At eight years, the current economic recovery is the third longest on record. Personal income, consumer spending, household assets, and net worth, are all at record highs. Stock markets are at record highs. Corporate profits are within striking distance of their all-time highs. Federal tax receipts are at record highs.
So, how is it possible that the federal budget, along with some state and local budgets, still look like they're in the middle of a nasty recession?
The answer: Government fiscal management is completely out of control. Politicians find time to fret about Amazon's purchase of Whole Foods and won't stop bashing banks, but they've lost their ability to deal with their own fiscal reality.
The federal government is projected to run a nearly $700 billion deficit this year, and long-term forecasts suggest trillion dollar deficits as far as the eye can see. Illinois and the City of Chicago are running chronic deficits, while New Jersey and New York are fiscal basket cases.
This makes the politicians of the 1990s look downright responsible. In 1999, after a 10-year recovery, these entities were all running surpluses. But even if this recovery lasts 12 years, deficits will persist. And what happens if there's another recession?
Politicians have claimed intellectual support for their fiscal irresponsibility from John Maynard Keynes. He believed in deficit-spending to help cure the problems of weak consumer spending in a recession. As a result, the Panic of 2008 gave cover to grow government, and they did so in spectacular fashion. But that "emergency" spending then morphed into permanent overspending and chronic deficits.
Tax rates are higher today than in 1999, and the economy is bigger, but governments have consistently outspent the ability of taxpayers to fund it.
Even Keynes thought the government should roll back spending and get budget deficits under control in better economic times. But politicians are long past seeking his intellectual support. They love to lecture business-people about greedy human nature, yet can't turn that analysis on themselves.