The Obama Presidency - 2008 & 2012

[flere-imsaho]

Public debt is not like private debt: Why public debt is not like credit card debt | The Great Debate




Unchecked deficit spending can be a problem (saving the argument of deficit spending as a response to Recessions). But, oh yeah....



The Shrinking Federal Deficit Hurts a GOP Argument - Businessweek

[Solecismic]

If you begin your chart when stimulus first kicked in, you'll get that type of curve. Especially if you frame it properly. Turn it upside-down, and it's a hockey stick.

The argument that public debt is a good thing ignores inflation. Right now, we're keeping inflation artificially low. When those practices stop... we'll all feel the effects.

Big-government supporters like inflation because it reduces savings and narrows the government-dependency gap.

[flere-imsaho]

It amuses me that the misguided deficit hawks back in 08/09 were all "Oh God don't use stimulus spending, the resulting debt (and/or deficit) will kill us!" And since then the Obama administration not only got stimulus to get the country out of recession, they've taken the deficit to lower than it was when they took office (half the size, in fact).

I wonder what these same people are going to be saying if the deficit ever gets to 0, or, god forbid, we run a surplus.

No wait, I don't, that happened, and the same people had Bush spend all the surplus on tax cuts.

Then when revenues drop, you get deficits again.

So you cut spending.

Then you get a surplus, so you cut taxes again.

See where this is going? The deficit hawk argument ends with no government. And if you want that, move to Somalia.

[Solecismic]

You're conflating deficit hawks with Bush supporters.

[flere-imsaho]

Originally Posted by Solecismic

If you begin your chart when stimulus first kicked in, you'll get that type of curve. Especially if you frame it properly. Turn it upside-down, and it's a hockey stick.

You're right, this paints a much worse picture:

[flere-imsaho]

Originally Posted by Solecismic

You're conflating deficit hawks with Bush supporters.

Only in the sense that they're both deeply misguided on this topic.

[Solecismic]

There's also the question of what the 2013 (and beyond) debt really is. Many say we'll run a $1T debt in 2013 rather than what the budget office shows. Many noticed that the debt clock didn't change for quite a while this year in order to stay under a limit that was never respected.

US Federal Debt Definition - plus charts and analysis

The charts there look very different, of course. The big issue being whether we're being sold a huge pack of lies with those blue bars at the right end of the CR chart.

[Solecismic]

Originally Posted by flere-imsaho

Only in the sense that they're both deeply misguided on this topic.

Rather than the emotional stuff, what's the real argument? What is the answer to the question of what you do when you devalue your currency by spending a lot more than you're taking in?

It's kind of like a geyser. Right now, it's plugged because interest rates are being kept artificially low. What happens when the pressure on those interest rates becomes too great?

Is it possible that some deficit hawks actually argue for letting the Bush tax cuts expire? Or understand that Bush was fairly damaging to the economy himself - not to mention responsible for the enormous disaster (for so many reasons other than financial) that was Iraq?

[flere-imsaho]

Originally Posted by Solecismic

The charts there look very different, of course. The big issue being whether we're being sold a huge pack of lies with those blue bars at the right end of the CR chart.

You can say that about literally anything, though.

I mean, the Denver Broncos look to have a really good trajectory to win the Super Bowl this year, but it's all quite possible we've been fed a pack of lies about their supremacy and Peyton Manning will be revealed to be Ryan Leaf in disguise come January.

The projections are the projections. If you've got something that substansively challenges the projections, then post it. If you want to argue via speculation that the trend won't continue due to reasonably-argued X, Y and Z, then that's fine too. But don't retreat with some vague claim of "we're being fed a pack of lies". There's literally no constructive way to discuss that.

[JPhillips]

Debt and deficit are two different things. The total debt is rising, but the yearly budget deficit is decreasing. The budget deal reduces the yearly deficit as compared to staying with sequestration. Spending increases, but revenue increases as well and lowers the deficit.

[flere-imsaho]

Originally Posted by Solecismic

Rather than the emotional stuff, what's the real argument? What is the answer to the question of what you do when you devalue your currency by spending a lot more than you're taking in?

Are you talking generally, or in the context of responding to a recession?

