The Fork In The Road Which Lead Us To The Fiscal Cliff
The Fiscal Cliff is a problem. We typically blame people not named us when problems occur. It’s easier and less painful than solving the problem. Here the problem is that the current US President and Congress (The US Senate in particular)* have both spectacularly failed in their management of the national fisc.
If we decided to solve America’s fiscal issues, it wouldn’t hurt to mine some historical data. Since 1950, the United States Government has averaged expenditures proportional to 19.61% of the same year GDP with a standard deviation of 2.25%. Our government has booked revenues equivalent to 17.65% of same year GDP with a standard deviation of 1.26%. If both events occurred at random, we’d have a 6.07% chance of a Federal Budget actually balancing if the spending and the revenues were determined at random.** This would suggest that we’ve set up a systemic and nasty spending problem despite pious insistence otherwise.Read More »