RE: Ultimately it's the democrats

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DomKen -> RE: Ultimately it's the democrats (1/5/2013 4:44:07 PM)
quote: ORIGINAL: Yachtie quote: ORIGINAL: DomKen FR The deficit is unsustainable in the long term but is needed in the short term. The fact is that government deficit spending is a vital part of the economy and has been for decades. True as to first part; unsustainable. Short term? More of what got us here. Like drinking more to achieve sobriety. We've been heading towards the brick wall for decades. Problem is, which most deny, is that we have arrived. When the economy improves and unemployment is closer to 4% then we can drastically cut defence spending, resulting in tens of thousands of job losses in the private sector, and increase tax rates till we have a surplus which can be used to pay down the debt over several decades. Maybe ten years ago, when we had some room to still move, before we hit the wall. No matter how you slice the pie, there is not enough to achieve that without destroying what remains. It's just math. Unmitigated bullshit. There is absolutely no need to reduce deficit spending right now. As a matter of fact right now is one of the best times ever for the federal government to be borrowing money (factoring in inflation versus the prevailing interest rate on Treasury notes the bond holders are actually paying for the privilege of owning the bond). Just out of curiousity, what sign do consider exists to say that we have reached a tipping point of the debt?

DomKen -> RE: Ultimately it's the democrats (1/5/2013 4:45:41 PM)
quote: ORIGINAL: DesideriScuri quote: ORIGINAL: DomKen FR The deficit is unsustainable in the long term but is needed in the short term. The fact is that government deficit spending is a vital part of the economy and has been for decades. Undoing that dependency during an economic downturn of this severity is asinine. When the economy improves and unemployment is closer to 4% then we can drastically cut defence spending, resulting in tens of thousands of job losses in the private sector, and increase tax rates till we have a surplus which can be used to pay down the debt over several decades. As to the sudden rage in supposed conservatives about the defecit it has that unmistakable odor of partisanship at best, at worst it appears to be eerily reminiscent of http://en.wikipedia.org/wiki/Council_Wars We could have 4% unemployment tomorrow if that's what we want. What would the cost be for that, though? What would the benefit be? The whole point of government isn't to give the majority what they want. The Constitution is the framework and limitations placed on Government. It doesn't matter if the majority want something, nor if that something is "affordable" or not. The first test is whether or not it's Constitutional. Then we can see if it's affordable and/or even desirable. The point of Government is not to protect the habitat of some naked mole rat or to commission a plan to create a safeway for local fauna to cross a highway safely. It's also not about imperialistic military installations and bases strewn across the globe. This was settled back in the 30's. The federal government can deficit spend to effect the economy.

mvc333 -> RE: Ultimately it's the democrats (1/5/2013 4:49:12 PM)
I'm not averse to a consumption tax but with two caveats 1. I'd want a rebate on tax expenditure going up to the poverty level to keep it progressive. 2. I'd want to combine it with an inheritance tax. Consumption taxes tend to favour aggregation of wealth since savings aren't taxed. Nor are investments as they aren't consumption. This can quickly lead to a few people owning nearly everything. Hence my 2nd caveat. People being born into extreme wealth is hardly a "fair system". It's also harder on personal responsibility when wealth is aggregated in few hands because that makes opportunity more limited. The last thing I want is to live in an oligarchy. I'm also not averse to a conservative reading of the constitution, though I am quite liberal myself. I think people would often be surprised what a conservative reading would allow. Gay marriage for one would be(and should be) legalized under the Full Faith and Credit clause. "Full faith and credit ought to be given in each state to the public acts, records, and judicial proceedings, of every other state; and the legislature shall, by general laws, prescribe the manner in which such acts, records, and proceedings, shall be proved, and the effect which judgments, obtained in one state, shall have in another." Instead conservativism often takes the guise of "family values" rather than a strict interpretation of the constitution. Until we get to that point I'll be called a liberal and glad to be I suppose.