Here's what happens when you practice austerity in response to a recession: Financial Times | Error | Akamai Error

It's kind of like a geyser. Right now, it's plugged because interest rates are being kept artificially low. What happens when the pressure on those interest rates becomes too great?

And, as in the past, this will likely coincide with a recovering economy and, critically, recovering tax revenues, which will reverse the "problem" of "spending more than you take in".

Reasonable economists understand this is a balancing act, and managing economies in this manner requires work.

Is it possible that some deficit hawks actually argue for letting the Bush tax cuts expire? Or understand that Bush was fairly damaging to the economy himself - not to mention responsible for the enormous disaster (for so many reasons other than financial) that was Iraq?

You get some of these mythical people into power and maybe we'll have a conversation. For now your choices are the insanity that currently passes for fiscal policy in the GOP vs. an administration that's overseen a recovery from recession, unemployment dropping from 10% to 7%, and a halving of the deficit, all without runaway inflation.

Edit: The link works, it's just giving the forum software a hard time.

[gstelmack]

Originally Posted by flere-imsaho

Are you talking generally, or in the context of responding to a recession?

Here's what happens when you practice austerity in response to a recession: Financial Times | Error | Akamai Error

You don't have to practice austerity in a recession, as long as you pay off the debt once out of it. We deficit spend constantly.

The Federal Government is keeping interest rates low enough that there is already talk that banks might start CHARGING you to keep your money there, rather than the tiny pittance that barely passes for interest they give you now. THAT'S going to be fun.

Try teaching a kid about savings and compound interest when their savings account offers 0.1% annually...

[JPhillips]

Originally Posted by gstelmack

You don't have to practice austerity in a recession, as long as you pay off the debt once out of it. We deficit spend constantly.

That part I'll agree with. The problem is we still are far from full employment and cutting hundreds of billions out of the economy will only add to that problem. I saw a couple of charts recently that showed private job creation in line with other recessions, but public job creation far into the negative. If we had followed the path of other recessions we'd be much closer to full employment and in a much better place to tackle the structural deficit.

[Arles]

Originally Posted by gstelmack

You don't have to practice austerity in a recession, as long as you pay off the debt once out of it. We deficit spend constantly.

The Federal Government is keeping interest rates low enough that there is already talk that banks might start CHARGING you to keep your money there, rather than the tiny pittance that barely passes for interest they give you now. THAT'S going to be fun.

Try teaching a kid about savings and compound interest when their savings account offers 0.1% annually...

Our deficit spending is like a gambler winning at the tables. After 3-4 winning hands (things start to turn around in the economy), we should have enough discipline to stop it. But, like the winning gambler, our government can't. We will only stop once we run out of money

[Solecismic]

Originally Posted by flere-imsaho

Are you talking generally, or in the context of responding to a recession?

Here's what happens when you practice austerity in response to a recession: Financial Times | Error | Akamai Error

What we're trying to avoid is Japan-style over-spending. Yes, they make it through, but it's very painful. Austerity isn't the recommendation here - I think that's a loaded word that in modern times means less government increase than projected rather than a real cutback.

Originally Posted by flere-imsaho

And, as in the past, this will likely coincide with a recovering economy and, critically, recovering tax revenues, which will reverse the "problem" of "spending more than you take in".

Reasonable economists understand this is a balancing act, and managing economies in this manner requires work.

Question being what is the balance point. Reasonable is also a loaded word in this context. Deficit hawks would argue that we are so far beyond the balancing point that extreme cuts are necessary.

Originally Posted by flere-imsaho

You get some of these mythical people into power and maybe we'll have a conversation. For now your choices are the insanity that currently passes for fiscal policy in the GOP vs. an administration that's overseen a recovery from recession, unemployment dropping from 10% to 7%, and a halving of the deficit, all without runaway inflation.

Edit: The link works, it's just giving the forum software a hard time.

Some would say insanity passes for fiscal policy in the administration. Some would say that unemployment rose because of this policy, and continues to rise because more people are becoming dependent on government for everything, and have left the work force entirely. Some would say not only that, but the new jobs being created are either public sector or very low-paying. And some would say the runaway inflation is inevitable as soon as the fed is directed to stop holding interest rates at an unsustainable level.

