I'd be interested in hearing from those who are concerned about the deficit and debt in the U.S. as I think there's a lot of misunderstanding and misapplication of "common sense" heuristics to the issue. I'd like to hear people's takes on any or all of the following:
1. What specific problems running a chronically high deficit can cause
2. What problems maintaining a high debt-to-GDP ratio can cause
3. Whether and how those potential problems are likely to arise now and in the medium- and long-term future
4. How one can determine whether those problems are in fact occurring
5. The best ways to reduce the relative magnitude of the deficit and debt
6. The ways in which the U.S. budget is similar to and different from a household budget
The best way to deal with the deficit and debt is to raise revenue/taxes during strong expansions and booms, and reduce spending if it's not needed. Some of this will occur naturally, as a stronger economy means more income/sales to tax as well as reduced need for social programs, so spending there will be reduced somewhat.
This will also have the effect of not overheating the expansion or contributing to a bubble, which is good, although there are many people looking for short-term gain who do not like such a long-term view. A boom time is when the country should be investing in infrastructure and other improvements and paying off debts, not encouraging irrational overinvestment in things like, say, housing.
What is NOT a good idea is, when the economy is going well, cut taxes so that you then eliminate the government's surplus which could've been used to pay down debt and better enable the country to weather a recession when it comes. What's NOT a good idea is, when the economy is doing poorly, cut services so that when people need help the most, they can't get it, even more people are unemployed as you lay off government workers, and demand falls as people don't have cash to spare. People who would be spending some of their money from welfare or unemployment insurance, or getting help with healthcare, instead don't have the resources to spend anything. Demand drops, which means businesses have less business, and can't afford to hire new workers.
This in turn makes it so that an increase in tax revenue is even longer in coming.
What I see the Republicans doing is, when the economy is doing well, and government is taking in enough tax revenue to be able to pay down the debt, they want to cut the taxes til we're running a deficit again. Then when the economy begins to do poorly, the tax rates are even lower, so the deficit becomes even larger than before, and then they scream that the deficit will ruin everything, so we need to cut services just when people/the economy needs them the most. Then when the economy recovers, the reduced budget means a surplus might be easier to achieve... at which time they want to cut taxes again.
Their goal is to shrink government, but given that there's not a consensus around that, instead they're pursuing reckless and damaging policies to further that aim - get the deficit large enough and people might be willing to give up some services that they would be opposed to cutting otherwise. Given that the Republicans never say no to a tax cut, however, they have no real plan to deal with the deficit, since any time the government could realistically start to pay down the debt, they'd want to cut taxes instead. Reagan and Bush both doubled the size of the debt, then the Republicans all talk about how panicked they are about it.
Meanwhile, the rich always continue to amass an even greater share of the wealth during their terms.
According to you republicans never met a tax cut they didn't like. I would submit that the democrats never met a spending bill they didn't like.
Quit playing political cards for once and think about the long term damage all this free money is doing to our economy. Its not like those poor people are taking thier hand outs and getting out of debt.
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Out of the blackness and stench of the engulfing swamp emerged a shimmering figure. Only the splattered armor and ichor-stained sword hinted at the unfathomable evil the knight had just laid waste.
According to you republicans never met a tax cut they didn't like. I would submit that the democrats never met a spending bill they didn't like.
Quit playing political cards for once and think about the long term damage all this free money is doing to our economy. Its not like those poor people are taking thier hand outs and getting out of debt.
Imagine how our country would be right now had we not had the Bush Tax Cuts and used that money instead to reduce the debt by a couple trillion dollars. Republicans, on the whole, want big government, lower taxes. Democrats, on the whole, want big government and higher taxes. One of these actually has a chance of working, can you take a guess on which it is?
According to you republicans never met a tax cut they didn't like. I would submit that the democrats never met a spending bill they didn't like.
Quit playing political cards for once and think about the long term damage all this free money is doing to our economy. Its not like those poor people are taking thier hand outs and getting out of debt.
It's not poor people that are the problem, it's the entitlement programs. You want to look at the biggest drag on our national deficit it's medicare/medicaid/social security/military spending. Slash these and problems are solved. The problem? These are the popular programs, so people focus on semi-expensive things like welfare, and tax cuts to fight over, while the real problems looms in the background like a mountain lion about to jump a deer.
BOTH parties are the problems here. Republicans want tax cuts, and massive military expenditures, and democrats want mediocre tax hikes, and large welfare programs such as "Obamacare" to be the focus of their campaigns. If they united we could solve some problems, but the media will keep getting in the way, and as a result we have a hot political environment right now.
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"I've always been a fan of reality by popular vote" - Stephen Colbert (in response to Don McLeroy)
It's not poor people that are the problem, it's the entitlement programs. You want to look at the biggest drag on our national deficit it's medicare/medicaid/social security/military spending. Slash these and problems are solved. The problem? These are the popular programs, so people focus on semi-expensive things like welfare, and tax cuts to fight over, while the real problems looms in the background like a mountain lion about to jump a deer.
