General Political Thread

[KevinG]

So this thread took an odd turn over the last three days.  I don't want to get in the middle of anything here so I just thought I would share an op-ed from the NYT by Paul Krugman.  Which says that deficit spending is not a bad thing.  

 

http://www.nytimes.com/2013/03/11/opinion/krugman-dwindling-deficit-disorder.html?ref=paulkrugman&_r=1&

 

What seems odd here, again and I have mentioned it before, is that all of a sudden that the GOP now see running up a big debt as a problem.  But they were sure happy to run up the debt under Regan and GWB, with no intention of ever paying it back.  But for some reason when there is a Democrat in the White House it is something we have to solve right away, to the detriment of social programs that are designed to help when the economy is bad.  

 

Really why is deficit spending bad?   

[uncool2pillow]

An interesting article, Kevin.  Krugman is certainly a good advocate for left-wing economics.  I'm not sure why he says there's nothing wrong w/ an $845 billion deficit when he say about 1/2 of that is what would currently be sustainable.

 

He really glosses over the entitlements issue.  Why does it need to be dealt with now??  Because we clearly have an incredible crisis developing as baby boomers continue to go on medicare and social security.

 

The insane thing is that there are reasonable solutions (gradually raising the retirement age, means testing) but the assholes in Washington view compromise with the other party as treason.

[Hixter]

Really why is deficit spending bad? 

You don't have to be an economist to understand that when you're deeply in debt it is a bad idea to continue spending more than you earn, all the while borrowing more money to pay for it.

 

I'd be living in a cardboard box under an overpass if I managed my finances like the government does.

[KevinG]

You don't have to be an economist to understand that when you're deeply in debt it is a bad idea to continue spending more than you earn, all the while borrowing more money to pay for it.

 

I'd be living in a cardboard box under an overpass if I managed my finances like the government does.

 

But you are comparing apples to oranges here.  Comparing household finances and the government finances is overly simplifying the role of the government.  Making that argument is ridiculous and really makes no sense in how the government actually spends.  And I think to fully understand the US economy you absolutely have to be an economist.  Neither you nor me really have any inkling of what the US Economy is all about.    

 

I am wondering if you actually read the article.  Krugman states he is all for reducing the deficit, but at this time it doesn't make sense.  All you have to do is look at say the Debt Crisis in Europe.  Yes several countries were in debt, but when the austerity measures where imposed that is when things went to shit.  See the government is actually keeping the economy going. 

 

Ok think of it this way, so let's say a constitutional amendment were passed that required a balanced budget.  To achieve a balanced budget you would have to drastically cut services or raise taxes.  Essentially you are now taking a trillion dollars out of the economy.  What kind of effect do you think that would have on the economy?

 

 

An interesting article, Kevin.  Krugman is certainly a good advocate for left-wing economics.  I'm not sure why he says there's nothing wrong w/ an $845 billion deficit when he say about 1/2 of that is what would currently be sustainable.

 

He really glosses over the entitlements issue.  Why does it need to be dealt with now??  Because we clearly have an incredible crisis developing as baby boomers continue to go on medicare and social security.

 

The insane thing is that there are reasonable solutions (gradually raising the retirement age, means testing) but the assholes in Washington view compromise with the other party as treason.

 

 

Krugman is saying that an $845 Billion deficit is ok, for now.  As I mentioned before he wants to reduce the deficit once the economy fully recovers.

 

 

On entitlements, he does mention them, "There are, of course, longer-term fiscal issues: rising health costs and an aging population will put the budget under growing pressure over the course of the 2020s."  But remember entitlements are part of the budget as a whole and Social Security is solvent until 2032.  Dealing with it now would adversely affect those that need it most. 

 

I do agree raising the elibility ages and have a slidling scale making those who can afford it pay more should be done, but to try to tackle it now wouldn't do us any good. 