Finally, when you say "maybe we'll have a conversation", that's adding an emotion that shuts down substantive discussion. Obviously, we have very different views on economic policy. It's frustrating to me that you post charts that ignore a large portion of the debt. We're in a great period for adding debt because we're still in the post-9/11 phase of our history, people will still lend us money (especially China) and politicians on both sides are fundamentally cowards when it comes to cutting off the spigot. But it's not a budget cut when it amounts to reducing the expected increase in something.

[JPhillips]

Public sector jobs are well below the level they were when Obama took office.

[Solecismic]

Originally Posted by JPhillips

Public sector jobs are well below the level they were when Obama took office.

But federal employment is up, and participation in the work force is down.

[Mizzou B-ball fan]

Originally Posted by JPhillips

Public sector jobs are well below the level they were when Obama took office.

Alright, this is malarkey. Yes, they are down. Why? Because they've replaced those people with short-term contractors who are actually more expensive than salaried public sector jobs. I know how this works because I've managed in the government before. My old group where I used to work is now at an all time high. 55% of the workers are contractors.

Need to cut? Move a couple salaried employees to another division and hire on contractors.

Bigger budget available? Time to hire back those employees you moved over.

It's all a shell game.

[JPhillips]

Originally Posted by Mizzou B-ball fan

Alright, this is malarkey. Yes, they are down. Why? Because they've replaced those people with short-term contractors who are actually more expensive than salaried public sector jobs. I know how this works because I've managed in the government before. My old group where I used to work is now at an all time high. 55% of the workers are contractors.

Need to cut? Move a couple salaried employees to another division and hire on contractors.

Bigger budget available? Time to hire back those employees you moved over.

It's all a shell game.

If public sector jobs are up and the government jobs are secretly up, why is the U16 so damn high?

[JPhillips]

Originally Posted by Solecismic

But federal employment is up, and participation in the work force is down.

Minimally.

There's no way to argue that most of the jobs created are in government. Public sector jobs are in line with other recoveries, but public sector jobs are way down.

[Solecismic]

Originally Posted by JPhillips

Minimally.

There's no way to argue that most of the jobs created are in government. Public sector jobs are in line with other recoveries, but public sector jobs are way down.

The argument lies in the reduction of full-time private-sector employment.

The calculation of unemployment at 7.0% is misleading - it doesn't reflect lower participation in the workforce and increased part-time low-wage employment.

So the small increase in federal government employment (state and local, as you point out, is way down - the pending pension problem has seen to that) is compared to a large reduction in full-time private-sector employment.

[sterlingice]

Originally Posted by Galaxy

How is increasing spending good?

It tuns out money is not just thrown into a giant hole and lit on fire, contrary to some ignorant beliefs. While there can be some waste, spending on things like roads, military spending, and food stamps actually go back into the economy and provide goods and services to the community as well as private sector job growth, in some cases.

SI

[flere-imsaho]

Originally Posted by Solecismic

The calculation of unemployment at 7.0% is misleading - it doesn't reflect lower participation in the workforce and increased part-time low-wage employment.

Then show us some non-misleading numbers.

Only one side of this conversation (JPhillips & I) are bothering to post actual numbers with actual citations and proof, which is why I have to do this:

Originally Posted by Solecismic

Finally, when you say "maybe we'll have a conversation", that's adding an emotion that shuts down substantive discussion.

It's not a substantive discussion if only one side is being substantive.

[flere-imsaho]

Originally Posted by Arles

Our deficit spending is like a gambler winning at the tables. After 3-4 winning hands (things start to turn around in the economy), we should have enough discipline to stop it. But, like the winning gambler, our government can't. We will only stop once we run out of money

You know, it's bad enough that people try to make the analogy between public and private debt, but I think you've managed to construct an even worse analogy. Well done!

[flere-imsaho]

Originally Posted by Solecismic

What we're trying to avoid is Japan-style over-spending. Yes, they make it through, but it's very painful.

Did you even read the article? The result of the cutting back that Japan did (after first trying stimulus with mixed results) was a) serious economic stagnation, b) huge ballooning debt (mainly due to a stagnant economy = lack of revenue) and c) no real platform, even 20 years later, to climb out of the hole thus dug.