BOTH parties are the problems here. Republicans want tax cuts, and massive military expenditures, and democrats want mediocre tax hikes, and large welfare programs such as "Obamacare" to be the focus of their campaigns. If they united we could solve some problems, but the media will keep getting in the way, and as a result we have a hot political environment right now.
Just want to point out that Social Security is not the reason why we have a deficit. Social Security is still 100% paid for by payroll taxes.
According to you republicans never met a tax cut they didn't like. I would submit that the democrats never met a spending bill they didn't like.
Superficially, this looks like a "What's sauce for the goose is sauce for the gander" kind of thing.
Except it's not the case that a large number of Democrats have signed a pledge to never vote against a spending bill. Grover Norquist has, for some reason, had great success getting almost every Republican in Congress to sign his insane pledge to never raise taxes ever, for any reason.
It's not actually the case that Democrats never vote against spending nor that they never vote for spending cuts. It is the case that more than 95% of Republicans in Congress have signed a pledge to never vote for any tax increases, even when they're part of a larger package.
Quit playing political cards for once
You first.
and think about the long term damage all this free money is doing to our economy. Its not like those poor people are taking thier hand outs and getting out of debt.
What you're talking about is about the role of government, not about how to address the deficit. And the fact still remains that austerity during a recession exacerbates the problem. Whatever level you think is appropriate for these kinds of programs, it's still the case that you should reduce them in a strong economy and increase them in a weak economy.
I'm saying during a recession spending on the social safety net should be X+Y while during an expansion it should be X-Y. Telling me that it should be Z instead doesn't really address the notion of countercyclical economic policies at all.
I don't really want to get into an argument on the merits of the social safety net in general, but it's laughable for you to make those statements immediately after chastising me for "playing political cards".
Just want to point out that Social Security is not the reason why we have a deficit. Social Security is still 100% paid for by payroll taxes.
Yes, but in 20 years it won't be, in fact right now it's pulling in 100 billion less a year then it should due to Obama's payroll tax cuts. If this continues too much longer, and no one changes how SS is funded that 20 year number could drop further. This problem is approaching fast, this was the looming mountain analogy I used. So, it needs to be in the discussion now.
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"I've always been a fan of reality by popular vote" - Stephen Colbert (in response to Don McLeroy)
Yes, but in 20 years it won't be, in fact right now it's pulling in 100 billion less a year then it should due to Obama's payroll tax cuts. If this continues too much longer, and no one changes how SS is funded that 20 year number could drop further. This problem is approaching fast, this was the looming mountain analogy I used. So, it needs to be in the discussion now.
Personally I just want to lift the cap on payroll taxes and then social security would be good for almost, like ever. People who pay in more past the now cap would get more out of it still when they go to retire to make it "fair."
What I would honestly like to see right off the bat, is we reduce the defense budget by $200 billion a year over the next 10 years, use half that on infrastructure and science investments and the other half on nothing to help pay down the deficit or not raise it as much.
For taxes, I would like to see the Buffet tax put into place and the Bush Tax cuts removed. Then we can work on simplifying the tax code by removing deductions and stuff but lowering the overall tax rate.
Then I am all for finding ways to work with Republicans on how reduce the deficit that does not involve just removing every program they don't like because its "liberal." But we can do that in a year or two when the economy has shown some real strength.
Yes, but in 20 years it won't be, in fact right now it's pulling in 100 billion less a year then it should due to Obama's payroll tax cuts. If this continues too much longer, and no one changes how SS is funded that 20 year number could drop further. This problem is approaching fast, this was the looming mountain analogy I used. So, it needs to be in the discussion now.
And whos fault is it S.S. is where it is today? The government. If they would have left their greedy little hands out of it and quit thinking it was THEIR money to play with, S.S. would be fine.
A large deficit give the government a lot of money to play with due to the taxes they bring in. The government doesnt want to pay off the deficit, its their cash cow and way to raise taxes on the people of the country. Remove the deficit and they wouldnt have the billions to play with. People are not happy now to pay the tax rates they do, but they see this huge debt and pay it. Think if there was littel to no debt and we were paying the same tax rate to pay salaries... people would be up in arms about it.
By the way, What are you going to do with the millions of people surviving, and I mean just surviving, while on entitlement programs and both parents working, when you discontinue the programs? Are we just going to kick them to the curb and let them die? How is the country going to handle the up tick in homeless if entitlement programs were to be done away with? We dont have the employment NOW with the entitlement programs. Jobs are just not there. And you want to eliminate more jobs. I agree the programs need to be reworked to stop abuse, but doing away with them all together would be terrible for millions of people.
Not to get too partisan (and without looking it up) but before Obama stepped in this stink... Reagan, Bush I, And Bush II, EACH added more to the debt than all presidents not named Bush & Reagan, combined.
President doesnt determine everything, Congress is involved, circumstances matter, etc.
I agree with the Republicans that much of it is the nature of entitlements... But at the same time both Dems and Republicans have no incentive to shrink anything, because new and bigger bureaucracies themselves are entitlements for politicians on both sides:
Every time I hear "War on Drugs" or "War on poverty" or "war on terror" or "war on Snipes", I realize we're creating a bureaucracy that will create a bunch of jobs for politicians and bureaucrats, whose #1 job is to get their bureaucracy funded again next year and has no incentive whatsoever to WIN the war on Snipes... In fact it's to their advantage to have the Snipes keep growing! Just so long as It looks like its somebody else's fault the Snipes are growing, and just so long as the bureaucracy has a lot of high profile "victories" against Snipes. It's like IT departments at hospitals: they don't want simpler systems that require less help to use. Why would they want their headcount shrunk? It's not like savings will be passed on to the IT department.
