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From: regard@ttidcc.UUCP (Adrienne Regard)
Newsgroups: net.flame
Subject: balancing the budget
Message-ID: <506@ttidcc.UUCP>
Date: Wed, 26-Jun-85 17:30:52 EDT
Article-I.D.: ttidcc.506
Posted: Wed Jun 26 17:30:52 1985
Date-Received: Sun, 30-Jun-85 01:36:28 EDT
Organization: TTI, Santa Monica, CA.
Lines: 52

>>(Larry K. Kolodney)
>>That's a crock!  The way the budget process works is that Reagan proposes a
>>budget to the congress, ...
>
>Sorry Bucko, the Prez is not a member of Congress so how can he introduce any
>bill?  He has to do it though a Senator or Representative.  He can @b(ONLY)
>influence the members of Congress until the bill is on his desk to be signed
>or vetoed.

Well, yes and no.  The defense budget is written by the Prez, direct, and
does not got through the Department of Budget (whatever it's title is), as
all other budgetted sectors have to.  This isn't news -- it's always been
this way.  That means that there are really two budgets -- one where the
Prez says how much he wants for defense (which is then negotiated) and one
that the Budget Department puts together (which is also negotiated).

>>All of Reagan's proposed budgets have included deficits BEFORE congress ever
>>got a hand on them.  The Republican Senate also has never produced a
>>deficit free version.
>But they had a smaller deficit than after the Congress got its hands on it.
>Did the Democratic House ever produce a deficit free version?

According to the Economists at UCLA, the deficit funded the inflation of
the 70s.  Reagan inherited some deficit, and more got added on.  The monetary
supply and the changes in banking law in the 70's (which rendered monetary
policy rather useless) also contributed.

>But, Ladies, Gentlemen, and childish liberals of all ages, we do seem to be
>straying from the subject, not so much where should we point the finger but
>can we place a cap on this deficit with a balanced budget amendment?

Also, according to the Economists at UCLA, a balanced budget amendment would
make things worse, since yearly balancing negates the effect of the automatic
fiscal stabilizers. These stabilizers reduce the budget _swings_, though
they do not correct unfavorable _trends_ (into the red).  Cutting spending
(whether military or foreign aid or welfare) 20 Billion would not reduce
the deficit by 20 billion because of multiplier effects.  Instead, it might
reduce the deficit by, say, for example, 10 billion (better than nothing you
say) but then raise the interest rate by a couple percent (which lowers
everybody's available income) and reduce the GNP by a significant amount (I
have no idea of sample figures here) which lowers the tax base.

Now, I don't know how much I trust the Economists, and it wasn't my favorite
class, and I wouldn't have brought it up except there didn't seem to be
anyone contributing who had heard anything about this stuff.  BUT there seems
to be some merit in looking further before buying a pop-politics solution,
the kind of thing that candidates say to get elected, and never have to
act on, since it's such a stupid idea.

I really don't want to have to dig through the notes (BORRRRIIINNGGGG stuff),
so if anybody else can explain this thing better than I --PLEASE PLEASE
take it up.