The Deficit Commission's Recommendations for Reducing the Deficit

[Meadmaker]

I found this interesting:

But very misleading. The actual spending for education is about 53 cookies: (in the linked video, 1 cookie= 10 billion dollars) So, adding one more cookie wouldn't make much of a difference.

http://www2.ed.gov/about/overview/fed/10facts/index.html

Also, I think Ben is showing something very, very, wrong with the way a lot of people look at the budget. He takes from one program (defense) and gives a little bit of what's taken to each of the other programs, like Head Start or education or feeding the world's starving children, but there's a problem. The spending is just as big as it was before, which mean the debt gets larger, which means next year we have to skim off more cookies from programs across the board to give them to bondholders.

More likely, though, you'll just start using cheaper ingredients to make cookies that aren't as good. Sure, you'll get just as many cookies, but they won't have as much delicious filling. (i.e. inflation will mean that there are just as many dollars, but with less purchasing power.)

At least since Reagan, we have heard that there's a magic deficit diet pill that lets you eat all the cookies you want, but never gain budgetary weight. The supply siders (Reagan et. al) said that we can cut taxes and the net effect will be to collect more taxes. The pseudo-Keynesians (Obama et. al.) said that if we spend a lot more, it will pay for itself.

14 trillion dollars later, we're going to be paying around 500 billion dollars in interest payments this year.

I think we would have been better off just paying the bills.

 

[TraneWreck]

At least since Reagan, we have heard that there's a magic deficit diet pill that lets you eat all the cookies you want, but never gain budgetary weight. The supply siders (Reagan et. al) said that we can cut taxes and the net effect will be to collect more taxes. The pseudo-Keynesians (Obama et. al.) said that if we spend a lot more, it will pay for itself.

14 trillion dollars later, we're going to be paying around 500 billion dollars in interest payments this year.

I think we would have been better off just paying the bills.

Of course, the Keynesian position holds that debt should be paid down during times of economic prosperity, like the 90's, and that's what happened. The profligate spending during the Bush administration, causing massive deficits, was as anti-Keynesian as you can get.

Now, during liquidity traps, like we have now, when the economy cannot be stimulated by lowering interest rates due to the fact that they're approaching the zero-bound, Keynesian theory calls for stimulus until the economy recovers, then demands that the debt be paid down.

Not very complicated, rational, and proven correct. It amuses me that "Keynesian" has joined "liberal" and "socialist" as the thoughtless smear du jour (not that you meant it that way in your post).