And also, just as with corporations, when politicians (who will graduate to corporate rewards after they govern) only care about the short term (which is critical to re-election which is job 1), short term pain for long term gain is impossible.
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Obviously it's the nature of the rules of the game. I would love to hear some sophisticated game theory approaches to solving the problems above that drive the debt and deficits.
I wonder if the nature of big national debt and short term corporate greed are inevitable in this game environment. Are their clever, perhaps counterintuitive, rules that can nip some o these "evil" (for lack of a better word) tendencies that are clearly present in the current circumstances. Because I think straightforward attempts at reform rules usually seem to have unpredictable and ineffective results (and all players game the new rules).
Maybe I have too much faith in the level of practical power of game theory approach in tackling problems like this.
I would just like to add that even if the Republicans did cut tax for the rich cutting tax for the top half percent of the countries population does very little to influence the amount of money the government has at its disposal.
The lefties in this thread should remember that when the level that criticism.
I think when a country tries to fix a deficit problem they should determine what sectors the country excels in and try to promote companies of that sort. In the last twenty years the American Economy has seen the shift from a big manufacturing sector towards a more services oriented economy. The problem with this is that the manufacturing sector cost of entry is very low. A services company on the other hand generally need college educated people for the workforce.
So this leaves the American public with no choice really as a college education is almost a must for a person who wants to prosper.
So in closing I think that education will play a crucial part in determining if the US can not just sustain its services sector, but if it can make it grow as well.
So it will have to have a concerted effort to promote education.
I think when a country tries to fix a deficit problem they should determine what sectors the country excels in and try to promote companies of that sort. In the last twenty years the American Economy has seen the shift from a big manufacturing sector towards a more services oriented economy. The problem with this is that the manufacturing sector cost of entry is very low. A services company on the other hand generally need college educated people for the workforce.
So this leaves the American public with no choice really as a college education is almost a must for a person who wants to prosper.
So in closing I think that education will play a crucial part in determining if the US can not just sustain its services sector, but if it can make it grow as well.
So it will have to have a concerted effort to promote education.
America has always been pretty good at innovation, yet we get one side of the aisle criticizing the government for supporting green technologies which I am sorry to break it to everyone, is the future, at least over the next 100 years. Other countries are sponsoring their green tech companies and the only hope for our own is for the government to do the same. It worked with the railroad companies and their expansion out west, why shouldn't it work for the next big thing?
The problem with colleges is that only 5% of college goers get a degree in STEM, 5%. People just go to college because they can without any goal in life, but I am sorry, if you are going into any significant amount of debt getting an art degree, you are doing it wrong. Maybe if we could somehow get people more interested in getting science degrees, then a lot of other things would sort themselves out.
Heck, we have one side of the aisle who made a point of it to throw out all the fluorescent bulbs they could in the Congressional Building and go back to incandescent and to go from recyclable cups to styrofoam. They want to protect the incandescent light bulb even when the light bulb manufacturers say no, stop it. Change is happening and this one party is just sticking its fingers in its ears throwing temper tantrums. They are being willfully ignorant and I am sorry if it offends anyone, but that makes them stupid.
America has always been pretty good at innovation, yet we get one side of the aisle criticizing the government for supporting green technologies which I am sorry to break it to everyone, is the future, at least over the next 100 years. Other countries are sponsoring their green tech companies and the only hope for our own is for the government to do the same. It worked with the railroad companies and their expansion out west, why shouldn't it work for the next big thing?
The problem with colleges is that only 5% of college goers get a degree in STEM, 5%. People just go to college because they can without any goal in life, but I am sorry, if you are going into any significant amount of debt getting an art degree, you are doing it wrong. Maybe if we could somehow get people more interested in getting science degrees, then a lot of other things would sort themselves out.
Yea, well I remember reading this a while ago from one our fellow denizens:
Quote from How depressed should I be that I am going for a career in science?[/quote »
So, I love science and I don't regret pursuing a degree in chemistry. But as I get closer to graduation, reading about jobs really scares me. It seems like this is the progression of your career as a chemist:
1) Undergrad for 4 years. Bust your balls studying harder than anyone else because your major is very difficult. Lots of extra work getting research experience.
2) Graduate school for 4-6 years. Work 70 hours a week making less than minimum wage.
3) Post doc for 5 years. Make less than if you had just gotten a 4 year business degree.
4) Get very lucky, land a permanent position. Make decent money, but it took 10 years of education and 15 years total to get to this point.
Ok, I'm not trying to sound like a tool, but the reason I went into science in because I am smart and I enjoy the material. Most people do not have the intellectual ability or even the work ethic to get through those 4 steps above. Yet it seems like exceptional talent in science is rewarded only with bad pay and worse conditions.
