Our title is perhaps the most obnoxious line in the Hoover Five oped per some of the appropriately harsh comments to Cochrane’s post, which alas I did not cover here. Before I do so, let me turn the microphone over to Jonathan Chait:
It is a foundational belief of Republican Party doctrine that tax cuts cannot have any adverse impact on the national debt. Indeed, Republicans have invented a new language in which budget deficit does not actually mean the difference between revenue and outlay at all. It is a term used exclusively to express panic over social spending. Economists and intellectuals associated with the party are therefore required to, in essence, keep two different sets of books when discussing fiscal policy in public. In November, a group of Republican luminaries, including Michael J. Boskin, John H. Cochrane, John F. Cogan, George P. Shultz, and John B. Taylor co-authored an op-ed cheering on the Trump tax cuts. Isn’t it a little dangerous to permanently increase the deficit, especially during the peak of an economic expansion? Nonsense, they argued. The effect on interest rates of higher debt “is likely to be modest, given that the United States operates in an international capital market, which means that the impact of changes in interest rates resulting from greater investment demand and government borrowing are likely to be relatively small.” No need to worry your pretty little heads about interest rates, since international capital markets will supply as many buyers of Treasury bills as needed, forever. Party on! Now that the Trump tax cuts have passed, though, they have pivoted to a message of deep concern about rising debt. Boskin, Cochrane, Cogan, Shultz, and John B. Taylor have written another oped. It applauds the tax cuts and calls for more. Yet it warns that the failure to cut social spending will lead to catastrophe. Including higher interest rates
Well said! Now to defense spending. I could go all nominal like the Hoover Five and note that nominal defense spending rose by 90% from 2000 to 2017 but then nominal GDP rose by 88.5% over the same period. So we have updated the graph provided by Jeffrey Miron:
Figure 6 Defense Spending as a Percentage of GDP
Buying like the pentagon does now is slow disarmament; defending a profitable trough, selling junk justified by interventionist propaganda adoring a Saudi crown prince!
Several years ago Hoover mouth pieces were saying “liberty is lost if US does not spend 7% of GDP”!!
Here is another way to look at US war mongering spending:
The GDP adjusted line is nearly inflation adjusted and shows spending greater than during the not so cold war of the late 60’s with 40% less “force structure.”
Hoover has been misleading with their declining share of GDP meme for long as I have been following war mongering spending trends.
It has gotten intense and more crazy since the bi-partisan reign of liberal interventionism initiated by the Cheney branch of war monger perpetuated by the Clinton-Kagan-Obama brand.
For example, when I was still managing; F-22 was budget capped so when all they could get for $88B was 132 jets that was it.
F-35 was not limited by budget so when 2400 useless untested jets cost 40% more the liberal imperialists lined up to send more good money after bad.
It ought to be obvious by now that the LACK of social spending is rapidly destabilizing the country politically, and that the biggest threat these days is the internal anger and resentment being cause by rapidly increasing wealth inequality and the destruction of the middle class. But of course, the greedy scum who run the country will continue to push their propaganda right up until the day their necks are placed on the guillotine.