Tuesday, May 21, 2019

Peggy Noonan Giving Up on Fiscal Responsiblity?

Economist Chris Baecker manages fixed assets for Pioneer Energy Services and is an adjunct lecturer of economics at Northwest Vista College in San Antonio.  Today, writing for the Foundation for Economic Education, he notes an article by Peggy Noonan on May 2nd in the Wall Street Journal (paywall) and extrapolates it to say conservatives are giving up on fiscal responsibility.

I notice this because Peggy Noonan was among the very first people I quoted on this blog and I think of her as being fairly rational.   In this case, she's saying the rational fiscal conservatism of the Reagan years is pretty much over and conservatives need to recognize that.  She says, “The federal government will not become smaller or less expensive in our lifetimes.” and “less taxes and spending won’t resolve America’s crisis”.

I think it's a jump to say that a single writer, even one as influential as former-Reagan speechwriter Noonan is saying “Conservatives Are Throwing in the Towel on Fiscal Restraint”, which is why I didn't use Baecker's title.  Still, it's almost a cliche' that we don't have a fiscally conservative party in this country, just a Uni-party with two competing sides trying to gain power and control for themselves.  As Baecker says,
For the first time in a half-century, the GOP had control of Congress as the 21st century began, and for a majority of it, a Republican presidency. But far from being the “sober-minded … best stewards” of the government who look at spending “coolly,” they became drunk with the power of the purse. Spending rose an average of 7 percent per year, two to three times the rate of inflation.  
It's almost like Lord Acton said, "power corrupts and absolute power corrupts absolutely?"  Almost ... exact for being exactly what he had in mind.

So what's left to do?  Are we to watch America sink into the sunset (or crash into the ground along the way)?  Certainly we can work to cut waste, but with the total National Debt north of $22 Trillion and unfunded liabilities estimated at $124 Trillion, almost six times that debt, is it taking a trim when a full haircut is what's needed?  As I've said before, with these numbers we don't need balanced budgets, we need budget surpluses for about the next century.

Do they think they can shut down the Department of Education and fix things?  That's laughable; the DoE is almost a rounding error.  With 62% of the federal budget this year going to mandatory spending, that leaves 27% of the budget as discretionary (which includes DOD and all the alphabet agencies you know).  Oh, yeah, 62+27=89%.  Another 8% is interest on the debt, which needs to be considered mandatory spending too, but isn't.  That still doesn't get us to 100% and that linked website never fills in the gaps.

 The money to be saved lies in the mandatory spending category.
Life expectancy, for example, has increased by roughly a decade since the inception of both Social Security and Medicare. Logic dictates that the age of eligibility should follow suit. Also, we should have more choice about our participation in these programs and the way disbursements are administered.

Furthermore, there’s a popular myth that these entitlements have dedicated revenue streams: the payroll tax. The fact is barely a third of Medicare is funded that way, and if demographic trends don’t change, it’s currently projected that Social Security will also have to start dipping into general revenues to help pay out full benefits in fifteen years.
You may have noticed that these proposed fixes fly in the face of what the Evil Party presidential candidates are campaigning on.  In addition to Medicare for All, a massive budget buster, Kirsten Gillibrand declared that illegal immigrants should have the right to pay into and receive social security benefits. 

Just about a month ago, I wrote piece passing on how government involvement in education was distorting the market for college and making prices rise at several times the official cost of living.  That's another factor in the budget.  Mark J. Perry of the American Enterprise Institute has a plot that shows the rates of inflation since 1998 of a handful of common expenses.

Notice how the highest rates of inflation are in areas in which the government is heavily involved?  While I don't have numbers right now, it looks like the higher the involvement of the government the steeper the curve (hospital services, the top curve, are in the thoroughly broken insurance/government complex), college tuition and books as just described and so on, down to things where the market is working, with TVs getting the most affordable since 1998 - as anyone who has looked at the prices of 4k UHD sets can attest.

A simple but truthful statement is that America's fiscal policies over the last 100 years show a deep ignorance of, or at least antipathy toward, basic economics.  The fiscal conservatives have been our best hope, and consistently done nothing. Final words to Chris Baecker. 
If we’re stuck with a two-party system, Republicans need to be the party that aggressively represents and promotes independence and personal responsibility, not to mention logic and basic math. It’s been proven before, in 2006 and last year, that they can’t win elections maintaining or adding to the welfare state.
By that token, perhaps Ms. Noonan has a point that the government will not be right-sized in our lifetimes. At the same time we teach our kids about our federalist system, though, we should also impart upon them the ideal to work toward.


  1. Realistically we are well past the point of returning to fiscal sanity and solvency. It's simply NOT GOING TO HAPPEN. The handful of people who may
    be willing to dole out the bitter medicine of higher taxes, fewer benefits
    and austerity for all will ALWAYS be shouted down and if necessary eliminated
    by those promising pie in the sky and free beer for everyone.....to hell with the price tag. And as long as we allow literally ANYONE....dead or alive...to
    vote the ONLY thing that will be voted on is MORE GOODIES and send the bill to
    someone else. What cannot continue will not. Eventually the charade must collapse....and when it does history shows us the nearly inevitable outcome
    of such a collapse is massive conflict and death in wholesale numbers. This
    is because we are a clever species....NOT an intelligent one.

  2. The conservatives have shown no interest in conserving anything, ever. Why should they start now? The conservatives are trailing on the coattails of the progressives in their march against sanity and reality.

    Why worry about insignificant things like printing our way out of debt, when we have things like 15% of middle school children "coming out" and doctors sex-reassigning toddlers?