Question being what is the balance point. Reasonable is also a loaded word in this context. Deficit hawks would argue that we are so far beyond the balancing point that extreme cuts are necessary.

Those deficit hawks must then be making the argument that the U.S. economy is fully recovered and in good shape then, right? So, that's the question. Have we recovered, or does the economy need more help?

Some would say insanity passes for fiscal policy in the administration. Some would say that unemployment rose because of this policy, and continues to rise because more people are becoming dependent on government for everything, and have left the work force entirely. Some would say not only that, but the new jobs being created are either public sector or very low-paying. And some would say the runaway inflation is inevitable as soon as the fed is directed to stop holding interest rates at an unsustainable level.

And those people have no actual evidence for any of those claims except "their gut" and "truthiness".

Finally, when you say "maybe we'll have a conversation", that's adding an emotion that shuts down substantive discussion.

Well, you misread me. It's not emotion, it's dismissal.

Obviously, we have very different views on economic policy. It's frustrating to me that you post charts that ignore a large portion of the debt.

Well, basically, that's because I've posted two charts about the deficit.

But it's not a budget cut when it amounts to reducing the expected increase in something.

I'm reasonably certain I have never construed any of this as an actual cut of a budget. I'm certain I've never used that phrase. I understand the difference between cutting a budget and a deficit.

[Solecismic]

Originally Posted by flere-imsaho

Then show us some non-misleading numbers.

Only one side of this conversation (JPhillips & I) are bothering to post actual numbers with actual citations and proof, which is why I have to do this:





It's not a substantive discussion if only one side is being substantive.

It's unfortunate that you have to resort to personal insult. You have a very definite view and don't seem open to discussion. At some point, either debt is paid back or you devalue. We seem headed for the latter, which will hurt a lot of people.

I think it's best to use the ignore function at this point.

[flere-imsaho]

mmmkay, can someone point out what the personal insult was that I used?

[Butter]

Was wondering that myself.

[DaddyTorgo]

Originally Posted by flere-imsaho

mmmkay, can someone point out what the personal insult was that I used?

You said he wasn't being substantive I guess?

IMHO you were actually far more gentle than say I would have been had I gone through and picked apart the series of posts that you did.

Somebody's apparently feeling a little sensitive today.

[Solecismic]

Originally Posted by DaddyTorgo

You said he wasn't being substantive I guess?

IMHO you were actually far more gentle than say I would have been had I gone through and picked apart the series of posts that you did.

Somebody's apparently feeling a little sensitive today.

No, just tired of those who are dismissive of anyone who is concerned about the debt. It's pointless to discuss when they feel so strongly that any opposition is not only wrong, but a sign that someone can't read or can't think.

I don't want my son to grow up in a country going through what Greece is going through now. So I feel strongly that we need real budget reform, just like we need real health care reform. I don't see any sign that Washington is capable of addressing either issue, long-term. You can't run this high of a deficit without devaluing your currency. We can't keep propping up our currency without having to pay more down the road.

From now on, I think it's best that I put people on ignore who can't have this debate without resorting to insult. It's one thing to feel strongly. It's another to behave without respect for opposing views.

[flere-imsaho]

When I make assertions I do my best to back them up with facts, figures and other citations as possible, pointing out when I'm just speculating. All I'm asking for (on the previous page), is for those making competing assertions to do the same. To me, that's the respectful way (ironically) to conduct this kind of discussion, as opposed to just (say) putting unsupported assertions out there.

[gstelmack]

Let me ask this question to flere, etc:

When DO you start paying back the debt?

This conversation was happening, on this very board, before the real estate bust / recession hit. It's such a huge conversation during this recession and the climb out of it because we WEREN'T paying it off, except during a brief time under Clinton when there was a surplus, helped by a bunch of false economic bubbles (propped up stock prices based on shady accounting practices that came crashing down).

[DaddyTorgo]

Originally Posted by Solecismic

No, just tired of those who are dismissive of anyone who is concerned about the debt. It's pointless to discuss when they feel so strongly that any opposition is not only wrong, but a sign that someone can't read or can't think.

I don't want my son to grow up in a country going through what Greece is going through now. So I feel strongly that we need real budget reform, just like we need real health care reform. I don't see any sign that Washington is capable of addressing either issue, long-term. You can't run this high of a deficit without devaluing your currency. We can't keep propping up our currency without having to pay more down the road.