[uncool2pillow]

The Euros (Greece, Italy, Spain) were forced to be austere because their bond ratings were going to shit.  They went on a spending binge in good times and bad.  We've been doing the same, on and off, since the 1930s, but really began to go nuts in the 60s through 80s.  Then came the short lived tech-bubble-fueled imaginary surplus of the 90s.  That led to the Bush tax cuts.  Then Afghanistan, Iraq, TARP, stimulus.  If Krugman had his way, he'd do another bigger stimulus and spend us into banana republic territory.  That is simply unsustainable.

[Hixter]

That is simply unsustainable.

Absolutely. It doesn't take an economics degree to understand that spending more than you earn is a bad thing and it's doubly bad when you're already deeply in debt.

[KevinG]

Absolutely. It doesn't take an economics degree to understand that spending more than you earn is a bad thing and it's doubly bad when you're already deeply in debt.

 

Again you are taking a simple household finance model and trying to make that apply to the US government.   It is so much bigger than that, there is so much more that.  Simplifying it does no good to help the problem.    

 

Neither you or uncool2pillow did not respond to my scenario, go ahead balance the budget and take a trillion dollars from the economy what does your common sense tell you what would happen?

 

Listen, I am not saying we shouldn't reduce the deficit, nor does Mr. Krugman.  At this point in our fragile economy it doesn't make sense, it would do far more damage then the good it would do.  

 

Yes, uncool2pillow Greece, et al were forced into austerity, but has it solved anything, are those countries doing much better?  

 

This is my overall point.  The GOP spent like drunken sailors for 8 years with no regards on how to pay for it.  And now that a Democrat (who is actually reducing government spending BTW) has the credit card they want to cut it up.  I honestly don't think the GOP cares one lick about deficit spending, otherwise they would be serious about tax increases.  I think the GOP just doesn't like what the government its money on.   

[Hixter]

Again you are taking a simple household finance model and trying to make that apply to the US government.

The fundamental ideas hold true in both cases: don't spend more money than you earn. Period.

 

The only difference is that the government can print money, while a household can't do so without committing a crime -- but it comes with a very real cost to the economy.

[lost highway]

 

The only difference is that the government can print money, while a household can't do so without committing a crime -- but it comes with a very real cost to the economy.

 

Is that the only difference?

[Tweedling]

Weren't the Republicans just as instrumental as the sitting president in balancing a budget the last time a Democratic president was in office?

[uncool2pillow]

Greece was forced into austerity because they were forced into prosperity. The cost of borrowing became too expensive. That's why we need to reduce our deficit.

 

I never argued we need a perfectly balanced budget, but we need to shrink, not grow, the deficit.

 

Also, when household borrow money, who prospers? The banks. When the federal government borrows, who prospers? China? Is this spiral really in our long term best interests?

[lost highway]

The obsession with Chinese owned U.S. debt is a weird use of true information with the exclusion of the context.  There is a narrative that seems to obsess over China, but not acknowledge the rest of the facts.  In short: about half of the U.S. debt is public, the rest is split between several countries.  China has a larger chunk, but Germany's chunk is almost the same size.  The rest is split between the U.K., Canada, Taiwan, Brazil, South Korea and about a dozen other countries/ oil exporters.

 

In the end China owns about 8% of U.S. debt.

 

Likewise, the Greece analogy doesn't work particularly well.  Most simply put: the U.S. is a G8 country and Greece is not.

 

If you look at some of the numbers from the response to the economic crisis (right around 2011), the U.S. and Greece aren't the worst examples of debt vs. GDP, Ireland is.  Right now most economists have forecasted Ireland's economy will grow faster than any other country using the Euro.  Some of their neighbors in the national debt vs. GDP scale are France, Germany and the Netherlands.

 

I'm not saying all of these countries have had great economies through the crisis, but I am saying the obsession with Chinese debt and the Greece analogy are oversimplified to the point of propaganda.  The global economy is more complicated, for example Ecuador has lower debt per capita than China, and Japan (who owns a chunk of our debt) is in worse debt than we are.