I mean, it's not about the money.... except when it is about the money. I just wonder if, 8 years from now, I'm going to be wishing that I had gone to med school or law school instead. Because I am academically capable of pursuing any career... I just happened to choose the one with bad rewards. At this point I have pretty much ruled out a career in academia because they seem to make so little money for the extensive education and exceptional individual that is required for such a position. I've even considered becoming a patent lawyer instead of a research scientist. Yes, you need to do something you love, and I love science, but there comes a point where you have to say that 10+ years of your life and a low payscale for your talents just isn't worth it.
Or have I just been listening to too many cynical scientists?
It's an interesting read totally on the nature of science in general and the job market. 3 page thread. And yea this is what happens when you use the same handle on other forums!:p
Eh, I was watching a talk on CSPAN where there were conservative and libertarian people talking about the economy:
Regulation on the internet, Peter Thiel had a number of interesting ideas and things to say about the issue. He's the one who's putting up grant money for people to drop out of college and start businesses. He also raised the argument that a number of regulations are too high and that most innovation is only in two sectors; finance and technology. He said the high point was the 50's and 60's which also corresponded to less regulation, from both sides, and more cash inflows.
I've slowly over time became more of an "Eisenhower Republican" even though I still detest the concept of social security and Medicare and such, it's not going any where because liberals will just put it in anyway so it's better to pull a "Bismark" and do it right. The whole point of government and corporations is to limit transaction costs by limiting choice and eliminating certain choices, to which is why "anarcho-capitalism" is a shell game as there's a natural point to where people will become over informed and tuned out and stressed out to engage in choice and lead to courses to limit choice come back as a point of utility.
Equally, this is why you see "engineering of consent" so well, because it picks up on the trends with how humans think and is more able to tune into our nature to buy products. Negative political adds work, and if I say "Give me a Kitkat bar" you can sing the jingle right now where as if I said "George Marshall" it may take a few moments to think or if I said "Marshall Plan" you know what I'm talking about. The hierarchy of knowledge is often pinned to narrative and emotion alongside not in spite of logic.
With that said, Congress has a number of parliamentary issues such as:
-How council heads are chosen
-How government is funded, namely that services must spend their full budget and can't squirrel away funds without seeing a decline in next year's fund "because it's the people's money" or politicians that want to appear to be cheap and instead letting people that know how to handle such money that can give good reasons to keep the money should be able to do so. Especially with things such as snow removal or even schools to have a rainy day fund.
-The primaries and length of our electoral process, namely it bleeds out the non popular and the non rich out. Clinton even had a $1 million in debt for her campaign going against Obama. Shortening the election cycles and having run off elections would open up the system.
-Limiting the powers of Congress with a censor branch on long term money that's elected and has appointed members rather than a "balanced budget amendment." Having an entire class that go toe to toe with Congress on issues of over spending or misallocation of funds is adding new bureaucratic mechanisms which can lead to punishments against Congress for cronyism and stupid redundancy. Having a political body that says "Why are you doing this?" "How are you going to pay for that?" "No you're not cutting taxes and adding in Medicare Part D, one or the other."
Furthermore how we do elections is stupid, it may come down to the need to give Congress more cash to run their home offices in totality and shortening campaign cycles. Equally, I wouldn't mind cutting down the amount of members in the House and making political jerrymandering unconstitutional.
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Ambition must be made to counteract ambition.
Individualities may form communities, but it is institutions alone that can create a nation.
Nothing succeeds like the appearance of success.
Here is my principle: Taxes shall be levied according to ability to pay. That is the only American principle.
Equally, I wouldn't mind cutting down the amount of members in the House and making political jerrymandering unconstitutional.
The latter is a no-brainer, but the former is a little tricky. Since each state must have at least one Representative if you reduce the total number of Representatives then the power of states with lower populations increases. The Senate already gives smaller states a disproportionate amount of power; the House is supposed to counteract that power discrepancy by giving larger states more representation.
The latter is a no-brainer, but the former is a little tricky. Since each state must have at least one Representative if you reduce the total number of Representatives then the power of states with lower populations increases. The Senate already gives smaller states a disproportionate amount of power; the House is supposed to counteract that power discrepancy by giving larger states more representation.
They already have a lot of power because small state politicians have magical staying power and access to mystical mountain energies that make them live longer; Senator Byrd. The longevity and seniority issue triggers the chairmanships and ability to gain hegemony in Congress. Most power is relational, not state vs. state. Coalitions of states do work, however there are several large/small state issues that are irrelevant as it's mostly geographical distributions and economic make up rather than population density that declare political splices.
Direct election of the Speaker and for the most powerful chairs on a national level would be interesting, though.
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Ambition must be made to counteract ambition.
Individualities may form communities, but it is institutions alone that can create a nation.
Nothing succeeds like the appearance of success.
Here is my principle: Taxes shall be levied according to ability to pay. That is the only American principle.
The thing I always wonder is: what is going to ultimately happen to our debt? This is no longer a situation we can keep avoiding by simply raising the debt ceiling.
The thing I always wonder is: what is going to ultimately happen to our debt? This is no longer a situation we can keep avoiding by simply raising the debt ceiling.
