Monetarism defeated Keynesianism.
But you would not know that from the bean counters that work the CBO (Congressional Budget Office). These Keynesians are the most astute fellow travelers one can imagine. Any brief look at how the Federal Budget is formed (remember Bismark’s retort on sausage and law making?), will fortify your sense of just how removed from reality the CBO gnomes are.
The CBO says that Obama-care will reduce the Federal fisc!! Did you get that! Wait it gets better. By creating a brand new entitlement off the official accounting books of the Federal Budget, just like Medicare, Medicaid, Social Security, Fannie, Freddie and numerous Pensions, it reduces the deficit. Just like that!
Its an accounting gimmick. Socialists and their nominalist fellow travelers are experts in the arcane art of the semantic slight of hand.
Here’s more: according to these bean counters, the baseline either becomes a massive growth in spending expenditure or a reduction in the rate of growth; making it a ‘cut’. Both are gimmicks. The second decoy is the use of the 10 year plan. No Congress can bind the future years of another!
So what’s being enunciated by the CBO? Its a projected guess, an estimation of a guess, a “guest-a-mate”. Let me explain. A ten year time frame to pretend to reduce spending reveals an imaginary “cut” in “out year” projections. No real cuts happen when Congress is in session! That balance that is sought is a ratio, an idealized idea noting else.
By passing fantasy cuts in the “out years” they can pretend to be doing the responsible thing! All this happens without mentioning either the impact of confiscatory taxation or currency depreciation.
The Socialist fellow traveling bean counters at CBO march on, but those who adhere to the tenants of Monetarism know better.
Along with the expectation of a shrinking deficit, the gnomes at CBO predicate that future unrealized achievement by postulating 3.5% annual GDP growth (no mention of nominal rate of inflation (wink), a 25% increase in tax receipts in two years, all driving federal revenue to 19% of GDP.
Do the math. For this to become a reality, we must have 6% annual growth in our GDP with disinflation.
No mention from the CBO on the interest rate which could quadruple current levels, wiping out both the Federal Reserve’s capital base making it a ward of the Treasury.
How does this end?
Well, the divergent views encapsulated in both the CBO’s own projections along with the 2012 Budget Control Act/American Taxpayer Relief Act 2012 embody the dangerous plurality that animates our culture war. The conclusions reached by the gnomes at CBO don’t square with the realism underwriting the empirical realities denoted by both Bills.
Nothing can evade the reality that as a share of our nations GDP, entitlements and debt will eat up and consume a once productive Civilization.