Tuesday, June 14, 2011

How Is This Sustainable?

Democrats appeal to emotions (throw Grandma off the cliff, people dying in the streets, etc.) while Republicans, at least the conservative ones, have to be the adults in the room. A Dem might look at this chart and say taxes need to go up to match spending, but this doesn't work because (a) people will find ways to avoid extreme taxation so (b) revenues actually go down. Historically, we've never been able to collect more than 20% of the GDP as revenue regardless of the actual tax rate, and it's averaged 18% over the last few decades. So, to reduce the deficit, we simply must spend less than 18% of the GDP.

I think we can do that without throwing Grandma out of her wheelchair. We did it in 2000, and I don't recall the streets being littered with bodies.

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