>1. The US could only realize a budget surplus by savage cuts;
"Savage" is a major exaggeration, as I'm sure Max Sawicky will be quick to point out. There have been caps on domestic spending. The end of AFDC, while a savage piece of social policy, has had minimal fiscal impact.
>the rather
>insane debt to GDP ratio was increasing until 1995, and whether it resumes
>its upward incline in a downturn--a great liklihood, no matter how low
>Greenspan pushes interest rates-- I still maintain that govt cannot freely
>play the fiscal card in the next recession or depression because of its
>indebtedness.
The U.S. has one of the lowest debt/GDP ratios in the OECD, and one of the lowest interest burdens too; it, unlike most of the EU countries, meets the Maastricht debt/deficit criteria. In short, the U.S. would probably have little problem pulling off countercyclical deficit spending - in financial terms, that is. Politically, though, deficit spending is only slightly more respectable than pedophilia.
>2. Patrick has already quoted Grossmann on how wars by destroying capital
>set the stage for a new upturn. So for Mattick as well the stage for the
>post world war II upturn was set by the massive destruction of capital in
>World War II. This upswing was fueled by the fictitious prosperity from
>Keynesianism. I should have clarified this.
I agree that the long boom depended on the destruction of capital during 15 years of depression and war. But necessary isn't the same as sufficient; there was plenty of elite worry in the late 1940s and early 1950s about a return of the depression. Thus, NSC-68, the permanent war economy, and the rest. Still, the deficits of the 1950s were quite small:
U.S. GOVERNMENT, SURPLUS/DEFICIT, % OF GDP
1930s -3.0% 1940s -9.7% 1950s -0.4% 1960s -0.8% 1970s -2.1% 1980s -4.0% 1990s -2.7%
Doug