Ron Paul: Economics 101 Is Not Rocket Science!

by Ron Paul

Last week the Congressional Budget Office (CBO) issued its annual long-term budget outlook report, and the 2012 numbers are not promising. In fact, the CBO estimates that federal debt will rise to 70% of GDP by the end of the year– the highest percentage since World War II. The report also paints a stark picture of entitlement spending, as retiring Baby Boomers will cause government spending on health care, Social Security, and Medicare to explode as a percentage of GDP in coming years.

While the mainstream media correctly characterized the CBO report as highly pessimistic, they also ignored longstanding errors of methodology in CBO estimates. And those errors tend to support arguments for higher taxes and government spending, when in fact America needs exactly the opposite.

As Paul Roderick Gregory explained in a recent Forbes column, CBO has always applied wrongheaded assumptions inherent in Keynesian economics when forecasting future deficits – no matter how many times both history and economic theory have proven such assumptions incorrect. In particular, CBO seems wedded to two enduring Keynesian myths: First, that higher taxes necessarily increase federal revenue and have no negative effect on the economy; and second, that lower government spending hurts the economy. Neither is true, of course.

CBO also fails to factor in unexpected wars and expensive foreign entanglements, and we should not assign too much validity to predictive models based on peace. Judging from the actions and rhetoric coming from both parties in Washington, new military entanglements in Syria and Iran may well spike military spending in coming years.

Despite these sobering budget realities, the CBO report suggests that a solution is possible with merely a few minor adjustments in the way Congress handles economic issues. But what we need are not minor adjustments, but rather a fundamental shift in our philosophy of government. If we could come to our senses about the proper role of government in America, and what level of government interference is appropriate in a free economy, we would quickly find that there is no reason for government to spend so much, borrow so much, and tax so much.

If we simply allowed markets to work free of governmental or Federal Reserve interference, bad debt would be liquidated relatively quickly and malinvestment would be curtailed. Scaled-back regulations would encourage businesses to expand. Lower taxes would jump start investment and spur job creation.

This is not rocket science, it is Economics 101. All it would take is for government to get out of the way. There would be some short term pain, of course, but only by allowing the bubble to burst and bad debt to liquidate can we ever hope to begin building a real economy again.

The CBO report was alarming to most simply because they know neither party will take the steps necessary to avoid eventual fiscal calamity. Instead, despite their rhetoric, both parties want to maintain the fantasy that “deficits don’t matter.” But the CBO report, combined with what is happening in Greece and the European Union, should finally make the undeniable case that economic realities apply even to industrialized first world economies. We must take concrete steps today to avoid having America become the next Greece.

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153 Comments:

  1. 1) It is impossible for me to be a fascist which shows that your ability to judge people is worthless which actually solidifies that you are wrong about Ron Paul so I support your insult. 2) Rand is a prick. 3) You say you care about him being a sellout yet have not given any evidence to show him as a sellout. I can give you a video link to prove Rand is a sellout so where is the link to Ron being a sellout?

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  2. Ron, I’m not sure you’ve noticed but you are trying to reason with people who have abandoned reason. Don’t try to medicate the dead.

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  3. Childish name calling? I called you a Fascist sycophant, and you call Rand Paul “a prick”?

    I’m defining you and Rand Paul for what you are, while you “name call”, and name calling doesn’t work with me. So go right ahead sycophant.

    I don’t give a damn about Ron Paul’s news letters. You can shove em up your sycophant butt for all I care.

    I care about him being a sell out, leading his supporters down a dead end blind alley while he and his son disappear and shill for an establishment puppet.

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  4. Look at the poll on RonPaul(.)com.

    ‘If Ron Paul endorses Romney, who would you vote for?’

    If Ron Paul endorses Romney, I write in Ron Paul’s name; “Vermin Supreme”.

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  5. Hey you have done more than enough with your childish name calling and baseless statements to show who is in the right out of us. You assume Ron is bad because his son is a prick. I assume Ron is good because of his actions. 30 years of consistency. People like you attack him for newsletters, Rand, etc because you have nothing to go after him for.

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  6. I’m aware of that…but this is the wrong place to even bring it up. Not to mention, this isn’t actually Ron Paul’s page…he doesn’t have a youtube page. This is a fan site.

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  7. He was just in Teas where he gave an amazing speech so he is still in it.

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  8. When you need to pretend to be blind and stupid, I imagine we’ll be waiting for you to “see something” for a long long time.

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  9. I heard it all little Fascist. I heard his excuses when he skipped out on Iowa. I heard him try and tell people “Washington DC is sound asleep” while they were trying to pass crime into law as fast as they can.

    I heard Ron Paul sitting there telling people their representatives and repealing their one amendment after another when they don’t have that authority.

    If Rand Paul wants to shill for a Fascist wanna be dictator, he can, but don’t imagine anyone here’s will support him.

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  10. Once again pretending you know me. All I want him to do is say he’s still in it, thats it. If he can’t do that then he doesn’t want to win does he.

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  11. true, but he hasn’t come out with an explanation anywhere – not his website or anything.

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  12. Oh if only you found time to make an argument. Well now I can clearly see why you are mad at Ron Paul. I will not waste time making opinions based on logic when clearly you just want Ron to be some bad guy. If Ron is a bad guy I will wait until he actually does something to be labeled as bad for.

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  13. What do you want him to do spank Rand’s bottom. Rand is his own man and makes his own choice. You are a rabid voter wanting Ron to scold his son for your own amusement. Rand stabbed the movement in the back but Ron has not. So in lieu of Ron doing something bad he is getting hatred for something Rand did. That is an argument made from desperation.

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  14. Pretending you’re blind and stupid is always the only option you Fascists ever have.

    You think everything’s great, because you need people not to notice the big glob of globalist semen at the corner of Rand Paul’s mouth.

    This campaign has done everything it could to defeat its supports. They may as well told people to PRETEND THEY DON’T EXIST .

    Now they try and speak authoritatively into the camera telling people how shilling for an establishment puppet is good for the liberty movement…

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  15. 1) First part is a baseless assumption. 2) Clearly you never heard of the Ron Paul Super Brochure they were giving out. 3) If Ran Paul ran a self defeating campaign then why did he stay in it as well as speak to delegates about winning the caucuses. He was just in Texas where he gave a great speech and the Ron Paul Delegate strategy just one in Arkansas. 4) I am surprised you didn’t add “Wrote racist newsletter” to your list. 5) Name calling is adorable :p

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  16. You go ahead and pretend Rand didn’t have a big hand in Rons Campaign. He said nothing when they said he dropped out. That is a stab in the back. Look whats going on bud, the people your having to argue with, Ron didn’t have the majority now he definitely doesn’t. And it’s his own fault. All he has to do is say something but he pretends it never happened.

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  17. They live together, and think they’re leading a r3VOLution. Of course Ron Paul knew and supported the move.

    This campaign has been doing nothing but selling us out from the begging.

    ‘Don’t wear any buttons, don’t tell anybody who you support, act like a Romney supporter, if you feel like you have to speak out at the conventions keep it to Ron Paul talking points.’

    Ron Paul ran a self defeating campaign, and now his son’s sided with the establishment. That’s “selling you out” sycophant.

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  18. These videos have nothing to do with his campaign for President.

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  19. That really depends on your definition of winning. If you want power but a worse future then yes Rand is on the path to winning. If you want a better future but no power then Rand is on the losing path

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  20. oh please – he endorsed mitt romney ffs, what else do you want a punch in the nose?

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