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On the Need to Grow Up (About the Budget Deficit)

March 24th, 2011 . by economistmom

I’ve had a couple columns in the Christian Science Monitor over the past month, both making the basic point that the fiscal woes we’re in have a lot to do with our failure to behave like grown-ups when it comes to recognizing and admitting our own roles in the problem and doing something to be part of the solution even when it isn’t all our own fault.

  • This week’s column suggests kindergartners could do a better job at cutting the deficit.  The CSM editors added that flourish/slight exaggeration, but I actually think older grade schoolers could do a better job–particularly those fortunate enough to be exposed to some economic concepts such as “opportunity cost” and “budget constraints” (the notion of scarce resources) in their social studies curriculum.  And of course, older grade schoolers have also mastered basic addition.  ;)
  • My prior print-edition CSM column came out about a month ago and elaborated on a point I first made up on the fly at an Urban Institute event (mentioned on my blog here): the federal government’s “spending spree” is really like a shopping mall phenomenon in “intergenerational reverse”–that is, we expect our kids and grandkids to put all our own benefit and tax cut goodies on their “credit card,” and we give them nothing of decent value in return.  Not fair.  :(

Both point to our need to “grow up” about the budget deficit.  Help!  Where’s the “fiscal therapy” we need to snap out of this deficit dysfunction?!!

Immediate addendum/update:  The Ramones song “I Don’t Want to Grow Up” seems very fitting…video above, lyrics here (emphasis and a side-comment added):

When I’m lyin’ in my bed at night
I don’t wanna grow up
Nothing ever seems to turn out right
I don’t wanna grow up
How do you move in a world of fog that’s
always changing things
Makes wish that I could be a dog
When I see the price that you pay

I don’t wanna grow up
I don’t ever want to be that way
I don’t wanna grow up
Seems that folks turn into things
that they never want
The only thing to live for is today…
I’m gonna put a hole in my T.V. set
I don’t wanna grow up
Open up the medicine chest
I don’t wanna grow up
I don’t wanna have to shout it out
I don’t want my hair to fall out
I don’t wanna be filled with doubt
I don’t wanna be a good boy scout
[no "be prepared!"]
I don’t wanna have to learn to count

I don’t wanna have the biggest amount
I don’t wanna grow up
Well when I see my parents fight
I don’t wanna grow up
They all go out and drinkin all night
I don’t wanna grow up
I’d rather stay here in my room
Nothin’ out there but sad and gloom
I don’t wanna live in a big old tomb on grand street
When I see the 5 oclock news
I don’t wanna grow up
Comb their hair and shine their shoes
I don’t wanna grow up
Stay around in my old hometown
I don’t wanna put no money down
I don’t wanna get a big old loan
Work them fingers to the bone

I don’t wanna float on a broom
Fall in love, get married then boom
How the hell did it get here so soon
I don’t wanna grow up

Incidentally, when the Ramones performed this song on David Letterman’s show (1996), we were headed toward a (brief) period of budget surpluses.

14 Responses to “On the Need to Grow Up (About the Budget Deficit)”

  1. comment number 1 by: markg

    I remember that great budget surplus. Just how has the economy been since? The last time the US had a budget surplus period that good(?) was from 1926-1929. How was the decade that followed that surplus? And Japan had a surplus period just prior to their lost decade. I can’t wait to get back to those surplus years.. Our children and grandchildren will be happy with no debt. Hope the economic depression doesn’t bother them.

  2. comment number 2 by: Vivian Darkbloom

    Sorry Economist Mom, but “I Don’t Want to Grow Up” is not a Ramone’s song. While thé Ramone’s covered it, the song was written by the incomparable Tom Waits and his wife Kathleen Brennan. It was originally performed on Wait’s album “Bone Machine” in 1992.

    http://www.youtube.com/watch?v=Zo4Y0TxW41ghttp://www.youtube.com/watch?v=Zo4Y0TxW41g

  3. comment number 3 by: B Davis

    markg wrote:

    I can’t wait to get back to those surplus years.. Our children and grandchildren will be happy with no debt. Hope the economic depression doesn’t bother them.