From now on, I think it's best that I put people on ignore who can't have this debate without resorting to insult. It's one thing to feel strongly. It's another to behave without respect for opposing views.

Nobody insulted you though!

You didn't back up your thoughts with any facts/figures/citations. If you're not willing to do that then you're not having a real constructive conversation about it.

If it was just a case of not having them at-hand, at least say "don't have sources for this, can someone provide?" or "i'm busy but i'll look up the sources I'm thinking of later."

Pointing out that you didn't include any actual evidence for anybody to dialogue over, and just based it on your feelings and anecdotes (and thus anybody responding and trying to discredit those is de facto going to come off as insulting you in your eyes and evoke an emotional response) isn't attacking you.

Not including actual evidence/citations/facts and figures isn't engaging in constructive conversation.

[Solecismic]

Originally Posted by DaddyTorgo

Nobody insulted you though!

You didn't back up your thoughts with any facts/figures/citations. If you're not willing to do that then you're not having a real constructive conversation about it.

If it was just a case of not having them at-hand, at least say "don't have sources for this, can someone provide?" or "i'm busy but i'll look up the sources I'm thinking of later."

Pointing out that you didn't include any actual evidence for anybody to dialogue over, and just based it on your feelings and anecdotes (and thus anybody responding and trying to discredit those is de facto going to come off as insulting you in your eyes and evoke an emotional response) isn't attacking you.

Not including actual evidence/citations/facts and figures isn't engaging in constructive conversation.

If you look at today's discussion, I've provided links and summaries of articles as well as an argument both based on opinion and on fact.

Even though it's not the case today, you certainly can have a constructive conversation without providing citations for every post you make.

Are you calling just about every post on this item non-constructive? That seems harsh.

As for the insulting part, it's part that post, part others, part to me, part to others. I've reached a point where I have no tolerance for the Fox/CNBC style of shouting down others without listening or being respectful. I have no idea why that stuff gets ratings - I can't watch for more than a few seconds. I like discussing politics, but respectfully. So I'm just going to ignore people who aren't respectful to others.

[flere-imsaho]

Originally Posted by gstelmack

When DO you start paying back the debt?

To be technical, we pay back the debt now. I am led to believe it's a rather large part of our budget.

I think the question you're asking is when do we get serious about balancing the federal budget and even aiming for surpluses that would allow us to pull the debt down to a level that is a) structurally sound and b) makes most people happy (with a being more important than b in my mind, but there you go....)?

To answer that question, you have to break it down further, into spending and revenue-based questions:

1. What is the appropriate level of revenue to generate given overall economic conditions and a goal of having a strong economy and what levers (i.e. taxes) should be adjusted to meet this revenue (also knowing that a stronger economy generates more revenue without changes to tax rates - see the late 1990s)?

2. What are appropriate spending cuts given a) need for that spending, b) the population's agreement on the necessity of that spending and c) the economic effects of any such spending cuts?

Sound familiar? Because it's the same old taxes & spending arguments we've had for ages.


Since we now have unprecedented access these days to data, models, etc..., in a non-partisan approach (which, granted, will never happen), we might ask the following:

What sources of revenue can be increased, and to what level, without deleterious effects on the recovering economy?

What spending line items can be decreased, and to what level, without other deleterious effects on the recovering economy?

And that's the problem: no one can agree on the answers to those two questions, probably least of all our politicians. Thus, we're left with folks seeking simpler solutions, such as unilateral and massive spending cuts, or unilateral and massive tax increases, neither of which is likely to actually work given the likely deleterious effects of such radical actions.

Which is why I respond with incredulity to those who would propose we focus on reducing the debt as a primary goal, given that it implies radical actions, and usually radical spending cuts.

[flere-imsaho]

Originally Posted by gstelmack

This conversation was happening, on this very board, before the real estate bust / recession hit. It's such a huge conversation during this recession and the climb out of it because we WEREN'T paying it off, except during a brief time under Clinton when there was a surplus, helped by a bunch of false economic bubbles (propped up stock prices based on shady accounting practices that came crashing down).

