US politics

[Dave Backus @ NYU]

We’re now in the middle of a great run of political theater, filled
with great material for the Daily Show and the Borowitz Report, but
there’s also a serious debate going on concerning the size of
government. Current law would lead to a substantial increase in
government spending as a fraction of GDP, which has been pretty much
constant (other than cyclical variation) for several decades. At some
point we’ll need to line up spending and revenues, either by raising
the former or reducing the latter. The question is how much of
each.

I ran across an interesting take on this in today’s Times from Stanley
Greenberg, who describes himself as a Democratic pollster -- link
below. My summary goes something like this: Voters are attracted by
many liberal government programs, but they believe that in practice
the benefits go mostly to the well-connected. (At this point, you
might think to yourself: “Duh!”)

The tension between policy design and execution has a long history.
Years ago, when I took a course in development economics, the
professor suggested that subsidized loans to small businesses in poor
countries could be counterproductive. Why, you might ask? Subsides
would attract the well-connected, who would crowd out the small
businesses for whom the loans were intended. I’m sure you can think
of similar examples. You’ll have to make up your own mind how typical
this is, in the US or elsewhere.

For my part, this leaves me unusually optimistic. I’m relieved to see
-- finally -- some focus on the budget. Long-term budget issues have
been apparent to anyone who cared to look for a while now -- at least
since the mid-90s, and probably before -- but better late than never.
It’s a feature of our system that problems are ignored until they
become crises, but once they hit that point the adults usually take
over. Let’s hope they do this time, too.

Links
http://www.nytimes.com/2011/07/31/opinion/sunday/tuning-out-the-democrats.html
http://www.borowitzreport.com/2011/07/28/china-puts-us-on-ebay/