Yachtie -> RE: Ultimately it's the democrats (1/5/2013 4:49:44 PM)
quote: ORIGINAL: DomKen Just out of curiousity, what sign do consider exists to say that we have reached a tipping point of the debt? Stated debt has now risen to ~103% of GDP (does not include unfunded liabilities which exceed 100T). Historically, to my knowledge, no nation has survived where such has occurred.

mvc333 -> RE: Ultimately it's the democrats (1/5/2013 4:51:36 PM)
We've had higher. http://visual.ly/united-states-debt-percentage-gdp-1940-2012 1946 121.7%

DomKen -> RE: Ultimately it's the democrats (1/5/2013 4:54:05 PM)
quote: ORIGINAL: Yachtie quote: ORIGINAL: DomKen Just out of curiousity, what sign do consider exists to say that we have reached a tipping point of the debt? Stated debt has now risen to ~103% of GDP (does not include unfunded liabilities which exceed 100T). Historically, to my knowledge, no nation has survived where such has occurred. It was at 112% of GDP in 1945. http://en.wikipedia.org/wiki/File:Publicly_Held_Federal_Debt_1790-2012.png

Yachtie -> RE: Ultimately it's the democrats (1/5/2013 4:56:50 PM)
quote: ORIGINAL: mvc333 We've had higher. http://visual.ly/united-states-debt-percentage-gdp-1940-2012 1946 121.7% True. In 1946 we had unusual circumstances to allow us bring it down over a relatively short amount of time. Today, we don't. Yours is the exception to the rule, and the circumstances of ~1946 (last man standing, untouched) versus today is what makes for that distinction. edit: in short, if it weren't for Europe, and to a lesser degree Japan, purchasing our industrial might, post WWII, which allowed our economy to accelerate domestically, we'd have been in deep shit.

mvc333 -> RE: Ultimately it's the democrats (1/5/2013 5:01:42 PM)
What we had to bring it down was massive government spending. That's what the wars were. The gearing up and development of our manufacturing base for technologies and equipment to be spent in WW2 and Korea stimulated this economy, and brought it out of the depression. This is why I am in favour of a large stimulus. Clearly it has to be well spent and well targeted, as the WW2 stimulus was (because it had to be). If anything things were somewhat worse back then, we had nobody to trade with. Europe and Asia being in tatters didn't make it better for us, it deprived us of essential markets that we have access to now. Of the debt that wasn't being spent stimulating our economy, a lot of that went towards stabilizing other countries (e.g. The Marshall Plan). What worked then is what will work now. Keynesian economics.

DomKen -> RE: Ultimately it's the democrats (1/5/2013 5:01:52 PM)
quote: ORIGINAL: Yachtie quote: ORIGINAL: mvc333 We've had higher. http://visual.ly/united-states-debt-percentage-gdp-1940-2012 1946 121.7% True. In 1946 we had unusual circumstances to allow us bring it down over a relatively short amount of time. Today, we don't. Yours is the exception to the rule, and the circumstances of ~1946 (last man standing, untouched) versus today is what makes for that distinction. WTF are you claiming. We brought the debt down back then by raising taxes to a top marginal rate of 90% and making it hard to remove money from the nation. Absolutely no reason we couldn't do it again.

Yachtie -> RE: Ultimately it's the democrats (1/5/2013 5:05:26 PM)
quote: ORIGINAL: DomKen quote: True. In 1946 we had unusual circumstances to allow us bring it down over a relatively short amount of time. Today, we don't. Yours is the exception to the rule, and the circumstances of ~1946 (last man standing, untouched) versus today is what makes for that distinction. WTF are you claiming. We brought the debt down back then by raising taxes to a top marginal rate of 90% and making it hard to remove money from the nation. Absolutely no reason we couldn't do it again. Unmitigated bullshit. We've been over this before. edit: round and round we go. When it all goes to shit, don't complain to me.

Yachtie -> RE: Ultimately it's the democrats (1/5/2013 5:07:40 PM)
quote: ORIGINAL: mvc333 What we had to bring it down was massive government spending. That's what the wars were. The gearing up and development of our manufacturing base for technologies and equipment to be spent in WW2 and Korea stimulated this economy, and brought it out of the depression. This is why I am in favour of a large stimulus. Clearly it has to be well spent and well targeted, as the WW2 stimulus was (because it had to be). If anything things were somewhat worse back then, we had nobody to trade with. Europe and Asia being in tatters didn't make it better for us, it deprived us of essential markets that we have access to now. Of the debt that wasn't being spent stimulating our economy, a lot of that went towards stabilizing other countries (e.g. The Marshall Plan). What worked then is what will work now. Keynesian economics. You and DomKen can battle it out. You both can't be right. Matter of fact, you're both wrong. hint: wars are funded by the G component of GDP (and where does G get its money beyond taxation? And, what is that effect on the economy?) edit: you're getting your stimulus. Of course it will be said we did not spend enough when it fails. Krugman has said that.

