Megan McArdle suspects both political parties will not face up to the need to balance the budget until the system reaches a crisis. (my bold emphasis added)
I assume that at some level, Republicans understand that cutting taxes will make it that much more wrenching when we finally have to cut the deficit. I assume that at some level, Democrats knew that passing the health care bill would make it harder to balance the budget, because we used up the easiest, most obvious tax increases and spending cuts on expanding health care coverage, instead of using them to bring revenues and spending into roughly the same ballpark. But I think they view this as a way to improve their initial position in the final showdown, meaning that overall, we'll end up with [lower taxes/higher spending] than we would if they just left well enough alone.Despite Ross Douthat's optimism, I am very much afraid that this we are headed for a terrible crash. Game theorists tell us that the way to win a game of chicken is to make a highly credible committment: rip off the steering wheel, and throw it out the window. They do not tell us what to do once you have thrown it--only to realize, in horror, that the guy in the other car has just done the same thing.
I hold this view as well. Watching state-level fiscal crises get far worse than I originally expected (not just California - but also Illinois, New Jersey, and others) I no longer think the center is big enough or either party dominant enough to force thru a compromise. At the federal level we will have to reach a point where the markets begin to price US debt as highly risky before both big spending cuts and big tax increases become feasible. Absent need to stop a panic I do not expect anything resembling fiscal sobriety. An irrational faith in American exceptionalism has combined with political divisions to make it impossible to admit to our limits.
This paper examines the growth of government during this century as a result of giving women the right to vote. Using cross-sectional time-series data for 1870–1940, we examine state government expenditures and revenue as well as voting by U.S. House and Senate state delegations and the passage of a wide range of different state laws. Suffrage coincided with immediate increases in state government expenditures and revenue and more liberal voting patterns for federal representatives, and these effects continued growing over time as more women took advantage of the franchise. Contrary to many recent suggestions, the gender gap is not something that has arisen since the 1970s, and it helps explain why American government started growing when it did.
The welfare state that women vote for feeds the rise in divorces. Women initiate most (somewhere between two thirds and three quarters) of all divorces. They'd be far less likely to file for divorce if the state did not help them out with social programs. So more social programs lead to more divorce which translates into more support for social programs. Meanwhile, the married people and the singles without children pay more taxes to support those with unstable relationships. Part of the stand-off between tax increasers and spending cutters is a fight over marriage and social obligations. I am on the side of spending cutters because I do not want to pay to raise the children of others.
Share | By Randall Parker at 2010 December 29 07:26 PM Economics Sovereign Crises