Reality: The end of “cake & eat it”

Why the DC gridlock re: taxes & spending?

First, while Obama won a relatively slim majority of the countrywide macro vote … the GOP won a majority of the district-by-district micro vote.

In other words, the whole doesn’t equal the sum of the parts.

Further, as argued by Jay Cost in an Insightful Weekly Standard piece, people don’t really grasp the perilous financial situation the US is in … in part, because past economic growth rates have insulated folks from the hard choice of higher taxes or lower spending.

They’ve been able to have their cake … and eat it, too.


Here’s the essence of Cost’s argument:

Polling data indicate that the people simply do not understand the parlous state of public finances​,

Hence the refusal to brook tax hikes to deal with the deficit, or spending cuts in entitlements, the biggest drivers of the nation’s overdrawn account.

Why does the public seem so ill-prepared to answer basic questions about the size and scope of government?

The answer might simply be: They never really had to before now.

For generations, conservatives have warned about a government that was too intrusive and a danger to private initiative.

Liberals have been bemoaning a government that has not done enough to secure social justice.

Yet the public has never had to make a hard choice because of economic growth.

In the latter half of the 20th century, growth in real gross domestic product averaged 3.6 percent per year.

This enabled us to have our cake and eat it, too: The government could grow every year, and do more to ensure equity between citizens, without intruding on the private sector via higher tax rates.

Everybody could win, in some sense.

Since 2000, growth has been roughly half that, clocking in at 1.8 percent per year, which is about where most experts believe 2012 will end up.

This stagnation has put unprecedented pressure on Washington.

The “have your cake and eat it, too” combination of big spending and low taxes has generated an annual budget deficit that now tops 10 percent of gross domestic product, unprecedented in peacetime and unsustainable over the long haul.

This is a reality that appears not to have sunk in on the public.

Add to that: half of the country draws the bulk of the benefits from added spending … and half of the country draws the bulk of the benefits from lower taxes.

How to  break that stalemate?

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