Posted by Pete Spiliakos
Japan has had stable consumer prices since 1993. There have been periods of mild inflation and mild deflation (~1% per year), but on balance consumer prices have remained unchanged. I cannot figure why he refers to Japanese 'deflation' unless he is referring to some other price index than the one's commonly used.
Imagine for a moment you had serious reformers in charge of the federal executive and legislature, they would be compelled as they worked to discover the following:
1. There is quite a bit you can cut with a cleaver, inasmuch as whole agencies and departmental staff are given over to tasks that might be readily deemed inadvisable by a Republican politico applying a modest array of principles. (The Department of Housing and Urban Development, the Farm Service Agency, and the National Science Foundation would be examples). I will wager that 'quite a bit' might amount to about 7-8% of all federal spending. To be responsible, you might have to phase this spending out over a period of years to allow the clientele who so benefit to make the necessary adjustments. N.B. the current deficit exceeds what one can get with the meat cleaver by a factor of about 4.
2. Appended to that would be spending you would have to excise with a scalpel - the programs themselves being legitimate but for which budget reductions promise service reductions or require process improvements it is difficult for legislators to discern or require.
3. Bringing the compensation for federal civilian employees down to earth and seeing to it that public employees see the recession manifest in their paychecks are good objects. They have a limited capacity to make much of an impact on the deficit. Wages and salaries and benefits for civilians amount to about 6% of federal expenditures as we speak.
4. The old and crippled have limited earning capacity and limited capacity to adjust to changes in their economic circumstances. Benefits for the elderly are taken account of in people's financial planning throughout their worklife. Responsible controls on these sorts of expenditures need to be implemented gradually, cohort-by-cohort. The opportunity for savings will only be realized slowly.
5. The Republican congressional caucus better stop this pig-headed insistence that taxes must never be raised, or we ain't ever gonna get this job done.
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