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Sometimes it is better to sound smart than to be smart. Today I will discuss economic policy in an oversimplified and misleading fashion. I'd be surprised if anything I say makes sense. But it will sound brilliant because I will use some psychological tricks to accomplish the illusion.

First, I'll tell you what you want to believe. That gives me automatic credibility. After all, who do you trust more than yourself? If I agree with you, obviously I would be an awesome president.  So look for me to say things you already agree with. As soon as you feel that my opinions and yours are similar, as if we are one mind in two bodies, I'll nudge you someplace new, and it will feel as if you got there on your own. (Hypnotists call this process pacing and leading.)

Secondly, I'll oversimplify a complicated topic. Oversimplifications are compelling because we humans prefer the illusion that we understand our environment over the reality that we don't. The illusion of understanding gives us a feeling of control over our lives. We feel as if we can fix the problems of the world through our intelligent voting.

Let's agree that everyone prefers smaller government, but not everyone likes the tradeoff to get there. Some people would like the same level of government services we have now, or even more services, but at a lower cost. Unfortunately, no one knows how to get more stuff for less money in the short term. Other people, such as Ron Paul, would shrink the government quickly and accept the substantial risk that comes with that sort of change. All big changes have unintended consequences; it's unavoidable. So, given all of that, what is the sensible middle ground between growing the government forever - which Republicans and Democrats are likely to continue doing - and making drastic and unpredictable changes the way Ron Paul might?

My plan for shrinking government is to freeze total federal spending immediately and forever, and let inflation eliminate the bureaucracy by chewing into its budget over a few generations. That way, the government can unwind at a leisurely pace, allowing technology, competition, and better ideas to deliver natural cost reductions over time. With my plan of gradual government shrinkage, there's no shock to the system, and no outsized risk.

As President, I will still look for ways to eliminate or streamline entire functions of government. But realistically, the bureaucracy has a lot of fight in it, and the easy cuts will be fewer than you'd hope. I'm suggesting more of a rope-a-dope approach, capping the budget and allowing the government to punch itself out over a few decades.

The best part of my plan is that it keeps government spending relatively high today, when we still need the economic stimulation. The only downside, which you correctly point out, is our gigantic national debt. Don't we need to drastically cut spending soon to reign in the debt? Raising taxes - even if you favor that option - won't put much of a dent in the deficit.

Luckily, national debt isn't like personal debt. Personal debt, such as your car loan, needs to be paid back over a certain period, such as three years. As a car buyer, your biggest cost is the car itself, not the interest on the loan. National debt is entirely different. The nation has the option of paying interest only for generations, until normal inflation turns the debt into a trivial amount. For that to happen, all we need is a return to some sort of normal economic growth, which is apparently happening on its own. And the best way to ensure normal economic growth is to keep borrowing and government spending high for the next few years. Obviously we'd need to reassess things as we go.

Keep in mind that the government is a semi-closed system. The United States is borrowing half of its money from its own citizens. When you get a car loan, your interest and principle payments leave your pocket and go to the bank. When the United States borrows from one citizen and uses the money in a way that stimulates the economy for all citizens, much of that money stays within the system.

If I tell you our national debt is somewhere in the range of 100% of our GDP, which is true, it sounds scary. But if you consider that a typical home loan is 300% of the owner's annual salary, it puts things in perspective. And remember that a typical homeowner didn't borrow half of his money from himself, the way the government does. It's also worth mentioning that the national debt was much higher after WWII than it is now, and that was the beginning of unprecedented economic prosperity in the United States. While it's true that some level of debt could crush the United States, history says we're nowhere near that level. If that situation were to change, I'd flip-flop to an economic policy that made sense with the new data.

I will close my argument with a final trick of persuasion: I'll summarize my solution with a familiar truism. The truism is that any good business agreement makes all sides a little bit unhappy while delivering most of what everyone needs. My solution would deliver economic growth and smaller government, but without the deep cuts in spending that Republicans want, and without the guaranteed-forever government benefits that Democrats want, nor the quick and deep cuts that Ron Paul supporters favor. Everyone would likely get what they want in the long run, while no one would be happy in the short run. That's what a good deal looks like.

