– 49% of people in the US reside in households receiving government transfer payments. How many of those people are going to be willing to give up their benefits just because of a silly little thing like the collapse of the welfare state? What’s really sad is the chart: since 1983, the only real downturn was right after welfare reform in the mid-90s. There was another flatline in the mid-200s, but since then, the “stimulus” has jumped the trendline right back up to the pre-welfare reform days.
– Ramesh Ponnuru notes that the US has been pretty well locked out of new free trade agreements. That isn’t stopping southeast Asian countries from implementing them, however. A good way to improve economic performance would be to introduce new, legitimate free trade agreements (hint: if the free trade agreement is more than one page in length, it isn’t really a free trade agreement).
– Bob Murphy on federal tax receipts. It’s a bit hard to read the years on that graph, but note that only in the past few years have receipts gone down to around 15%. Bob Higgs has a good point in the comments: federal tax receipts were going down until the Korean war, which gave an incentive to jack the rates back up.
Incidentally, the third point mixed with the first point leads directly to welfare state catastrophe.