Colombia’s Fiscal Woes and the 19th Theorem of Government

September 17, 2024 by Dan Mitchell @ International Liberty 

Three days ago, I wrote about Brazil’s budgetary chaos and I issued a corollary to my Golden Rule.

Whenever there is a fiscal mess, excess spending growth is the cause.

Today, let’s apply that lesson to another South American country.

There’s currently a big fiscal controversy in Colombia. So I did my usual thing of going to the IMF’s World Economic Outlook database (I’m not a fan of that bureaucracy’s policy agenda, but they have the best numbers) to see whether the nominal spending burden was increasing faster than the private sector.

Lo and behold, that’s exactly the case.

Since spending is not growing more than twice as fast as GDP, Colombia’s numbers are not nearly as bad as Brazil’s.

But there is nonetheless a bad pattern, with the gap between spending growth and GDP growth getting worse in more recent years.

I’m writing about Columbia today because of a Bloomberg report by Oscar Medina. Here are a few excerpts.

A group of Colombian lawmakers submitted a proposal to slash the government’s 2025 budget to avoid the need for tax rises as Gustavo Petro’s government navigates his latest crisis. The proposal…aims to cut the budget by 12 trillion pesos ($2.9 billion)… Petro faced a major political crisis this week after a proposal to increase diesel prices led thousands of truck drivers to block roads across Colombia’s main cities and highways, increasing food prices and risking fuel shortages. …

Colombia’s fiscal accounts are strained due to weak economic growth and lower-than-expected fiscal revenue. The government is projecting a budget deficit of 5.6% of gross domestic product for this year, the widest since the pandemic. Finance Minister Ricardo Bonilla warned that tax increases would be needed to fill that gap when submitting the nation’s 2025 budget… However, the recent crisis puts Petro’s government in a weak position to propose additional taxes, said Angélica Lozano, a senator on the budget committee.

I have two observations on this story.

First, I’m glad to see taxpayers protesting. Just as we recently saw in Kenya, Bolivia, and Sri Lanka, people are sick and tired of being fleeced by politicians.

Second, the story references “lower-than-expected fiscal revenue,” but the IMF data shows that the tax burden in Colombia has jumped by 7-percentage points of GDP this century.

I realize that very few readers are intensely interested in Colombian fiscal policy, but it does give us further confirmation of my observation that “whenever there is a fiscal mess, excess spending growth is the cause.”

Indeed, I’m going to use that statement as part of a new, 19th Theorem of Government.

And I added a second sentence so that we can see both the cause of fiscal problems and the solution to fiscal problems.

P.S. Click here for a tutorial on the economic harm of excessive government spending.

Obama at Columbia – Or Was He?

Revelations from George Stephanopoulos, Newsweek, and Columbia grads from Israel.

September 4, 2019 Lloyd Billingsley 

The president, “spent the first 20 years of his life going by the nickname Barry,” the former First Lady explains in the 2018 Becoming. “Somewhere along the way, though, he’d stepped into the fullness of his birth name – Barack Hussein Obama.”  Michelle does not note that, in all his writings from 1958 to 1964, the Kenyan Barack Obama mentions nothing about an American wife and Hawaiian-born son. Becoming portrays the future president as an “exceptional” and “gifted” student who “worshipped books.” At Columbia he “consumed volumes of political philosophy as if it were beach reading.”................“I was at Columbia a year behind Obama,” Cooper explained, but “I never knew Obama.” As Cooper recalled, Clinton factotum George Stephanopoulos was a year ahead of Barry and didn’t know him either. Neither did many other Columbia students, including those in Barry’s own class.

“I don’t know a single person at Columbia that knows him, and they all know me. I don’t have a classmate who ever knew Barack Obama at Columbia. Ever!” That was Columbia alum and Libertarian party vice presidential candidate Wayne Allyn Root in 2008. As Root told Matt Welch of Reason magazine,  he and Obama were both in the 1983 political science, pre-law class at Columbia University. Root and Barry had the same major, same career path and graduated on the same day, but Root “never met him in my life, don’t know anyone who ever met him.”.........To Read More....

Helluva warning about the stalemate in Venezuela

July 6, 2019 By Monica Showalter

Venezuela is in a stalemate. Ruled as a colony by its Cuban masters with a little puppet leader in the persona of Nicolas Maduro, it's as bad an economic shambles as Cuba is, and like Cuba, millions of its people are fleeing. The United Nations declared it a death-squad regime, with 7,000 documented killings of dissidents. There's a legitimate leader in the legislative declaration of Juan Guaido as president, but the man is powerless without an army to command and sadly fading to irrelevance.

But there's not nothing going on. Francisco Toro at the Washington Post has a powerful warning that the Venezuelan vacuum is activating some extremely evil forces that could take down our ally Colombia at a time when most of the attention is focused on the Guaido melodrama.............. He continues:

"Venezuela’s economic tailspin has left thousands of young Venezuelans hungry and desperate for any chance to make a living, creating rich recruiting grounds for the guerrillas. That same hunger has pushed thousands of Venezuelans out of the cities and toward the frontier mining regions the ELN controls, bringing a much-needed pool of labor to exploit. The result is a seriously strengthened ELN that, today, has more fighters, more income, more weapons and more territory under its control than ever before. Some analysts are now describing it as a “Colombo-Venezuelan rebel army.”

Toro's analysis is a very solid warning. Read the whole thing here..........To Read More...

Obama’s Admin Helped Fund Commie Rebels

By K. Campbell June 12, 2017

In February 2016, then-President Barack Obama announced a plan to increase U.S. aid to Colombia to at least $450 million in 2017 in order to help the Colombian government overcome the Marxist-inspired Revolutionary Armed Forces of Colombia, also known as FARC.  However, under the terms of Colombia’s attempt to appease the rebels ravaging their country, the U.S.-designated foreign terrorist organization would actually benefit from the massive funding, courtesy of U.S. taxpayers.

In fact, the deal would include direct distributions to FARC members, as well as government grants of millions of acres of prime agricultural land, according to Monica Crowley in an opinion piece to the New York Post.......To Read More.....

The Man Who Saved Colombia

By Alvaro Vargas Llosa 

Alvaro Uribe is among the most remarkable political leaders in recent history, but few North Americans know much about him. When he became president in 2002, some said Colombia was in its death throes. Homicides and kidnappings were common, paramilitary drug traffickers controlled half of the country, and a crippling 16 percent unemployment rate dashed hopes of material progress. By the time Uribe left in 2010, the violence had plunged, many of the paramilitary troops had been demobilized, and the investment rate had more than doubled to 28 percent of GDP. Some of that success can be attributed to Uribe’s willingness to challenge Ecuador and Venezuela for harboring Colombia’s narcoterrorists and to his village-by-village efforts to revive civil society. To Read More…..