Finally, we know that neither presidential candidate has the vaguest idea how to get the budget under control. Obama’s taxes on wealthier families will surely discourage the investment we need to get the economy rolling again. McCain says he will cut ineffective programmes, but he won’t identify the programmes he would axe.
Ronald Reagan solved that problem by putting in a figure for such cuts, followed by an asterisk, guiding the budget reader to a footnote advising that the programmes to be cut would be named at an unspecified future date. McCain might have to dust off that old dodge, while Obama would have to persuade his Democratic colleagues to reduce entitlement spending. Neither prospect is sufficiently bright to relieve the budgetary gloom that has been deepened by the Freddie and Fannie takeovers.
Nothing in sight is likely to offset the downdraught that is ripping through the economy right now. But if the housing market bottoms out at the end of the year or early in 2009, as Alan Greenspan says he expects and as falling mortgage rates suggest is possible; if the easing of commodity prices enables the Federal Reserve to keep interest rates stimulatingly low; if exports continue to boom despite the strengthening dollar; and if productivity keeps rising, we should see a recovery sometime next year. Then, tax receipts would rise, and the flood of red ink might slow to a trickle.
Without that, we will have to rely on the wisdom of our political class, and its willingness to cut the cost of the entitlments programmes. If you believe such wisdom and courage exist, I have a bridge in Brooklyn I would like to sell to you.
“Finally, we know that neither presidential candidate has the vaguest idea how to get the budget under control.”
The reason for this little factoid is quite simple, really. The reason ANY president can not get the budget under control is because, by our constitution, the president does not control the budget.
We live in an age of institutionalized ungoverned insanity. Only our great wealth, production, and the grace of God has prevented fiscal collapse, so far. Are you, dear reader, aware that last century congress passed a law that forces the executive branch to spend the ENTIRE appropriation for any particular year? In other words, it is against the law for the president to save one Dime of your money!
Yes, we live in an age of institutionalized ungoverned insanity. And I think that we presume upon God’s grace.
Don
Don- the executive branch could have effectively regulated this growth in the banking system, but they did not. Now that is partially a failure to write enabling legislation and regulatory budgets in Congress, but the Federal Reserve and Treasury could have opposed the history here, if they had wished to. They didn’t so wish, and now it is a mess.
You are spot on concerning Congress’s primary role in getting this straightened out though. It will be fascinating to watch a few Congressmen next session try to keep things the way they were and are.
2. Tom Roberts:
A proper treatise would take a book but I gladly acknowlege your correction. I would note, however, that quite often the congress removes the proper regulatory function of the executive by passing over-riding rules. These laws (rules) are not always harmful as exampled in the transportation industry with the deregulation of the 1980s. I was working in trasportation during this time and I was amazed at how the transportation industry adapted and became far more efficient and effective. I only wish that the congress was as wise in banking as it seemed to be in transportation as there have been many regulations passed by congress that have tied both regulators of government and industry to limit unworthy loans.
So, while it is true that the executive has probably fallen short in their duties, by my overview I am reticent to indict the executive branch without compelling evidence. I have little such bias with congress, however.
Don
Maybe they could start by identifying what part of the Constitution authorizes a particular expenditure. If no supporting passage is identified, the expenditure is then deleted.
How about that for revolutionary?
#4 The issue here is that the interstate commerce clause authorizes all interstate banking regulation. But it doesn’t say What and How Much. It also doesn’t specify the Glass-Stegall restrictions on banks not consorting with investment banks such as Lehman Bros., or the relaxation of that restriction some years ago. All these matters become political decisions on both the Congress’s and executive branch’s part. The decision, made jointly, was to open up Pandora’s Box to investment banks buying and reselling mortgage backed securities, something which Glass-Stegall would have forbidden in the past. Once the Box was opened, everyone had a great time and millions bought real estate that they should not have bought under highly leveraged terms. But eventually, all that remains in that Box is now False Hope. And a lot of worthless paper.
Oh, I agree that Congress’s power over banks is justified by the ICC, not to mention its power to coin money and regulate the value thereof. But where is the power to say, set up Social Security? Medicare? Dept. of Education?
I guess that, should Congress really stick to powers it was actually granted, we’d have a federal government that was 1/3 the size we have now (and it would do a much better job as a result).
#6 Yes, you’ve cited fully the adiaphora of modern government. Compared to Social Security, the government’s role in regulating banks is a no brainer necessity, which it has unfortunately ignored.
A great article on the current situation, which is salient to the top level but informs the discussion, is [url=http://www.washingtonpost.com/wp-dyn/content/article/2008/09/12/AR2008091202415.html] here . [/url]
Who is John Galt?