C'mon I'll Give You Some Chips

I know this is old news--okay two months old--but I started it over a month ago and just hadn't got around to posting it.

What does this (starting at about 0:33)



have to do with this?



If you guessed "C'mon I'll give you some chips" = "Do you realize that you are eligible for a $400 tax credit" then you win. If this was a labor, environmental, pro-immigration or women's rights protest she wouldn't be challenging the protesters (can you imagine?). But since it is a "conservative" protest she has to throw in her devil's advocate comments instead of letting the guy finish a sentence. This graphic (taken from the Washington Post) explains rather succinctly the impetus behind the tea parties. (Go here for commentary from the Heritage Foundation.)

"C'mon American public, give me your GDP. Don't worry, I'll give you some chips." If only Pedro could offer us his protection. Contrast the above graphic with this screenshot from the Orwellian Office of Management and Budget homepage.

A New Era of Responsibility!?!?! (C'mon, I'll give you some chips.) I'll admit that Bush and the Republican congress spent like drunken sailors during his two terms. Federal expenditures increased from $1.79 trillion to $2.90 trillion (62%) between fiscal years 2000 and 2008. As a percentage of GDP, expenditures increased from 18.4% to 20.0% (GPO data here). But if even more of the same equals a a new era of responsibility then I am getting worried. The sheer size of these numbers are frightening. To put this in perspective, let's look at the projected $1.85 trillion federal deficit for FY2009. According to GPO data, the estimated GDP for 2008 was $14.52 trillion. Assuming GDP is not growing (technically it's shrinking since that is the definition of a recession), the deficit will equal at least 12.7% of GDP and the total projected budget ($2.99 trillion) will equal at least 20.6% of GDP. (According to one source, when you throw in state and local spending the share to government is 44% of GDP.) Here's another graph from the CBO that may add some additional perspective.

Realistically, I think inflation will be the only way to pay for federal over-spending. Significant tax increases seem politically risky and any significant cuts in spending are politically impossible (and there is no indication that the Obama administration is even considering them). It seems that the only way to make these debts go away is to slowly--or quickly--inflate them away and hope that folks don't notice their decreasing standard of living (or at least don't notice until through the next election cycle).