Monday, August 29, 2011

The Do Nothing Solution

That's right!  Let's DO NOTHING.

We hear lots of jawboning from both the right and the left about what needs to be do to solve the deficit/debt problem.  But wait!  Why do we have to do anything.  Check out the chart below.

If Congress does nothing, nothing at all, they just go home and sit on the porch, the deficit will go down to about 1% of GDP, and the debt falls from a peak of 73% of GDP to about 60% as shown in the figure below.

Also note that this "Do Nothing" performance is much better than if Congress extends all current (essentially Republican) policies.

Well, where do all these reductions come from?  As explained in the Center for American Progress article that has these figures,
  • $1.2 Trillion dollars in spending cuts will be triggered if Congress does nothing,
  • $3 Trillion dollars in revenue increases will occur when the Bush tax cuts expire,
  • $2 Trillion dollars from Congressional inaction on the alternate minimum tax and the sustainable growth rate formula in Medicare.
Obviously, doing something is better than doing nothing.  Right?  Well, let's take a look at what is being proposed.
  • The president's fiscal commission "would leave the country with about $1 trillion in additional debt compared to simply doing nothing"
  •  The republican budget plan passed by the House "would incur approximately $1.5 trillion more debt than doing nothing at all".
So, right now, if your goal is to reduce the deficit/debt, the best plan out there is for Congress to go home and sit on their collective asses because they are only going to make it worse.


  1. I knew that there was a good reason to keep those idiots from entering the beltway. LOL

  2. It appears that we have nothing to lose. So let's extend this idea. Do we still need them (you know, THEM) if they do nothing?

  3. No comment, just want to subscribe, so in case it gets ugly. Don't want t miss anything.

  4. Sorry John. I need to figure out how to add a link to get comments without commenting first. I know some Blogger sites have it.

  5. Well this oughta be easy. Nothing is what Congress does best.

  6. Jerry, you have to use third party commenting software in order to have the subscribe to comments option on Blogger.

    Just another reason to leave Blogger in my opinion. WordPress is so much more friendly a platform. ;-)

    Also, I have been saying there IS NO debt crisis for months now. We have carried a debt load since 1917 fer christs sake. Its a made-up crisis.

  7. Dusty,

    Also, I have been saying there IS NO debt crisis for months now. We have carried a debt load since 1917 fer christs sake. Its a made-up crisis.

    I wrote an article about that, before everyone was saying it!

    National Debt Unicorn. It made people really mad.

  8. put it at MMA..therein lies the reason why I,for one, did not read it.

  9. Good plan, John. Of course any suggestion to close corporate loopholes and/or increase the top marginal tax rate will draw lots of ire from the right.

  10. Dusty,

    It had to go at MMA. It was originally a comment and I post comments where they ultimately belong.

    Most of my "posts" are long comments and I seldom post, per se, as you may have noticed, yet I write post sized comments on some site just about every day. I need inspiration.


    I would be OK with removing the corporate tax altogether in favor of raising the top marginal rates and closing all incentives and loopholes, thus collecting far more tax from the wealthy than with the existence of the corporate tax, if we could solve the tax sheltering problem that would follow.

    The corporate tax obfuscates who is actually paying (and not paying) they fair share of the "tax burden."

    I actually feel it is only just to tax disposable income. We need an algorithm that does this, one that is truly progressive.

    When you factor in sales taxes, state taxes, etc. We don't even have a progressive tax system in America and the one we pretend to have is on paper only.

    The corporate entity helps make this possible. I have been called a republican for saying this, which irks me.

    However, in this time of "debt crisis," and when raising top marginal taxes substantially, HOWEVER much is needed to handle it, is unpopular, closing corporate tax loopholes MUST be part of the solution.

    Oddly enough, I have got quite a few conservatives to concede this point, even though it would be effectively be an upper income tax hike. They then argue, that top marginal rates should be LOWERED!!!

    I have also got several conservatives to concede that taxing long term capital gains as regular income is just. They are not all crazy. They just act crazy to further their non-intuitive, often inhumane, policy goals.

  11. "$3 Trillion dollars in revenue increases will occur when the Bush tax cuts expire"

    This isn't a matter of when. It's a matter of one very iffy if.

  12. Remember, this is the "do nothing" solution. It will happen unless Congress does something.