An "Economic Snapshot" offered today by Max Sawicky of the Economic Policy Institute brings home the sobering cost of extending the Bush tax cuts of earlier this decade, measured two ways.

It shows that, all other things being equal, despite "out of control" projected growth in Social Security, Medicare, and Medicaid spending, the cost of these benefits in 2017 will be dwarfed by the cost of Bush tax cuts and related revenue policies, excluding interest costs associated with debt payments.

It also shows that the revenue depletion caused by extending the tax cuts would increase the budget deficit in 2017 to roughly 4.5 percent of gross domestic product -- see below. A country with budget deficits in this neighborhood would have its credit line severed by the IMF. Such a country would be barred from membership in the European Union.

If such the prospect of such a fiscal future for the United States is not unsettling to you, you may want to consider submitting an application for director of the administration's Office of Management and Budget, a position that is currently vacant.

Matthew Yglesias:

Preschool money for poor kids is the sort of thing that sounds good when a state is flush. When a recession comes, Medicaid costs go up, and tax revenues go down it's another matter. The state needs to balance its budget, and it's not going to want to do it by slashing services the middle class enjoys. So it comes down to tax increases and cutting services for the poor (and, of course, infrastructure maintenance as we've seen recently) and the poor tend to lose.

Exactly. Federal funding of programs that meet human needs are superior state funding precisely because the federal government can and does run a budget deficit. Except for Vermont, all states have some sort of balanced-budget requirement - be it explicit constitutional amendment, statute, or judicial ruling interpreting the constitution in such a way. The effect of this is that the vast majority of states' program funding is pro-cyclical, so in economic downturns when tax revenues decline, spending must also decline, exacerbating the economic pain felt by citizens. The federal government, on the other hand, by being able to run a deficit can smooth out the effects of an economic downturn (counter cyclical). When the economy tanks and families find themselves with fewer sources of income is exactly when human needs programs are needed the most.

National Journal's Clive Crook deftly devalues "starving the beast" as a political tactic, which asserts that tax cuts can put pressure on lawmakers to reduce the size of the government.

"Starve the beast" exponents are not demanding packages of lower taxes and lower spending. They are saying that lower taxes will sooner or later wear spending down anyway. When you look at those cases -- instances where taxes have been cut independently, with no connection to new spending plans -- spending does not fall, say the Romers. In fact, it rises a bit. "Starve the beast" does not work.

I hope they are right. The idea that a kind of political extortion is needed to contain the growth of government may possibly be correct -- but it is certainly unappealing. The case for low taxes can be made perfectly well on the merits: Arguments one (pro-growth) and two (pro-liberty), as mentioned at the start, ought to be enough. Then, if you can convince people that persistent large budget deficits are bad for the economy (which they are), the case for limited government is made as well.

A couple comments: "starve the beast" is another product of the rightist mind, which puts all faith in the individual when it comes to economic matters, but no faith in the individual when it comes to political matters. This thought has been formalized by George Mason economist Bryan Caplan, who suggested limiting the franchise to libertarian economists. Who's the elitist now?

Crook, who is both a libertarian and a believer in democracy, thinks a convincing case can be made for small-government economics.

Well, here's a thought experiment. Let's say you're a bridge engineer, or an Army hospital administrator, or a levee builder. And let's say you think you need more funding to do your job. Who do you think will give you a fair hearing- an honest, good-faith conservative like Crook, or a liberal who's less skeptical of government?

I'd venture it's the liberal who doesn't think government is always the problem that'll give the fair hearing and make the right call. After all, it's been conservatives of Crook's stripes that were in power while all these problems were festering.

So by all means, let's finally have a discussion on the merits. In fact, it seems like President Bush wants to have this discussion, and has taken up Crook's view. I believe liberals can make a convincing contrary case, but will they? Instead of just yammering on about the debt?

In his post about the president's call for a corporate tax cut, Matt asks:

And what if an unhinged market was the root cause of all this trouble [a potential economic downturn]?

I submit that the market is in fact completely hinged. That is: rapid expansion in financial markets (i.e. bubbles) is always followed by rapid contraction (i.e. bubble bursting). Oscillations between growth and contraction is the nature of the market.

And it is precisely because markets behave this way that some government policies are necessary. They provide a buffer between the humans that depend on constant sources of food, shelter, and security and the rough-and-tumble, unpredictable cruelness of The Market.

I'm going to go out on limb and suggest that of all the programs on which the government could spend money to mitigate the human misery caused by the housing bubble bust, corporate tax breaks would be the least effective.

Senate Majority Leader Harry Reid has announced that the Senate will vote on the nomination of Jim Nussle to be the new Director of the Office of Management and Budget on Monday, September 4 - the first day back from the August recess. Reid announced there will be three hours of debate on the nomination beginning at 2:30 pm. One hour each for the chairman and ranking member of the budget committee, and one hour controlled by Sen. Bernie Sanders (I-VT).

Sanders has announced a hold on Nussle's nomination because he has serious concerns about the nominee and his philosophical differences with the administration's fiscal policies. Sanders said:

President Bush is completely out of touch with the economic realities facing working families in America. Bush needs to hear the truth, not an echo. He needs a budget director who will make him face the facts, not fan his fantasies.

According to comments by senior Treasury Department officials yesterday, the Senate's failure to raise the statutory national debt limit -- the House has done so -- threatens to constrain the nation's ability to meet its financing obligations. Treasury says the U.S. will reach its debt ceiling, currently $8.933 trillion, in early October.

Because the Senate hasn't acted, Uncle Sam can't go to market for more money thereafter. This will force delays in Treasury's auction schedule, as well as run the risk of default on debt repayments -- which would be about as embarrassing as war declared on whimsy, i.e., unthinkable. Treasury estimates U.S. borrowing needs at $74 billion from October to December. It just needs Congress' permission to go to market.

Matt did a good job this morning of giving the business to Robert Samuelson. Economist/blogger Mark Thoma weighs in as well for good measure. Thoma makes the critical point:

Samuelson seems to have completely missed the connection between health care reform and his pet column peeve, hence his claim that the problem is being ignored in the political debate when that isn't the case. In addition, Samuelson's continual focus on the budget deficit obscures the real problem. It doesn't matter whether health care is in the public domain or the private domain, the costs will be daunting either way if they continue on their present trajectory, so finding ways to hold down health care costs is where the focus needs to be.

Exactly.

Samuelson is miffed that a gang of six think tanks have been derelict in their duty to ride his personal hobby horse. He complains that three left-leaning and three right-leaning think tanks have not yet gotten together to write a single book, with each contributing 35 pages, about the horrors of the retirement of the Baby Boom generation.

It would illuminate the connections between defense spending, retirement benefits, health care, economic growth and much more. Writing for a general audience, it would favor plain English, not the usual technobabble.

His beef is that think tanks writ large have yet to address his fears. I submit that perhaps there's a good reason for this: Think tanks have in fact thought about this and concluded that long term fiscal challenges cannot be met by simply cutting Socialsecurityandmedicare benefits. It's entirely possible that think tanks have figured out that these are multidimensional, complicated issued that require multiple policy solutions that cannot be addressed in 35 pages and require big words and numbers to describe them.