To the Editor:
The U.S. Senate passed its first budget in 1,448 days – largely in response to the House’s budget passage.
The only similarities between the two are that both were passed along party lines and that neither will last long in a vote by the other chamber. The main difference between the two budgets is the projected national deficit in 2023 for the House is $20.3 trillion and $24.4 trillion for the Senate.
The only way to explain these outrageous amounts of money and partisanship is through the Ratchet Effect’s application in economics. Robert Higgs best explained this theory by demonstrating that the continuous expansion of governments are largely due to national crises. With each crisis, the government expands in an effort to solve the problem. Afterward, the government contracts slightly, but the net effect is an increase since too much contraction would harm the beneficiaries of expansion.
The escalating large differences on economic policies between the two ideologies are results of this Ratchet Effect. Neither budget of Congress will lead to efficient deficit reduction because this economy has become dependent on government involvement and any significant cuts will be harmful. Oppositely, the idea of compensating for spending by taxing the rich is unrealistic and will also have negative economic consequences. Despite the budget passage by the Senate, the long-term effects of it are more harmful than that of the House’s. If deficit reduction is our goal, there must be more concessions. Unfortunately for opponents of spending cuts, it’s their turn.