How to Shrink the Deficit

I’m stealing the title of this post from an article i read by the same name in the “Review & Outlook” section of the Wall Street Journal dated December 3, 2010 that i read on the plane from SFO to Taiwan (wish our luck, we’re starting our Winter 2010 DCI tour :).

Anyway, in this article the unsigned author claims:

The U.S. federal deficit problem isn’t hard to understand. . In the short term, revenues have collapsed to 14.9% of GDP thanks to the recession and feeble recovery. Meanwhile, Democrats have raised spending to as high as 25% of GDP, a level not seen since World War II.

So i have a couple of things to say about this. One, i want to say i’ve point very careful to avoid the sort of finger-pointing that this quote endorses. “Democrats” have raised spending, like Republicans are also voting, submitting bills, and participating in the discussion of US fiscal responsibility. But again, that’s beside the point—i’m not going to say Democrats or Republicans, as a whole, are right or wrong, or somehow single one or there other out as responsible for the recession we’re in. What does finger-pointing like that accomplish?

Because, of course, we say that we’re all responsible, individually, for our own experience. So if i see a federal deficit, it’s because i haven’t been generous in the past. Whether i see Democrats or Republicans increasing spending or decreasing tax revenue is irrelevant.

But before we get into the solution for our problem (hint: it will have something to do with being more generous towards others :), i’d like to call into question one other idea in the quote above.

So this easy to understand problem is backed up by easy to understand math: you can’t spend 25% of the GDP and only collect 14.9% in revenue and have that work out. I wasn’t a math major in college, but i think 25-14.9=10.1. So that would put you 10.1% of the GDP in the hole a year.

But is it as simple as that? For example, what was the percentage of the GDP collected by the present tax laws before the recession? Or do increases in spending have no effect on the recession? What if some of the funds, spend now, brought us out of recession (for an idea on how to do this, see my article on what Germany did to counter the recession)? Would it be a mistake?

If you’re looking for a simple solution, i have one for you: plant the seeds to see the things you want to see in the world. If you don’t like to see a deficit (is a deficit a good thing or a bad thing?), first take care to make sure you’re paying back people yourself. Then look for someone who you could help pay their debts.

It’s an easy to understand solution you can do all by yourself, with out pointing fingers at anyone else. 🙂

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6 Responses to How to Shrink the Deficit

  1. Andrea Lemon says:

    Hi Eric,

    Question from an impatient Buddhist:

    I’ve always paid my debts promptly, and over the last ten years I’ve carefully helped other people clear their debts (to the tune of tens of thousands of dollars). So why am I seeing a huge decline in my country’s prosperity and soaring national debts?

    Andrea

    • ericbrinkman says:

      Dear Andrea, i share you pain. i was told that i can stop the Iraq war if i refuse to be violent and practice ahinsa. Well, it’s been probably 5 years now and the war still hasn’t ended… 😦

      But i think the idea is that we have to do something for someone else, maybe in a bigger way. For example, i wrote an article about how we should be helping China be prosperous, not fighting against them. What have you done for anyone in China, recently?

      It’s a big advantage for me, i think, to be able to go on these teaching tours with Geshe Michael… i feel like when we actually go to to a foreign country and try to help we’re helping to plant seeds to see things change on a global level.

      But it seems to me there are still certain things we avoid… i’ve been on every tour for the last, i think, 4 years? And we have never gone to anywhere in Africa. Only once to the Middle East (Morocco). Why would i expect anything to chance in Iraq if i’m afraid to go there and help?

      i don’t know; something to think about…

  2. Ben says:

    Maybe we may need to plant MORE and BIGGER SEEDS to breed BIGGER PLANT, the same case applied to abovementioned “STOP Iraq War”. Rgs, BEN

  3. Holger says:

    So true – all you comments…. Andrea, I also share your pain!! and your impatience..
    Well, obviously we cannot travel to all the place we would like to go.. and not all of us have the opportunity to travel to all these far away places. But there are tools. Not as effective as going there yourself and help with your own hands – but better than nothing. I decided for me to invest heavily in kiva.org because I help people all over the world. I really try to help people in Afghanistan, in Asia, in the US, in South America.. Since I started two years ago amazing things started to happen with my own business 😉

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