You might question whether I, as President, would have enough clout to push this or any other economic policy through Congress. It's a fair question. And the answer is yes, I could make it all happen. If an independent such as myself gets elected President, it will make every member of Congress crap his or her pants. It would be the ultimate mandate. And as an independent, with no campaign funding needs, I could shine a bright light on any obstructionist member of Congress and directly ask voters to make a change. I would respect all honest disagreements. But I would be a nightmare to any politician who objects for transparent political motives.

As a one-term president, no one would need to criticize my policies or thwart my plans just to gain an advantage in the next election. In our current polarized political environment, only an independent president has a chance of getting anything done domestically. This is probably the only time in our history that has been the case. In chaos, there is opportunity. And the opportunity in this situation is to elect an independent President.


 
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Jan 13, 2012
This is such a well written post that I feel compelled to comment. It is artistic not in content but rather in style.

The idea of placing a ceiling on spending while positing that inflation will devalue the debt is a bad one. The reasons behind the plan are poor, inaccurate, and misleading (as stated in the introduction). None of the ideas are solvent, but that’s not the point. Taken individually and in isolation to each other, each point shines brilliant. It is this engaging dialogue, the kind which engenders the comments I see, that muddles and borderline abuses public opinion and participation. I see this kind of presentation on TV, hear it on the radio, and read it in print. You could change the content from a contemporary political issue to something else and still deliver the same charged afterthoughts.

There’s a lot packed in here which demonstrates how a complex topic is more susceptible to being grossly generalized or overly simplified.
 
 
Jan 10, 2012
According to Washington Post, defense spending is 3.5% of GDP--- that's an 800 pound gorilla?
 
 
Jan 9, 2012
@GLK

I agree that this sounds more than a little like Ron Paul's libertarian rhetoric, with one unfortunate difference: As an independent, he would be able to hold policy opponents' feet to the fire, regardless of affiliation. As a Republican, I believe he would be too much of a gentleman to "jilt the ones who brought him to the dance." [Conversely, an independent, regardless of creds, has no chance of being elected nationally in a system controlled by the two major parties.]

The most important thing to remember is that once in office, a truely conservative POTUS does not need Congressional approval NOT to spend money, so that !$%*!$%* whole cabinet positions, and other expenditures, is not as farfetched as sometimes portrayed in the media.
 
 
Jan 8, 2012
@RavenBlack

"Slapping" was a metaphor. I'm not suggesting that punching anyone (as gratifying as that might be) will do any good... if we're speaking literally - please don't hit anyone except in self defense.

I am suggesting that we can put pressure on Congress to balance the budget and behave with more wisdom financially. So we should do that as opportunity presents itself.

If that Really is "rubbish" as you suggest, what is the alternative? No kidding non-metaphorical revolution? Sitting on our butts in a drum circle in 10 degree weather? Apathy?

Give me a better idea. I'm all ears.
 
 
Jan 6, 2012
@Aaror - who's gonna buy *that* piece of legislation though?

Also, companies would just split themselves into two companies, one to buy legislation and the other to benefit disproportionately from it. Kind of like how Rick Scott, governor of Florida, pushed through legislation mandating drug tests for weed for large numbers of people at taxpayer expense, while his wife held large investments in the medical company that manufactures those tests.
 
 
0 Rank Up Rank Down
Jan 6, 2012
Scott,

Lively post and responses. Great job! By the way, where is the renowned Dilbert "Mission Statement Generator" these days? Best regards, Ron Bronco Fey ron.bronco.fey@live.com
 
 
Jan 6, 2012
What can we do to help you get elected? (Keep in mind I have very little money!)

I agree with your approach and reasons, and having you as president would be tonic for this country.