We're either going to bring it down or default on our debt.
And if we default on our debt, we will bring about worldwide economic collapse.
It hasn't shocked me that so few actually discuss a substantive response to your questions, dismissing everything for a few of the frequently quoted political points.
Your first two questions are very simillar so I will answer them together.
1. What specific problems running a chronically high deficit can cause
2. What problems maintaining a high debt-to-GDP ratio can cause
--higher interest rates from borrowing from others.
--Loss of GDP when increasing percentages are used to pay for interest.
--inability to borrow if future needs should warrant it
--devaluation of currency
--increasing dependency on debt to fuel economic growth
--contagion from default, especially where other countries are running their own high deficits.
--Inflation
--Loss of wealth by the citizenry in the form of lower real wages due to inflation.
--Loss of economic confidence by consumers and the citizenry.
3. Whether and how those potential problems are likely to arise now and in the medium- and long-term future
Medium Term, there is a reasonable risk.
Long Term, there is a high risk if the rate of spending without growth is sustained.
4. How one can determine whether those problems are in fact occurring
--the day we lose our status as a reserve currency, the day china stops lending to us, the day we default will be major milestones.
5. The best ways to reduce the relative magnitude of the deficit and debt
--ironically, the best way to reduce the debt is do what Obama is doing. Spend more!
The deficit and our ability to pay off interest depends on one number only: The total tax revenue we receive. Keynesian theory says that in times like these, the government should spend money on public works, public projects, putting people back to work to kick start the economy.
Ideally once the economy is rolling again, the economy can wean itself off the need for debt-driven expansion.
The problem is this "growth" is hard to see.
Take for example, your local metropolis beltway(the major roadway encircling your city) or consider I-95. How much "value" did the government gain from this "investment"?
It's not like government spending money to build I-95 gives a 10% bond return in interest. Instead the "interest" you get is that roads make economic expansion possible. Cities and Towns are able to grow in areas connected by roads. Millions of commuters use the roads to get to where they need to go to make economic transactions. How much is this worth exactly? I'm not sure.
Neither am I sure about how much our economy improves from building other projects, or spending money on R&D research, on giving tax breaks for green energy, etc.
6. The ways in which the U.S. budget is similar to and different from a household budget
It's not at all the same. In a household budget, you spend less than what you make, and save the money available for a rainy day.
With the government, the government's ULTIMATE goal should not be saving money like a piggy bank. The government's ultimate goal should be ensuring a strong nation, increasing the prosperity of its citizenry, encouraing the growth of industries, and increasing the tax base.
The thing I always wonder is: what is going to ultimately happen to our debt? This is no longer a situation we can keep avoiding by simply raising the debt ceiling.
Expect all 4, the longer we go expect #3 to get more important. We're on the trajectory to pull an "Argentina." That is a successful economy that had a lot of elderly that liked to suck on Uncle Sam's manly nipples of magic money that ultimately crashed the economy and then to a debt crisis. Followed up by a massive splurt of inflation to correct it, and then finally financial recovery. Not everyone ends in the Weimar Republic scenario if it's not willy-nilly stupid. But there's still a lot of pain.
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Ambition must be made to counteract ambition.
Individualities may form communities, but it is institutions alone that can create a nation.
Nothing succeeds like the appearance of success.
Here is my principle: Taxes shall be levied according to ability to pay. That is the only American principle.
To post a comment, please login or register a new account.
1. What specific problems running a chronically high deficit can cause
2. What problems maintaining a high debt-to-GDP ratio can cause
3. Whether and how those potential problems are likely to arise now and in the medium- and long-term future
4. How one can determine whether those problems are in fact occurring
5. The best ways to reduce the relative magnitude of the deficit and debt
6. The ways in which the U.S. budget is similar to and different from a household budget
This will also have the effect of not overheating the expansion or contributing to a bubble, which is good, although there are many people looking for short-term gain who do not like such a long-term view. A boom time is when the country should be investing in infrastructure and other improvements and paying off debts, not encouraging irrational overinvestment in things like, say, housing.
What is NOT a good idea is, when the economy is going well, cut taxes so that you then eliminate the government's surplus which could've been used to pay down debt and better enable the country to weather a recession when it comes. What's NOT a good idea is, when the economy is doing poorly, cut services so that when people need help the most, they can't get it, even more people are unemployed as you lay off government workers, and demand falls as people don't have cash to spare. People who would be spending some of their money from welfare or unemployment insurance, or getting help with healthcare, instead don't have the resources to spend anything. Demand drops, which means businesses have less business, and can't afford to hire new workers.
This in turn makes it so that an increase in tax revenue is even longer in coming.
What I see the Republicans doing is, when the economy is doing well, and government is taking in enough tax revenue to be able to pay down the debt, they want to cut the taxes til we're running a deficit again. Then when the economy begins to do poorly, the tax rates are even lower, so the deficit becomes even larger than before, and then they scream that the deficit will ruin everything, so we need to cut services just when people/the economy needs them the most. Then when the economy recovers, the reduced budget means a surplus might be easier to achieve... at which time they want to cut taxes again.