Well, here's your answer:



Two key points:

Bear in mind that President Bush inherited perhaps the strongest federal balance sheet in postwar history. There were record-high surpluses, debt was at around 30 percent of GDP and falling, and the Congressional Budget Office projected that the federal government would be debt free by 2009. The country was in great fiscal shape to deal with any crises or emergencies coming down the road, and it was even ready to deal with the coming retirement of the baby boom generation.

Of course, other factors contributed to the federal budget’s deterioration: the terrorist attacks of September 11, 2001; the subsequent recession; the wars in Iraq and Afghanistan; President Bush’s domestic spending programs; and the onset of the Great Recession at the end of 2007, which led to massively reduced tax collections as incomes plummeted.

But even with all of that, when one adds back the foregone revenue from the Bush tax cuts to the actual revenue collections over the past 10 years, the debt picture suddenly becomes markedly better. That additional revenue would have meant lower deficits in each year and therefore lower overall debt. And lower debt means lower interest payments on that debt, further reducing deficits. In the “no Bush tax cuts” alternate universe, our debt-to-GDP ratio would be less than 50 percent this year even after all the other fiscal shocks of the past 10 years.

Look, if you want to reduce and/or eliminate the debt, you're going to need to:

1. Spur growth and keep the economy strong
2. Raise revenue
3. Cut spending, especially spending with questionable ROI
4. Avoid decisions that create massive mandatory expenditures (like wars)

[gstelmack]

Originally Posted by flere-imsaho

Which is why I respond with incredulity to those who would propose we focus on reducing the debt as a primary goal, given that it implies radical actions, and usually radical spending cuts.

And I think that's the key problem that I've seen others post as well - no one can agree on how to do it, so let's not bother. That's not a solution either.

If no one can agree, then doing something across-the-board so everyone feels the pain becomes necessary. There is no "easy" solution, there will be pain. But the longer we delay, the worse the pain is going to get.

We can talk all we want about "good" levels of deficit, but as long as that debt grows, and the interest on it, a larger percentage of our taxes go to pay that interest, and we have less for all the other things we need to spend it on. Eventually we reach a point where it's all going to interest, and not paying off anything else. Or we default on that debt. Both are pain, big pain.

So I understand that getting the budget balanced and paying down the debt won't be easy, will hurt, and will cause problems, I just think the result of NOT doing it will be far, far worse. Maybe I'll get "lucky" and be dead by then, but I don't think so, I think it's coming much much sooner than that, based on history and the magnitude of the debt.

[gstelmack]

Originally Posted by flere-imsaho

Look, if you want to reduce and/or eliminate the debt, you're going to need to:

1. Spur growth and keep the economy strong
2. Raise revenue
3. Cut spending, especially spending with questionable ROI
4. Avoid decisions that create massive mandatory expenditures (like wars)

Unfortunately I'm not sure #4 is always a viable option. #1 I'm not sure how you actually do, again the last time our economy was "strong" turned out to be mostly a sham of illegal accounting tricks.

2 & 3 I agree on, and we can certainly have this conversation.

But we've got you and others going "the deficit is okay", and that's where I think Jim and myself and others have a big problem.

[JPhillips]

Originally Posted by gstelmack

Let me ask this question to flere, etc:

When DO you start paying back the debt?

This conversation was happening, on this very board, before the real estate bust / recession hit. It's such a huge conversation during this recession and the climb out of it because we WEREN'T paying it off, except during a brief time under Clinton when there was a surplus, helped by a bunch of false economic bubbles (propped up stock prices based on shady accounting practices that came crashing down).

I'd target under 6% unemployment before I cared at all. The debt is a possible crisis in the future, the lack of jobs is a real crisis currently. I wish we'd worry more now about the current crisis.

I look at where I grew up in rural Ohio and see massive suffering because there are no jobs. Cutting spending doesn't mean shit to these people because they can't find work. The real physical and emotional damage being done by a lack of employment should be on the front pages papers every day. Congress should be screaming and investigating. Every election should turn on who will get people working.

[JPhillips]

Originally Posted by gstelmack

Unfortunately I'm not sure #4 is always a viable option.

But we can choose not to start wars.

#1 I'm not sure how you actually do, again the last time our economy was "strong" turned out to be mostly a sham of illegal accounting tricks.