    The idea that surpluses lead to depressions is a deeply flawed theory. I first heard proposed by Frederick C. Thayer, a professor of Public Administration at George Washington University. I point out the flaws with this theory in my October 4th and October 14th posts at this link. Regarding the period you mention from 1926-1929, I state the following:

    The final period that Thayer cites is the 11 years from 1919 to 1930, during which the debt was reduced by 36 percent (41 percent by the Treasury numbers in the above table). This followed another war which Thayer saw no need to mention, World War I. In the four years from 1915 to 1919, the debt had increased by 796 percent. Even after the 41 percent decrease, the debt was still over 5 times its size at the beginning of World War I.

    My October 4th post continues:

    Hence, four of the six periods of surpluses that Thayer mentions followed wars during which the debt rose far more than it was paid down during those periods. Another of the periods (1879 to 1893) was just a further paying down of the tremendous debt run up during the Civil War. Hence, only one of the periods represented a seemingly voluntary paydown of debt not recently acquired through war.

    The above timeline suggests that the initial events that lead to financial crises are wars, not periods of paying down the resultant debt.

    If you have a problem with any of my numbers or arguments, please read my entire posts and reply hear and/or following my posts. Thanks.

  4. comment number 4 by: markg

    I have no problem with your numbers. I just think your argument about the post war debt is irrelevent. Why run a surplus and create a depression just to pay off a war? That makes no sense.
    I will say the title to this post is fitting. I voted for Perot because he was going to fix our govt and get rid of the debt. Then I decided later in life to get educated in economics. A big part of growing up is admitting when you are wrong. I was wrong in my thinking when I voted for Perot. I am grown up, I can admit when I am wrong. Those outdated gold standard beliefs I had are wrong in our modern nonconvertable fiat currency world.

  5. comment number 5 by: SteveinCH

    Could I suggest a moratorium on troll feeding, please

  6. comment number 6 by: Gipper

    Economistmom,

    How about a column, “On the Need to Grow Up (About Federal Spending).”

    You see the deficit is a dependent variable. Deficits = Spending minus Revenue. When individuals run up credit card debts because they spend more than they make, we don’t blame their employers for the deficits because they have not provided a big enough salary.

    Likewise, why blame Republicans or others for not providing enough revenue to suit your social expenditure lifestyle demands? It’s the Democrats who need to grow up regarding this over-spending problem at the federal and the state level.

    Deficits are a problem for Democrats, not Republicans. Republicans aren’t falling for the political sucker trap to engage the problem until Democrats are contrite about their sins of gluttony, dressed up as concern for the “less fortunate” unionized teachers making $65,000/yr. with a 9 month work-year and fully paid medical and pension benefits. Wah! Wah!

  7. comment number 7 by: AMTbuff

    Democrats are not gluttons. It’s just that appetite for government services exceeds the maximum economically sustainable level. Most Democrats do not believe that they are near that level, but current spending already exceeds it even without adding Obamacare’s promises. Just look at any report on our long-term fiscal outlook.

    The fiscal train wreck that’s coming will dramatically reduce the GDP and therefore the ceiling on government spending. In effect we will be forced to hit the rest button on government spending and government promises of benefits. The sooner this happens the less reduction will be required.

    Democrats believe none of this will happen, and they will be very upset when it actually does. Think Wisconsin demonstrations times 1000. But if the money’s not there, it’s not there.

  8. comment number 8 by: B Davis

    SteveinCH wrote:

    Could I suggest a moratorium on troll feeding, please

    According to the Urban Dictionary, a troll is “one who posts a deliberately provocative message to a newsgroup or message board with the intention of causing maximum disruption and argument”. By that definition, I’m not so sure that markg is a troll. As indicated by my post, there have been some people of some renown (such as Frederick C. Thayer) who have argued that surpluses lead to depressions. I do consider this to be a minority (as well as a deeply flawed) opinion and do not plan on wasting much more time addressing it. I posted my reply simply because I had already written one. In any event, I will advise markg that, beyond my next reply, I will not reply further on this site. That should minimize any disruption.

