All (Political) Roads Lead To Massively Higher Government Spending

The past few years have seen more than the usual amount of political upheaval. But, interestingly, most regime changes have resulted in pretty much the same thing: Higher government spending and bigger deficits.

Apparently the only “reforms” today’s voters will accept – which is to say the only actions that don’t get a leader kicked out of office – involve spending rather than saving money.

Three recent examples:

The US
Republicans – the party of smaller government – gained control of the White House and Congress in 2016, and proceeded to take a meat ax to bloated entitlements, lowering the government’s share of the economy to levels not seen since the Reagan years.

Just kidding. They tried to eliminate the newest entitlement, Obamacare, but failed to produce even a coherent proposal. So instead they cut taxes, expanded the military and left everything else on autopilot. Now, nine years into a recovery with official unemployment below 4% — and with the small-government party in charge:

U.S. budget deficit approaches $1 trillion

(MarketWatch) – The Treasury Department says that adjusted for timing-related transactions, the deficit would have been $270 billion over the last two months compared to $250 billion during the same period the prior year, with tax revenue up by 1% but spending up by 4%.

The budget picture is deteriorating as the U.S. taxes individuals and companies less and spends more, mostly on defense and benefit payments to an aging population. Though a growing economy is softening the blow, it’s possible that the annual deficit will top $1 trillion this year.

Italy
Voters recently installed a coalition of left and right-wing populists who immediately tried to make good on a number of campaign promises while ignoring the EU’s deficit guidelines. Threats flew and bond yields spiked, making it clear that the new government would have to be more circumspect. So Rome promised to keep its spending within EU limits. However…

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