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Tags: deficits | nixon | supply side

Rainy Day Economics

federal deficit in the us remains a concern


Ben Stein's DREEMZ By Tuesday, 05 February 2019 04:20 PM EST Current | Bio | Archive

It’s raining here in LA. Not cool. I liked it much better when it never rained. LA is not too much fun in the rain. The sky is gray and it’s cool. I’ll go swimming anyway.

Okay, get ready to faint. I think I have figured out something really deep about economics and especially about Trumponomics. Okay. So start with the obvious truth that the U.S. economy is doing fantastically well. It has been since Mr. Trump took office. So now the questions is why.

Some smart people say it’s because Trump stopped stepping on the economy’s oxygen tube by cutting down on regulation. There’s a famous joke about my hero — my absolute number one hero of all time — Richard Nixon — in the same vein. Here’s how it goes.

Ike is out at Burning Tree playing golf when he’s struck down by a heart attack. He is rushed to Walter Reed and he’s given oxygen and probably blood thinner. He’s recovering because after all he was SACUR so he can take pain.

Richard Nixon, veep at the time, comes to visit him and Nixon stands right next to the bed and says, "General, General. Is there anything I can do for you? Anything at all." And Ike croaks out, "Well, for one thing, Dick, you can stop standing on my oxygen tube."

So, now it’s 2017. Trump is sworn in. And he announces an end to the era of excessive regulation. And, wham, the economy explodes upwards. So maybe this is what caused the explosive growth in the GDP and in employment and labor force participation and especially in non-white employment and labor force participation.

But maybe not. Maybe the explanation is spelled K-e-y-n-e-s.

Maybe when Mr. Trump cut taxes and replaced the revenue lost with borrowings, this was pure Keynesianism. My theory is that supply-side does not work. That it produces every greater deficits and this deficit spending is what is propelling the economy.

That is, follow supply-side and tax cuts to their logical end point and what you get is big deficits — twice as big as we had in the Obama years — and this is what is goosing the economy.

Or, to put it in econ 101 terms — supply side  approaches Keynesian as a limit. Maybe there isn’t even a limit.

So, if we go from an Obama era deficit of $500 billion to a Trump deficit of $900 you are naturally going to have some major stimulus.

We are borrowing from our children and our grandchildren and their grandchildren to keep the economy red hot for now and that’s how it goes.

In the meantime, the economy is growing like mad and we might possibly wind up with surpluses. I sure hope we do.

In the meantime, we have some other problems:

Healthcare. We have to do better and if single payer is the answer, then it has to be. How we will ever pay for it, I have no idea.

We also have a huge deficit in defense spending.

Russia is just killing us with new weapons and so is China. As long as we are going way into debt, let’s spend to maintain our military at peak strength. Preparedness is how we avoid wars and we want above all to not have war.

We also have a huge deficit in education and in gratitude.

We can defeat any enemy as long as we believe in ourselves and act accordingly. So let’s do it.

Raise taxes. Raise defense spending and let’s protect the greatest project in human history — the United States of America. So writes Ben Stein, in The American Spectator.

Ben Stein is a writer, an actor, and a lawyer who served as a speechwriter in the Nixon administration as the Watergate scandal unfolded. He began his unlikely road to stardom when director John Hughes as the numbingly dull economics teacher in the urban comedy, "Ferris Bueller's Day Off." Read more more reports from Ben Stein — Click Here Now.

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Follow supply-side and tax cuts to their logical end point and what you get is big deficits, twice as big as we had in the Obama years, and this is what is goosing the economy.
deficits, nixon, supply side
Tuesday, 05 February 2019 04:20 PM
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