And Where is Biden Living?

[Amazon Link, See Disclaimer] Lao Tzu should have added a "If you are delusional…" option. Eric Boehm notes that. Biden Tried To Take Credit for the Falling Budget Deficit. Now, It Is Rising Again..

In a speech delivered one year ago this week, President Joe Biden took credit for what he called "the largest drop ever" in the federal budget deficit.

"Let me remind you again: I reduced the federal deficit," Biden said. "All the talk about the deficit from my Republican friends, I love it. I've reduced $350 billion in my first year in office. And we're on track to reduce it by the end of September by another 1 trillion 500 billion dollars—the largest drop ever."

As Reason—and others in the media—pointed out, this was a wild exaggeration. Biden had done nothing to reduce the deficit. In fact, policies enacted since he'd taken office had caused the federal government to borrow more, not less, than it otherwise would have. The lower federal deficit total in 2022 relative to the two previous years resulted from expiring one-time emergency expenditures during the COVID-19 pandemic, which had swelled the deficit to record highs.

In short, 2022 was a major outlier from the trend of growing budget deficits—a trend that had started before the pandemic and that was projected to reemerge after the tsunami of federal pandemic borrowing had passed. "The deficit will begin rising again next year and will rise faster and higher than it would have before Biden took office," I wrote in June of last year.

Well, the deficit is rising again.

Let's do a bit of pedantry: In theory, the Federal Government can only spend money that Congress authorizes. See Article I, Section 9, Clause 7. As Boehm notes, Biden didn't deserve credit for the "falling" deficit; on the other hand, Congress certainly shares the blame, with Biden, for the increase.

And, yes, that attributin to Lao Tzu is bogus. They didn't have anxiety or depression back then.

Briefly noted:

  • No, no, it's not dead, it's resting! Kevin D. Williamson (I think) is overoptimistic: Death of a Talking Point.

    One of the most ignorant and dishonest of the Democratic talking points that show up during budget debates like the one we currently are having is: “We could fix our budget problems if only we would return to the tax policies we had in the 1950s and 1960s, a time of widely shared prosperity with top tax rates above 90 percent for the rich.” 

    That is a fun talking point. My progressive friends love it. But it is a lie. 

    In the 1950s, there were very high statutory tax rates, meaning that a taxpayer could, in theory, pay a top marginal rate of 92 percent. But this applied to very few taxpayers and to a very small share of their income. That is why when you look at the data from a more meaningful economic perspective, U.S. taxes were a lot lower in the 1950s than they are today: Federal tax revenue from 1950-60 averaged only 16.8 percent of GDP, as opposed to the 19.6 percent of GDP collected in federal taxes in 2022. (GDP terms are useful because they capture the fact that our population is both larger and richer.) 

    KDW points to the OMB's Historical Tables. And, friends, it's pretty simple: whenever someone talks about eliminating the deficit, bring up Table 1.2 on that page ("Summary of Receipts, Outlays, and Surpluses or Deficits (-) as Percentages of GDP: 1930–2028"), point to columns C (Receipts) and D (Outlays), and note that Receipts (e.g., 19.6% of GDP for FY2022) have been much less than Outlays (e.g., 25.1% of GDP for 2022) for about the last 20 years.

    And ask: what should those two numbers be instead? And how do you propose to get there?

  • Speaking of proposals… At Econlib, John Phelan puts forth A Modest Proposal to Fix Social Security. Pedestrian solutions (let the cuts to benefits happen; raise taxes astronomically) are both painful and boring.

    Fortunately, there is a less gruesome solution. Remember, that in an “actuarially unfunded,” ‘Pay-As-You-Go’ system, your contribution to its capacity to pay benefits out to you in the future isn’t the money you pay in today, that immediately gets paid out to some retiree, it is your contribution to the tax base of the future: your children, in other words. We could fix Social Security by making payouts dependent on how many children you have had.

    This might strike some as unfair. But the generation now retiring is the one which voted for the politicians who passed across-the-board benefit increases of 7% (1965), 13% (1967), 15% (1969), 10% (1971), 20% (1972), and 11% (1974). In 1972, benefits were tied to the Consumer Price Index, yielding an annual ‘cost of living adjustment.’ All this was at a time when, as Paul Samuelson was explaining, the capacity of the system to meet such commitments depended on “this generation [having] children at the same rate as did previous generations:” And they didn’t. The Boomers voted themselves ever higher Social Security benefits without having the children to pay for them.

    I'm 85.6% certain that in calling this a "modest proposal", Phelan is being entirely Swiftian. Nevertheless I left a comment on that last bit I bolded above:

    Quibble: In the mid-1960s to early 1970s timeframe you point to, the Boomers were pretty young, some not even of voting age. Those who were voting, I don’t think a lot of them were thinking about Social Security at the time (other than a drag on their paychecks), let alone using it as a single-issue voting guide.

    But go ahead and blame the Boomers; we’re used to being blamed for stuff.

  • Ann Althouse rudely corrects Miss Manners. And it's a joy to behold: When the manners expert is unaccountably snooty... and wrong..

    Miss Manners, at WaPo — answering some question about how to eat haricot verts and informing us that haricots verts means string beans — adds a snarky parenthetical: "(Considering the number of people who think 'RSVP' is a noun, Miss Manners is not going to trust that everyone passed high school French.)"

    First, passing a high school course doesn't signify much knowledge. What do you have to do to fail? Surely not enough to ensure you know the phrase underlying the initialism "RSVP." I'll bet you could pass without even knowing how to say "please."

    But more importantly, is there anything about French that makes it wrong for a person speaking English to use "RSVP" as a noun? I find my answer in the Oxford English Dictionary:

    And according to the OED RSVP-as-a-noun is pretty much standard English usage and has been since 1850.

    Moral: don't be bullied by snarky WaPo columnists.

Last Modified 2023-05-30 7:42 PM EDT