 
 
+2 Rank Up Rank Down
Jan 6, 2012
Scott,
Could you add one little plan to help keep the gov't from growing?
Simple idea, any company that has a lobbiest or makes campaign contributions or pays for political speech loses the ability to win any federal contract...
Either they don't try to buy our legistature or they don't suck off the gov't teat...
 
 
Jan 6, 2012
You thief! That is almost exactly my plan!

There are a few nuanced details you have deal with (does SS spending count in your freeze? What about medicaid/medicare?). This plan cannot work without entitlement reform.

You also might want to let goverment grow at a rate less inflation/revenue growth, but still let it grow some (say 1-2%).

 
 
Jan 6, 2012
I'd vote for you. I don't honestly think you can do any worse than any of the normal bunch of losers we have currently running our government (or running for office).
 
 
Jan 6, 2012
When our so-called federal "budget" is around 200% of our actual federal income, freezing the budget won't have the effect you're suggesting.

@TheShadowNose any inspection of federal spending shows that the military is NOT the problem with our federal budget. At $700 Billion, it's expensive and I'd love to see it trimmed down to something more reasonable, but if we eliminated it entirely, we'd still be deep in the red.

Social Security is $715 Billion, Income Security Programs (unemployment, food and rent programs) total $630 Billion, Medicare is $450 Billion, Medicaid is $375 Billion, Education subsidies (low income school districts, minority scholarships, etc) are $130 Billion, Aid programs for Veterans cost $110 Billion, and Community & Disaster Relief programs cost $25 Billion. These alone total over $2.4 Trillion, and our federal receipts are only $1.8 - $1.9 Trillion.

There's no way that anyone could possibly argue that social programs are not breaking us. By themselves, they consume everything AND incur a half-trillion dollar deficit every year.

I'd just as soon keep supporting transportation (roads, bridges, air traffic, shipping), federal justice, and the comparatively small sums we invest in environment ($44 B), energy ($12 B), agriculture ($22 B), and science ($32 B). And I suppose we should keep paying government employees ($24 B) for their work.
 
 
Jan 6, 2012
I can't take any candidate seriously who doesn't have a serious plan for cutting military spending. Everything else get subordinated to that 800 pound gorilla, and the official budget is irrelevant because a large portion of that largess is in discretionary spending.
 
 
Jan 5, 2012
@veti - would be nice if that was true, but inflation doesn't really impact the rich. Interest rates go up on their cash savings, cash value of stocks goes up correspondingly faster, any goods they have increase in cash value just as fast as inflation (relative to the value they would have without inflation). Inflation really only screws people who have borrowed at a variable interest rate or have savings in a fixed-rate vehicle they can't pull out of, and benefits people who have borrowed at a fixed interest rate.

Oh, and it also screws everyone who works for a living, because annual pay raises are rarely adjusted corresponding to inflation.
 
 
+4 Rank Up Rank Down
Jan 5, 2012
I don't want to accuse you of harboring a hidden agenda, but I have this strange feeling that immediately after being sworn in on your zero budget growth platform you will turn around and announce your plan to solve unemployment. AKA building Cheaptopias from sea to shining sea.

I guess what I'm asking is... If I make an early political contribution to your campaign can you guarantee me a nice Cheaptopia house with a view of the Pacific and a veto over who my neighbors will be?
 
 
+1 Rank Up Rank Down
Jan 5, 2012
I'm probably wrong, but I'm pretty sure that an instant freeze on the federal budget is a more draconian cut than anyone is currently talking about. All those diehard tea-party congresscritters? - not one of them is currently suggesting any such thing, they all want to keep increasing the budget. They just spin it a little differently, that's all.

The debt is a problem, but it's not the problem most people think it is. See, the thing is - that $14 trillion or whatever it is, it's not (mostly) owed to some shadowy foreigners like China - the huge bulk of it is owed to American citizens. Specifically, to American citizens who are rich enough that they want part of their portfolio to be a very low-risk, low-return investment.

