Bill White -- America's fiscal constitution: its triumph and collapse
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A historical explanation of how the U.S. Federal government came to
the budget and debt situation that we currently own.

For me, the most interesting part of the book is Part IV, which
describes how the fiscal restraint on Federal budget deficits
provided by what White calls "America's fiscal tradition" eroded,
then revived, and then then collapsed from 1980 to the present.
This is more than a political game of assigning blame and praise.
It's also a reasonably good account of the political tendencies and
influences that induce leaders and elites in a democratic government
to enact policies which break the connection between income and
spending.

1. Goofy theories and bad budget projections enable politicians to
   delude themselves into fantasy budgets.  This proves, yet one
   more time, that we can convince ourselves of almost anything, no
   matter how bizarre, if we have the desire and motivation to do
   so.  Why the failure to maintain a balanced budget?  In part
   because of one especially egregious delusion, specifically the
   belief that if you limit income and taxes (which you want), then
   your political opponents will respond by cutting spending (which
   they do not want).

2. Budget plans that make good business sense and good sense for
   business while sacrificing those with the least to sacrifice can
   reduce deficits and the debt, too.  Why the *limited* success?
   Because, those policies really were good for business and finance
   and the financial markets.  But, we should not forget, that the
   rules and regulations (especially the stripping away of some
   financial regulations) planted explosive devices that became
   destructive in 2007-2008.

3. You can have as much as you want and anything you want if you
   learn to stop the pretense of even trying to balance the budget.
   This approach, in effect, says the pay-as-you-go approach is for
   suckers.  White calls this the *collapse* of America's fiscal,
   pay-as-you-go tradition.  Why the failure?  Because, Congress and
   The President (George W.  Bush) failed to support a mechanism to
   make tax cuts dependent on achieving budget milestones, in other
   words, disconnect income and spending.

A bit of contrast -- On one side we have the theory that if you cut
taxes, it will fuel economic growth and energize the nation's
economy.  And, on the other we have the theory that if the
government pumps money into the nation's economy (stimulus, building
infrastructure, tax rebates to workers, etc) it will simulate the
economy.  It is hard to determine which side White comes down on
with respect to this issue.  But, he is certainly clear on the
following: (1) Debt incurred to deal with a recession must be paid
down out of future earnings.  (2) Political leaders (Republicans in
particular) cannot expect the largest proportion of the population
who own the smallest proportion of the wealth to pay for the tax
cuts that went to a very small proportion of the population that
holds a far larger proportion of the nation's wealth.  (3) White
believes that we cannot reduce deficits by raising taxes alone; some
mix of spending cuts *and* increased taxes must be used.  This, by
the way, is an especially vexing problem now in the U.S.A.  where we
have one major political party (Republicans) whose elected officials
have sworn a pledge now to raise taxes and who live in fear of the
backlash that will happen if they vote in favor of doing so.

A summary from a left-of-center point of view: During the last 30
plus years we in the U.S.A. have had Republican Administrations that
break the piggy bank in order to give money back to their political
financiers followed by Democratic Administrations that try to repair
the damage either by reducing the deficit (Clinton) or save us from
a financial and economic collapse (Obama), and during it all
Republicans *talk* about how they are fiscal conservatives and are
trying to save the nation's finances.

Sometimes two opposite or extreme positions do not add up to a
compromise between those two positions.  That's a fundamental
problem in a democratic form of government.  And, one of the values
of White's book is to give a good descriptive account of how that
has happened in our recent (and not so recent) history here in the
U.S.A.  If we don't learn our mistakes, we won't learn how to
correct them.

05/22/2014

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