Their goal is to shrink government, but given that there's not a consensus around that, instead they're pursuing reckless and damaging policies to further that aim - get the deficit large enough and people might be willing to give up some services that they would be opposed to cutting otherwise. Given that the Republicans never say no to a tax cut, however, they have no real plan to deal with the deficit, since any time the government could realistically start to pay down the debt, they'd want to cut taxes instead. Reagan and Bush both doubled the size of the debt, then the Republicans all talk about how panicked they are about it.
Meanwhile, the rich always continue to amass an even greater share of the wealth during their terms.
Quit playing political cards for once and think about the long term damage all this free money is doing to our economy. Its not like those poor people are taking thier hand outs and getting out of debt.
Imagine how our country would be right now had we not had the Bush Tax Cuts and used that money instead to reduce the debt by a couple trillion dollars. Republicans, on the whole, want big government, lower taxes. Democrats, on the whole, want big government and higher taxes. One of these actually has a chance of working, can you take a guess on which it is?
It's not poor people that are the problem, it's the entitlement programs. You want to look at the biggest drag on our national deficit it's medicare/medicaid/social security/military spending. Slash these and problems are solved. The problem? These are the popular programs, so people focus on semi-expensive things like welfare, and tax cuts to fight over, while the real problems looms in the background like a mountain lion about to jump a deer.
BOTH parties are the problems here. Republicans want tax cuts, and massive military expenditures, and democrats want mediocre tax hikes, and large welfare programs such as "Obamacare" to be the focus of their campaigns. If they united we could solve some problems, but the media will keep getting in the way, and as a result we have a hot political environment right now.
"I've always been a fan of reality by popular vote" - Stephen Colbert (in response to Don McLeroy)
GPolukranos, Kill ALL the Things!G
Just want to point out that Social Security is not the reason why we have a deficit. Social Security is still 100% paid for by payroll taxes.
Except it's not the case that a large number of Democrats have signed a pledge to never vote against a spending bill. Grover Norquist has, for some reason, had great success getting almost every Republican in Congress to sign his insane pledge to never raise taxes ever, for any reason.
It's not actually the case that Democrats never vote against spending nor that they never vote for spending cuts. It is the case that more than 95% of Republicans in Congress have signed a pledge to never vote for any tax increases, even when they're part of a larger package.
You first.
What you're talking about is about the role of government, not about how to address the deficit. And the fact still remains that austerity during a recession exacerbates the problem. Whatever level you think is appropriate for these kinds of programs, it's still the case that you should reduce them in a strong economy and increase them in a weak economy.
I'm saying during a recession spending on the social safety net should be X+Y while during an expansion it should be X-Y. Telling me that it should be Z instead doesn't really address the notion of countercyclical economic policies at all.
I don't really want to get into an argument on the merits of the social safety net in general, but it's laughable for you to make those statements immediately after chastising me for "playing political cards".
Yes, but in 20 years it won't be, in fact right now it's pulling in 100 billion less a year then it should due to Obama's payroll tax cuts. If this continues too much longer, and no one changes how SS is funded that 20 year number could drop further. This problem is approaching fast, this was the looming mountain analogy I used. So, it needs to be in the discussion now.
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Personally I just want to lift the cap on payroll taxes and then social security would be good for almost, like ever. People who pay in more past the now cap would get more out of it still when they go to retire to make it "fair."
What I would honestly like to see right off the bat, is we reduce the defense budget by $200 billion a year over the next 10 years, use half that on infrastructure and science investments and the other half on nothing to help pay down the deficit or not raise it as much.
For taxes, I would like to see the Buffet tax put into place and the Bush Tax cuts removed. Then we can work on simplifying the tax code by removing deductions and stuff but lowering the overall tax rate.
Then I am all for finding ways to work with Republicans on how reduce the deficit that does not involve just removing every program they don't like because its "liberal." But we can do that in a year or two when the economy has shown some real strength.
And whos fault is it S.S. is where it is today? The government. If they would have left their greedy little hands out of it and quit thinking it was THEIR money to play with, S.S. would be fine.
A large deficit give the government a lot of money to play with due to the taxes they bring in. The government doesnt want to pay off the deficit, its their cash cow and way to raise taxes on the people of the country. Remove the deficit and they wouldnt have the billions to play with. People are not happy now to pay the tax rates they do, but they see this huge debt and pay it. Think if there was littel to no debt and we were paying the same tax rate to pay salaries... people would be up in arms about it.
By the way, What are you going to do with the millions of people surviving, and I mean just surviving, while on entitlement programs and both parents working, when you discontinue the programs? Are we just going to kick them to the curb and let them die? How is the country going to handle the up tick in homeless if entitlement programs were to be done away with? We dont have the employment NOW with the entitlement programs. Jobs are just not there. And you want to eliminate more jobs. I agree the programs need to be reworked to stop abuse, but doing away with them all together would be terrible for millions of people.
President doesnt determine everything, Congress is involved, circumstances matter, etc.