mvc333 -> RE: Ultimately it's the democrats (1/5/2013 5:17:04 PM)
Krugman has been screaming it and he's right. It hasn't failed though, it has prevented a much worse scenario. What was the stimulus? 787 billion? Over 3 years again a 15 trillion a year GDP. $45 Trillion GDP and we threw 1.75% against it? Furthermore a lot of it was not direct stimulus but indirect (ie tax cuts etc). https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_cd&idim=country:USA&dl=en&hl=en&q=us%20gdp Take a look. The $500B fall in 2009 and then going back up following the stimulus. Had the stimulus been more we might have actually seen some real growth.

mvc333 -> RE: Ultimately it's the democrats (1/5/2013 5:21:38 PM)
I don't think DomKen and I need to battle it out. Our points aren't mutually exclusive. http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#History_of_top_rates 94% in fact was the top marginal rate (Of course that is the MARGINAL rate, those rates only applied to amounts of money that were tremendous. Taken in context Bill Gates would be worth 3.6 billion instead of 60 billion) Tax AND spend. They've become dirty words but they're useful tactics in a recessionary period. So long as you are taxing the right people (the extremely wealthy because their money just sits there quite often) and spending on the right people (Lower income because they spend what they get).

Yachtie -> RE: Ultimately it's the democrats (1/5/2013 5:21:39 PM)
quote: ORIGINAL: mvc333 Krugman has been screaming it and he's right. It hasn't failed though, it has prevented a much worse scenario. Oh!?!? And we're out of the woods are we? GDP is rising faster than inflation? Real unemployment is falling? People coming off the SNAP rolls are they? Bond yields are back to ~historical norms are they? QE has ended has it? Are you sure the worst is not yet to come? You're a bit premature me thinks in your assessment.[8D] What's going to be so much fun is when all these posts can come back and bite you.

mvc333 -> RE: Ultimately it's the democrats (1/5/2013 5:24:04 PM)
I think you are taking a tremendous amount of liberty with my words "it has prevented a much worse scenario. " with "And we're out of the woods are we?" I would hardly equate those statements.

Yachtie -> RE: Ultimately it's the democrats (1/5/2013 5:25:27 PM)
quote: ORIGINAL: mvc333 Take a look. The $500B fall in 2009 and then going back up following the stimulus. Had the stimulus been more we might have actually seen some real growth. Ok, how much more? Pull a number out your arse.

Yachtie -> RE: Ultimately it's the democrats (1/5/2013 5:31:44 PM)
quote: ORIGINAL: mvc333 I think you are taking a tremendous amount of liberty with my words "it has prevented a much worse scenario. " with "And we're out of the woods are we?" I would hardly equate those statements. Ok. So I did. Mea Culpa. Let me rephrase. If a much worse scenario has been prevented, are we not out of the woods as to its repetition, or perhaps even worse? Would you care to place a wager?

mvc333 -> RE: Ultimately it's the democrats (1/5/2013 5:37:12 PM)
I'd say $1.8 Trillion. Based on precedent. Both parts of the New Deal combined measured out at about 12.6% of a years GDP. The American Recovery and Reinvestment Act was about 5.5% 12.6/5.5 * 787 Billion ~ $1.8 Trillion. A lot of which could go to state and local governments in the form of assistance so they don't have to lay off workers. You can't force the private sector to spend but you can support local governments who have employees who do spend.

mvc333 -> RE: Ultimately it's the democrats (1/5/2013 5:42:12 PM)
I'd prefer not to. I'd say it was excessive wagering in the derivatives market that caused this, far be it from me to add to it :) Unless I can pay DomKen a small percentage of our bet to insure me against losses? Anyway realistically speaking I have concerns about our debt levels. I just think the first mistake was the unfunded wars. The second is not supporting the economy as it recovers from a deflationary bubble. I don't want to compound the first mistake with the second. We need about another $1 trillion in spending (See my previous post) over 3 years to make up this shortfall. Mind you that's 2% of GDP/year. The spending obviously creates growth, as it must. So it isn't money being thrown away, it is money that goes towards growing our economy. Whether or not our current congress is CAPABLE is another story. We should deal with our debt levels when we're on firmer ground; which we could be with proper policy.

cloudboy -> RE: Ultimately it's the democrats (1/5/2013 5:46:22 PM)
I was reading to see what kind of response the OP would have for you, and your points still remain unaddressed. Rather than try find the problem in party affiliation, I wonder what solution the OP would recommend that would actually improve the USA's fiscal position. If he's anything like Subrob on politics or SimplyMichael on guns, he's got nothing. Republicans actually are not so good at cutting Social Security, Medicare, and Defense -- the red meat of the budget -- so where does the OP want to cut spending? Would those cuts equate to European austerity --- aka leading to a shrinking economy and a bigger budget deficit? Why or why not?

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