That's greatly overstating things. There was massive real growth and productivity improvements in the 1990s. Just modern inventory management alone has reaped hundreds of billions of dollars.

2 & 3 I agree on, and we can certainly have this conversation.

I think we should eventually go back to the Clinton tax rates and if healthcare expense growth doesn't slow something big will have to happen there.

But we've got you and others going "the deficit is okay", and that's where I think Jim and myself and others have a big problem.

I've certainly never said the deficit is okay, just not as important as the real crisis of unemployment.

[JPhillips]

Originally Posted by gstelmack

And I think that's the key problem that I've seen others post as well - no one can agree on how to do it, so let's not bother. That's not a solution either.

If no one can agree, then doing something across-the-board so everyone feels the pain becomes necessary. There is no "easy" solution, there will be pain. But the longer we delay, the worse the pain is going to get.

We can talk all we want about "good" levels of deficit, but as long as that debt grows, and the interest on it, a larger percentage of our taxes go to pay that interest, and we have less for all the other things we need to spend it on. Eventually we reach a point where it's all going to interest, and not paying off anything else. Or we default on that debt. Both are pain, big pain.

So I understand that getting the budget balanced and paying down the debt won't be easy, will hurt, and will cause problems, I just think the result of NOT doing it will be far, far worse. Maybe I'll get "lucky" and be dead by then, but I don't think so, I think it's coming much much sooner than that, based on history and the magnitude of the debt.

I'll admit I haven't studied this much, but a world with zero new U.S. Treasury debt would be risky. Where would all that money go? How would that change the global power structure?

edit: That doesn't mean I think any debt level is sustainable.

[Blackadar]

Originally Posted by flere-imsaho

mmmkay, can someone point out what the personal insult was that I used?

You used facts and data. Shame!

[gstelmack]

Originally Posted by JPhillips

I'd target under 6% unemployment before I cared at all. The debt is a possible crisis in the future, the lack of jobs is a real crisis currently. I wish we'd worry more now about the current crisis.

I look at where I grew up in rural Ohio and see massive suffering because there are no jobs. Cutting spending doesn't mean shit to these people because they can't find work. The real physical and emotional damage being done by a lack of employment should be on the front pages papers every day. Congress should be screaming and investigating. Every election should turn on who will get people working.

HOW are you going to cure unemployment? This is much easier said than done, especially when so much of the population does not value education and is growing up thinking things should get handed to them. People like to wave their hands about "creating jobs", but even with free education too many people don't have the basic skills needed for so many of the jobs that are available. And more educated people is likely to mean more businesses (with the people to run them) to hire those folks.

But the problem isn't money, the education is available, people just won't take advantage of what's there.

And for those that want to start and own businesses, the road is daunting, between convoluted regulations, taxes, and other roadblocks.

So we need people to start taking advantage of the education that is there, and we need to create a business-friendly climate with a streamlined set of regulations and taxes that is easier to follow and not run afoul of.

But creating a business-friendly climate does not seem to be supported by those who scream the loudest (I use that intentionally, I'm not talking necessarily about folks here, but what you see in the media etc) about jobs.

And yes, I think you need to do something about run-amok corporations, but heck even Obama thinks we have businesses that are too big to fail...

[flere-imsaho]

Originally Posted by gstelmack

Unfortunately I'm not sure #4 is always a viable option. #1 I'm not sure how you actually do, again the last time our economy was "strong" turned out to be mostly a sham of illegal accounting tricks.

That's the stock market you're thinking of (the sham of illegal accounting tricks). The economy continued to produce:



An improving economy improves revenues. Improved revenues assist with deficit reduction. Thus a focus on improving the economy is important and should be a major part of any deficit reduction strategy.

But we've got you and others going "the deficit is okay", and that's where I think Jim and myself and others have a big problem.

I'm tired of people putting words in my mouth. I did not say "the deficit is okay". I did say (well, post a chart) that it was decreasing, and that this was a good thing. Which is completely and utterly different.

Don't misconstrue my positions and I won't misconstrue yours.

[Solecismic]

Originally Posted by JPhillips

I'd target under 6% unemployment before I cared at all. The debt is a possible crisis in the future, the lack of jobs is a real crisis currently. I wish we'd worry more now about the current crisis.