[KevinG]

The fundamental ideas hold true in both cases: don't spend more money than you earn. Period.

 

The only difference is that the government can print money, while a household can't do so without committing a crime -- but it comes with a very real cost to the economy.

 

Actually there are quite a few differences:

 

http://rooseveltinstitute.org/new-roosevelt/federal-budget-not-household-budget-here-s-why

 

http://articles.latimes.com/2011/aug/24/opinion/la-oe-craighead-spending-20110824

 

But those articles are written by economists.  

 

The problem with the household analogy is that is over simplifies the problem.  The US economy is insanely complex, it sure does sound nice in theory but actual practice it does absolutely no good.  

 

 

Greece was forced into austerity because they were forced into prosperity. The cost of borrowing became too expensive.

 

 I understand why they were "forced into austerity" but have these measures helped the Greek economy?

 

Drastically cutting the budget would hurt our already fragile recovery.  The "Deficit Hawks"  don't care about a balanced budget, or reducing spending, they just don't like who has the credit card.  

 

I mean look at Paul Ryan's budget (that is if you can stop gazing into those blue eyes for a second).  It assumes the repeal of the Affordable Health Care Act.   Sorry Paul no matter how many times you and the GOP vote or try to repeal Obamacare, it ain't gonna happen.  To even put that in a budget shows he is not serious about dealing with his perceived problem.  If he were serious he would have a mixture of spending cuts and tax revenue increases.  That is the only way to reduce the deficit, which would do more harm then good.    

[LouieB]

 

 

 

 

I mean look at Paul Ryan's budget (that is if you can stop gazing into those blue eyes for a second).  It assumes the repeal of the Affordable Health Care Act.   Sorry Paul no matter how many times you and the GOP vote or try to repeal Obamacare, it ain't gonna happen.  To even put that in a budget shows he is not serious about dealing with his perceived problem.  If he were serious he would have a mixture of spending cuts and tax revenue increases.  That is the only way to reduce the deficit, which would do more harm then good.    

He wants to repeal it AND keep the savings from it. Somehow he can't have it both ways.

 

 

 

LouieB

[Hixter]

The problem with the household analogy is that is over simplifies the problem.  The US economy is insanely complex, it sure does sound nice in theory but actual practice it does absolutely no good.  

I guess we'll have to wait and see how things pan out. I wouldn't hold my breath as far as inflation, interest rates, government pensions, the Dow and Social Security go.

 

Sorry Paul no matter how many times you and the GOP vote or try to repeal Obamacare, it ain't gonna happen. 

It's a deeply flawed bill that barely became law: a single Republican supported it, while dozens of Democrats voted against it. It has poor support among Americans and I think it will be even less popular once people find out what it's all about: it doesn't require employers to cover spouses at all and it doesn't require affordable coverage for children, either. Employers are going to dump their coverage and pay the piddling fine.

 

I have little doubt that my excellent health insurance coverage will cost more, cover less and eventually disappear altogether.

[Mr. Heartbreak]

http://rooseveltinstitute.org/new-roosevelt/federal-budget-not-household-budget-here-s-why

Some great points here:

 

"When you die, your debts and assets need to be assumed and resolved. There is no “day of reckoning”, no final piper-paying date for the sovereign government. 

 

"With one brief exception, the federal government has been in debt every year since 1776.

 

"Every significant reduction of the outstanding debt has been followed by a depression, and every depression has been preceded by significant debt reduction. 

 

"The federal government is the issuer of our currency. Its IOUs are always accepted in payment. 

 

I can foresee a time when China might forgive a big chunk of US debt in exchange for their continued ability to sell us cheap shit. I cannot foresee a collection agency forgiving a debt of mine, even if it's only a couple hundred bucks.

 

Big differences between ordinary folks' budgets and governments' budgets.

[Hixter]

Let's not forget that there is more debt than just the federal government's: states and cities are also deeply in debt and pensions are woefully underfunded. We've already seen major cities declaring bankruptcy. Imagine the anger when the pension/Social Security checks don't arrive.