So basically, the debt is a problem of *distribution*. It's about funnelling money from future taxpayers to the descendents of today's rich. (Not *filthy* rich, just comfortably well off - think top 10%, not 1%.) And the best way (by far) to deal with it is simple, old-fashioned inflation.

Yeah yeah, I know, dirty word - Weimar, Zimbabwe, eighty trillion dollars for a mouldy apple, yada yada. But that's just scaremongering. Throughout the 20th century, lots of countries had inflation rates ranging from 5% to 25% per annum and successfully brought it back down without ever entering that scary hyper- phase. The British, for instance, had inflation around 15-20% for most of the 70s and early 80s, yet the pound is still worth more than the US dollar (and that's without one of those 'revaluations' where they knock zeros off the end of their currency amounts).

It's no coincidence that the 30 years since governments made "controlling inflation" their top priority is the same period over which inequality between rich and poor has grown enormously. Inflation is by far the best way of redistributing money from the rich to everyone else. Embrace it today.
 
 
+1 Rank Up Rank Down
Jan 5, 2012
You are already reneging on your promise to let Bill Clinton do the thinking and you would sit back and look smug![grin]
 
 
Jan 5, 2012
I've been telling people, not here but elsewhere, for a long time that I would happily accept a federal budge freeze. Hopefully as a temporary stopgap on the way to true cuts, but if a freeze is the best we can do forever, that's better than the current system.

The current system, by the way, for most federal programs uses automatic annual increases, that are assumed by the number crunchers to be etched in stone. This is known as baseline budgeting. Under this system, a spending freeze is called a drastic cut. Even a reduction in the increase, to something that is still an increase, just a smaller one, is still called a cut. This is mostly so the Democrats can demagog attempts to reign in spending by using misleading language that makes people think spending reductions are being threatened when the proposed spending is actually at the same or a greater amount.
 
 
Jan 5, 2012
Can someone correct me if I'm wrong about this:

The President (as the Chief Executive) can order the various government departments to do anything he wants. But Congress controls the money and passes the laws which limits what the President can do.

But, is the President required to spend all the money that Congress authorizes?
If President Adams wants to freeze government spending, but Congress keeps passing increased spending bills, can he choose not to spend all the money?

Note: It's estimated there's $650 billion in money from past budgets that has not been spent. So Congress authorized the borrowing, spending and in some cases specified what the money was to be spent on, and it simply hasn't been spent yet.
 
 
+3 Rank Up Rank Down
Jan 5, 2012
You knock Ron Paul yet your ideas are strangely similar...

http://www.freakonomics.com/2012/01/04/ron-paul-answers-questions-from-freakonomics-readers-encore/

Q. (To RP) What would your plans for economic stimulation look like during this slumping economy?

A. (RP's Answer) Let’s start with what I wouldn’t do, which is make the problem worse. We can not solve our problems with what we’ve been doing — borrowing money from overseas and creating money and credit out of thin air. Distorting interest rates and inflating the monetary supply sometimes provides short-term relief, but it will only make the pain worse in the long run. During the presidential campaign, I released the following four-point plan, and would stick by it while at the same time listening to experts for advice on how to improve it: The Four-Point Plan 1) Tax Reform: Reduce the tax burden and eliminate taxes that punish investment and savings, including job-killing corporate taxes. 2) Spending Reform: Eliminate wasteful spending. Reduce overseas commitments. Freeze all non-defense, non-entitlement spending at current levels. 3) Monetary Policy Reform: Expand openness at the Federal Reserve and require the Fed to televise its meetings. Return value to our money. 4) Regulatory Reform: Repeal Sarbanes-Oxley regulations that push companies to seek capital outside of U.S. markets. Stop restricting community banks from fostering local economic growth.

 
 
Jan 5, 2012
Tiny flaw with this plan: The president doesn't pass the budget, he just signs it into law or vetoes it.

To make any type of change, we need to put people in congress who are serious about budget cutting.
 
 
 
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