wasteful defense budgets — all to avoid the non-existent cliff. Maybe someone ought to show him Newk's handiwork. That won't happen, of course, but I nevertheless urge you to carefully read Newk's handiwork.
Chuck Spinney
The History of Budget Deficits and Economic Growth in Relation to Taxes and Unemployment
The Fact-Free Fiscal Cliff Debate
by NEWK MINDSHAFTGAP, Counterpunch, 19 December 2012
Those who cannot remember the past are condemned to repeat it
— George Santanyana
Over the course of the last few years, there has been much propaganda from politicians of all persuasions on what factors are conducive to economic growth and/or the emergence of budget deficits or surpluses. Regardless of the political viewpoint being represented, these claims have usually been supported by essentially no facts, and this absence of facts implies a lack of analysis in a political debate that has displaced by competing ideologies. The breakdown of reason is taking on great importance as the so-called fiscal cliff approaches, and with it, the increasing possibility of a full-blown constitutional crisis. My aim is to identify factors that have been associated with budget surpluses and/or solid economic growth (as measured by annual growth in the gross domestic product (GDP) in fiscal year (FY) 1931 through FY 2012 and to relate them to the emotionally-charged question of taxes.