I look at where I grew up in rural Ohio and see massive suffering because there are no jobs. Cutting spending doesn't mean shit to these people because they can't find work. The real physical and emotional damage being done by a lack of employment should be on the front pages papers every day. Congress should be screaming and investigating. Every election should turn on who will get people working.

Every election should. So how do we get more people employed, long-term? How do we deal with a record-level of people who aren't employed full-time? The stimulus ended up lowering employment when you count people who have left the work force. And we're only getting growth in part-time work.

The number we should target is percentage full-time participation in the work force. If stimulus had wound up getting that number down, then we could begin to turn this around. Instead, it's at a 35-year low - and numbers going back a few decades reflect far less participation from women.

Notice: Data not available: U.S. Bureau of Labor Statistics

We disagree on how close we are to crisis with the debt. We don't feel it yet because the fed is artificially keeping inflation low. The minute that stimulus stops, we'll have double-digit inflation. Then not only are people out of work, they'll see whatever savings they have reduced in value.

[flere-imsaho]

Originally Posted by gstelmack

HOW are you going to cure unemployment?

Well, we just went from 10% to 7% in the space of about three years. Let's examine how that happened and maybe do more of it.

Edit: Having said that, Greg, I certainly agree that long-term structural unemployment is an issue we should be looking at closely, and agree with many of the challenges you raise. I would also agree with JPhillips that working on that issue should be one of our more important priorities, given that strong employment will aid with many of these other challenges.

[gstelmack]

Originally Posted by flere-imsaho

Unchecked deficit spending can be a problem (saving the argument of deficit spending as a response to Recessions). But, oh yeah....

I did miss this bit earlier, but when I keep seeing graphs showing "deficit as a percentage of GDP" explaining how good things are, and it seems to keep ignoring the "total debt" question, that's when I jump to the "deficit is not really a problem" conclusion.

[sterlingice]

Originally Posted by gstelmack

I did miss this bit earlier, but when I keep seeing graphs showing "deficit as a percentage of GDP" explaining how good things are, and it seems to keep ignoring the "total debt" question, that's when I jump to the "deficit is not really a problem" conclusion.

Because 15-or-whatever trillion as a big number doesn't really mean much when a dollar today is not worth a dollar yesterday and certainly is not worth a dollar in 1980. It's really where using the average family as a model for national debt breaks down. Deficit as a percentage of GDP or deficit adjusted for inflation are more meaningful.

SI

[flere-imsaho]

Originally Posted by gstelmack

I did miss this bit earlier, but when I keep seeing graphs showing "deficit as a percentage of GDP" explaining how good things are

Well, that's your interpretation. I would term it as "explaining how relatively not terrible things are".

and it seems to keep ignoring the "total debt" question, that's when I jump to the "deficit is not really a problem" conclusion.

OK, you're conflating two things (debt & deficit) while I'm separating them.

Public debt has some problems, perhaps chief among them a) the money lost to interest payments (though remember a lot of this interest goes to actual Americans who hold this debt) and b) the risk of the debt ballooning should interest rates rise (which is what I think Jim has been pointing at).

However, to me, those problems aren't as important as the budget deficit.

The budget deficit has some problems, perhaps chief among them a) growth in the aforementioned debt and its attendant problems and b) a weakening of American fiscal strength (and/or perception).

However, to me, those problems aren't as important as unemployment and having a strong economy.

Unemployment and a weak economy have some problems, perhaps chief among them a) an inability to grow revenues, leading in part to deficits and the aforementioned problems, b) a need to sustain and/or grow programs that provide support for those affected by the weak economy and unemployment and c) an increasing inflexibility in the ability to manage the budget due to the aforementioned challenges.

So yes, I'd like to see the debt brought down, the deficit reduced, unemployment drop, and the economy strengthened, in roughly reverse order.

[Subby]

Originally Posted by Solecismic

It's unfortunate that you have to resort to personal insult. You have a very definite view and don't seem open to discussion. At some point, either debt is paid back or you devalue. We seem headed for the latter, which will hurt a lot of people.

I think it's best to use the ignore function at this point.

Is this another puzzle?