I agree with the Republicans that much of it is the nature of entitlements... But at the same time both Dems and Republicans have no incentive to shrink anything, because new and bigger bureaucracies themselves are entitlements for politicians on both sides:
Every time I hear "War on Drugs" or "War on poverty" or "war on terror" or "war on Snipes", I realize we're creating a bureaucracy that will create a bunch of jobs for politicians and bureaucrats, whose #1 job is to get their bureaucracy funded again next year and has no incentive whatsoever to WIN the war on Snipes... In fact it's to their advantage to have the Snipes keep growing! Just so long as It looks like its somebody else's fault the Snipes are growing, and just so long as the bureaucracy has a lot of high profile "victories" against Snipes. It's like IT departments at hospitals: they don't want simpler systems that require less help to use. Why would they want their headcount shrunk? It's not like savings will be passed on to the IT department.
And also, just as with corporations, when politicians (who will graduate to corporate rewards after they govern) only care about the short term (which is critical to re-election which is job 1), short term pain for long term gain is impossible.
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Obviously it's the nature of the rules of the game. I would love to hear some sophisticated game theory approaches to solving the problems above that drive the debt and deficits.
I wonder if the nature of big national debt and short term corporate greed are inevitable in this game environment. Are their clever, perhaps counterintuitive, rules that can nip some o these "evil" (for lack of a better word) tendencies that are clearly present in the current circumstances. Because I think straightforward attempts at reform rules usually seem to have unpredictable and ineffective results (and all players game the new rules).
Maybe I have too much faith in the level of practical power of game theory approach in tackling problems like this.
The lefties in this thread should remember that when the level that criticism.
I think when a country tries to fix a deficit problem they should determine what sectors the country excels in and try to promote companies of that sort. In the last twenty years the American Economy has seen the shift from a big manufacturing sector towards a more services oriented economy. The problem with this is that the manufacturing sector cost of entry is very low. A services company on the other hand generally need college educated people for the workforce.
So this leaves the American public with no choice really as a college education is almost a must for a person who wants to prosper.
So in closing I think that education will play a crucial part in determining if the US can not just sustain its services sector, but if it can make it grow as well.
So it will have to have a concerted effort to promote education.
America has always been pretty good at innovation, yet we get one side of the aisle criticizing the government for supporting green technologies which I am sorry to break it to everyone, is the future, at least over the next 100 years. Other countries are sponsoring their green tech companies and the only hope for our own is for the government to do the same. It worked with the railroad companies and their expansion out west, why shouldn't it work for the next big thing?
The problem with colleges is that only 5% of college goers get a degree in STEM, 5%. People just go to college because they can without any goal in life, but I am sorry, if you are going into any significant amount of debt getting an art degree, you are doing it wrong. Maybe if we could somehow get people more interested in getting science degrees, then a lot of other things would sort themselves out.
Heck, we have one side of the aisle who made a point of it to throw out all the fluorescent bulbs they could in the Congressional Building and go back to incandescent and to go from recyclable cups to styrofoam. They want to protect the incandescent light bulb even when the light bulb manufacturers say no, stop it. Change is happening and this one party is just sticking its fingers in its ears throwing temper tantrums. They are being willfully ignorant and I am sorry if it offends anyone, but that makes them stupid.
Yea, well I remember reading this a while ago from one our fellow denizens:
http://www.physicsforums.com/showthread.php?t=574384
It's an interesting read totally on the nature of science in general and the job market. 3 page thread. And yea this is what happens when you use the same handle on other forums!:p
Eh, I was watching a talk on CSPAN where there were conservative and libertarian people talking about the economy:
http://www.c-spanvideo.org/program/304734-4
Regulation on the internet, Peter Thiel had a number of interesting ideas and things to say about the issue. He's the one who's putting up grant money for people to drop out of college and start businesses. He also raised the argument that a number of regulations are too high and that most innovation is only in two sectors; finance and technology. He said the high point was the 50's and 60's which also corresponded to less regulation, from both sides, and more cash inflows.
I've slowly over time became more of an "Eisenhower Republican" even though I still detest the concept of social security and Medicare and such, it's not going any where because liberals will just put it in anyway so it's better to pull a "Bismark" and do it right. The whole point of government and corporations is to limit transaction costs by limiting choice and eliminating certain choices, to which is why "anarcho-capitalism" is a shell game as there's a natural point to where people will become over informed and tuned out and stressed out to engage in choice and lead to courses to limit choice come back as a point of utility.
Equally, this is why you see "engineering of consent" so well, because it picks up on the trends with how humans think and is more able to tune into our nature to buy products. Negative political adds work, and if I say "Give me a Kitkat bar" you can sing the jingle right now where as if I said "George Marshall" it may take a few moments to think or if I said "Marshall Plan" you know what I'm talking about. The hierarchy of knowledge is often pinned to narrative and emotion alongside not in spite of logic.
With that said, Congress has a number of parliamentary issues such as:
-How council heads are chosen
-How government is funded, namely that services must spend their full budget and can't squirrel away funds without seeing a decline in next year's fund "because it's the people's money" or politicians that want to appear to be cheap and instead letting people that know how to handle such money that can give good reasons to keep the money should be able to do so. Especially with things such as snow removal or even schools to have a rainy day fund.