 

As I said, we'll see how this all turns out over the next 5-20 years.

[KevinG]

It's a deeply flawed bill that barely became law: a single Republican supported it, while dozens of Democrats voted against it. It has poor support among Americans and I think it will be even less popular once people find out what it's all about: it doesn't require employers to cover spouses at all and it doesn't require affordable coverage for children, either. Employers are going to dump their coverage and pay the piddling fine.

 

I have little doubt that my excellent health insurance coverage will cost more, cover less and eventually disappear altogether.

 

You fail to get my point and decide to stand on a soapbox and rail against the evils of the Affordable Healthcare Act.  I never said one way if it was good or bad nor is that important to my over all argument at this time.  Irregardless of what anyone thinks of Obamacare it is going to stick around.  There is nothing anyone can really do about it.  By Ryan planning the repeal in his budget shows he is not serious about deficit reduction.  This what I have been trying to say over and over again.  The GOP isn't serious about the deficit and never will be.  If they were they would do a mix of entitlement reform, spending cuts (including defense, which the Ryan budget does not do), and tax increases.  That is the only way to decrease the debt effectively.     

[Hixter]

Irregardless of what anyone thinks of Obamacare it is going to stick around.  There is nothing anyone can really do about it. 

Unpopular programs get cut. It is an unpopular program. It is vulnerable because the politicians who voted for it are vulnerable on election day.

 

As for tax increases, I paid something like $30,000 in taxes last year. No thanks, I'd prefer spending cuts.

[Winston Legthigh]

Damn you sequestration!!

 

If I can't live in a country that can afford to waste money on loud-as-fuck fly-bys, well then I just don't know what I'm going to do...

[KevinG]

As for tax increases, I paid something like $30,000 in taxes last year. No thanks, I'd prefer spending cuts.

 

With that attitude you are not serious about deficit reduction.  You claim the debt is such a huge problem and it needs to be fixed, but your only solution is to cut spending.  Then you are for cutting spending and programs (unless it is defense which memory serves you are not in favor of cutting, if I am wrong please let me know).  I could care less about your stance on spending cuts, but don't dance around this BS of caring about the deficit, clearly you don't.  

[Hixter]

don't dance around this BS of caring about the deficit, clearly you don't.  

So, are you saying that you'd like to pay more taxes? You won't find many Americans who share your view. How much more are you willing to pay?

 

It's entirely possible to reduce the deficit without hiking taxes. Texas has no state income tax and recently reported a surplus of almost $9 billion. Contrast that with California, where the state has been raising taxes yet their schools still underperform ours. Californians are flocking to Texas for a reason.

[KevinG]

So, are you saying that you'd like to pay more taxes? You won't find many Americans who share your view. How much more are you willing to pay?

 

It's entirely possible to reduce the deficit without hiking taxes. Texas has no state income tax and recently reported a surplus of almost $9 billion. Contrast that with California, where the state has been raising taxes yet their schools still underperform ours. Californians are flocking to Texas for a reason.

 

I believe the deficit spending crisis is a ginned up problem because the GOP doesn't like the guy in office.  So that is like asking me to a dance I don't want to go to.  But yes I would pay more in taxes, how much more who knows.  

 

Sure it is entirely possible to reduce the deficit with just spending cuts (but not the Military heaven forbid) and that would reduce deficit but bhow much?  You seem to believe that our current deficit spending is going to spell doom and gloom for this country and it is something we have to take care immediately.  There really is no feasible way to solely cut our way to a significant deficit reduction to a sustainable level and leave the country in a livable shape.  

 

So which is it?  Is the deficit the problem or do just not want to pay more taxes?

[uncool2pillow]

Wow, this thread got really quiet today.  Must be a buncha Catholics trying to keep up with Francis.  Either that or people lost interest after the non-word irregardless showed up in it.

[lost highway]

The big news there: an Argentinian pope.  Too bad he's another bigot.