  9. comment number 9 by: B Davis

    markg wrote:

    I have no problem with your numbers. I just think your argument about the post war debt is irrelevent. Why run a surplus and create a depression just to pay off a war?

    First of all, nobody here is suggesting that we run surpluses anytime in the near future. Economist Mom simply noted that “when the Ramones performed this song on David Letterman’s show (1996), we were headed toward a (brief) period of budget surpluses”. She only spoke about “cutting the deficit”. In addition, she has been in agreement with most economists that a temporary increase in the deficit was necessary due to the financial crisis.

    That said, there is no evidence that surpluses lead to depressions. You said that “the last time the US had a budget surplus period that good(?) was from 1926-1929″. If you look at the second table at this link, you’ll see that we ran a surplus of 4.6% of GDP in 1948, nearly double of maximum surplus of 2.4% of GDP reached in 2000. Was there a depression in the early fifties that I missed? In addition, I have heard no credible person suggest that the financial crisis we just experienced had anything to do with the small surpluses that we achieved in the late nineties. I don’t believe that the movie “Inside Job” (which took an Oscar for best documentary) even mentioned surpluses. If you know of any credible article or study that suggests that the surpluses of the late nineties lead to the financial crisis, please post a link to it. In any case, please post any reply to this only following one of my related posts at this link. I will not post any more replies regarding this issue here.

  10. comment number 10 by: Jesse

    “Incidentally, when the Ramones performed this song on David Letterman’s show (1996), we were headed toward a (brief) period of budget surpluses.”

    And how much of that budget surplus was illusionary thanks to the borrowing from the Social Security Fund?

  11. comment number 11 by: Jesse

    @ Gipper

    “Deficits are a problem for Democrats, not Republicans. Republicans aren’t falling for the political sucker trap to engage the problem until Democrats are contrite about their sins of gluttony, dressed up as concern for the “less fortunate” unionized teachers making $65,000/yr. with a 9 month work-year and fully paid medical and pension benefits. Wah! Wah!”

    You must be kidding, right? Budget deficits are brought to us by both parties as both parties continue to grow the size, role, spending, and deficit of the Federal Government.

    Take a look at the voting record of the self-proclaimed “conservatives”, e.g. Rep. Paul Ryan or how about conservative idol Ronald Reagan

    Both parties love to deficit spend, they just cannot agree on where to spend. Both parties are comprised of a bunch of hypocrites. The Democrats are against the wars when the Republicans are in charge, the Republicans run on a humble foreign policy when the Democrats are in the White House…the Republicans run on a fiscal conservative platform when Obama increases the budget deficit but they fail to understand that each and every administration sets new budget deficit records. And let’s not get fooled by the numbers without taking into account that Clinton achieved the budget surplus through borrowing from the Social Security Fund…

  12. comment number 12 by: Arne

    “Clinton achieved the budget surplus through borrowing from the Social Security Fund”

    Actually, if you only count the SSTF, there was still a surplus. Total debt increased only because there were a number of other trust funds also being borrwed at the same time.

  13. comment number 13 by: B Davis

    Arne wrote:

    Actually, if you only count the SSTF, there was still a surplus. Total debt increased only because there were a number of other trust funds also being borrwed at the same time.

    You’re right. If you look at the first table at this link, you’ll see that there was a unified surplus of $236.2 billion in 2000. Not counting the money borrowed from the Social Security (OASDI) Trust Fund, there was still a surplus of $70.7 billion. Only by not counting the money borrowed from ALL of the trust funds, does the surplus become a deficit (of $23.2 billion).

    You can likewise see this from the second graph where the three measures listed above are represented by the purple, green, and red lines. As you can see, the green line (the surplus excluding OASDI) was positive in 2000.

  14. comment number 14 by: Brooks

    Wish I thought of this when this thread was fresher (don’t know if anyone will see it now), but…

    When I think of our dysfunctional politics vis a vis solving the long-term fiscal imbalance problem, “I wanna be sedated”.