-The primaries and length of our electoral process, namely it bleeds out the non popular and the non rich out. Clinton even had a $1 million in debt for her campaign going against Obama. Shortening the election cycles and having run off elections would open up the system.
-Limiting the powers of Congress with a censor branch on long term money that's elected and has appointed members rather than a "balanced budget amendment." Having an entire class that go toe to toe with Congress on issues of over spending or misallocation of funds is adding new bureaucratic mechanisms which can lead to punishments against Congress for cronyism and stupid redundancy. Having a political body that says "Why are you doing this?" "How are you going to pay for that?" "No you're not cutting taxes and adding in Medicare Part D, one or the other."
Furthermore how we do elections is stupid, it may come down to the need to give Congress more cash to run their home offices in totality and shortening campaign cycles. Equally, I wouldn't mind cutting down the amount of members in the House and making political jerrymandering unconstitutional.
Ambition must be made to counteract ambition.
Individualities may form communities, but it is institutions alone that can create a nation.
Nothing succeeds like the appearance of success.
Here is my principle: Taxes shall be levied according to ability to pay. That is the only American principle.
The latter is a no-brainer, but the former is a little tricky. Since each state must have at least one Representative if you reduce the total number of Representatives then the power of states with lower populations increases. The Senate already gives smaller states a disproportionate amount of power; the House is supposed to counteract that power discrepancy by giving larger states more representation.
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They already have a lot of power because small state politicians have magical staying power and access to mystical mountain energies that make them live longer; Senator Byrd. The longevity and seniority issue triggers the chairmanships and ability to gain hegemony in Congress. Most power is relational, not state vs. state. Coalitions of states do work, however there are several large/small state issues that are irrelevant as it's mostly geographical distributions and economic make up rather than population density that declare political splices.
Direct election of the Speaker and for the most powerful chairs on a national level would be interesting, though.
Ambition must be made to counteract ambition.
Individualities may form communities, but it is institutions alone that can create a nation.
Nothing succeeds like the appearance of success.
Here is my principle: Taxes shall be levied according to ability to pay. That is the only American principle.
We're either going to bring it down or default on our debt.
And if we default on our debt, we will bring about worldwide economic collapse.
Your first two questions are very simillar so I will answer them together.
1. What specific problems running a chronically high deficit can cause
2. What problems maintaining a high debt-to-GDP ratio can cause
--higher interest rates from borrowing from others.
--Loss of GDP when increasing percentages are used to pay for interest.
--inability to borrow if future needs should warrant it
--devaluation of currency
--increasing dependency on debt to fuel economic growth
--contagion from default, especially where other countries are running their own high deficits.
--Inflation
--Loss of wealth by the citizenry in the form of lower real wages due to inflation.
--Loss of economic confidence by consumers and the citizenry.
3. Whether and how those potential problems are likely to arise now and in the medium- and long-term future
Medium Term, there is a reasonable risk.
Long Term, there is a high risk if the rate of spending without growth is sustained.
4. How one can determine whether those problems are in fact occurring
--the day we lose our status as a reserve currency, the day china stops lending to us, the day we default will be major milestones.
5. The best ways to reduce the relative magnitude of the deficit and debt
--ironically, the best way to reduce the debt is do what Obama is doing. Spend more!
The deficit and our ability to pay off interest depends on one number only: The total tax revenue we receive. Keynesian theory says that in times like these, the government should spend money on public works, public projects, putting people back to work to kick start the economy.
Ideally once the economy is rolling again, the economy can wean itself off the need for debt-driven expansion.
The problem is this "growth" is hard to see.
Take for example, your local metropolis beltway(the major roadway encircling your city) or consider I-95. How much "value" did the government gain from this "investment"?
It's not like government spending money to build I-95 gives a 10% bond return in interest. Instead the "interest" you get is that roads make economic expansion possible. Cities and Towns are able to grow in areas connected by roads. Millions of commuters use the roads to get to where they need to go to make economic transactions. How much is this worth exactly? I'm not sure.
Neither am I sure about how much our economy improves from building other projects, or spending money on R&D research, on giving tax breaks for green energy, etc.
6. The ways in which the U.S. budget is similar to and different from a household budget
It's not at all the same. In a household budget, you spend less than what you make, and save the money available for a rainy day.
With the government, the government's ULTIMATE goal should not be saving money like a piggy bank. The government's ultimate goal should be ensuring a strong nation, increasing the prosperity of its citizenry, encouraing the growth of industries, and increasing the tax base.
1. Increased taxation
2. Decreased spending
3. Inflation
4. Economic growth
Expect all 4, the longer we go expect #3 to get more important. We're on the trajectory to pull an "Argentina." That is a successful economy that had a lot of elderly that liked to suck on Uncle Sam's manly nipples of magic money that ultimately crashed the economy and then to a debt crisis. Followed up by a massive splurt of inflation to correct it, and then finally financial recovery. Not everyone ends in the Weimar Republic scenario if it's not willy-nilly stupid. But there's still a lot of pain.
Ambition must be made to counteract ambition.
Individualities may form communities, but it is institutions alone that can create a nation.
Nothing succeeds like the appearance of success.
Here is my principle: Taxes shall be levied according to ability to pay. That is the only American principle.