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At what point will the economy be Obama's fault?

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Fern

Elite Member
Super Moderator
Sep 30, 2003
26,907
173
106
News flash to those who lack addition/subtraction skills... If you give money to a state/local gov, you are allowing them to preserve jobs, because they cannot run a deficit and would otherwise have to lay people off. If you fund an infrastructure project, a contractor is getting paid to do it, and paying its employees that it would otherwise have to lay off.

What is it about that that you don't understand?
I see this "no deficit" bullshit too often. WTH do you guys think state & muni bonds are issued for? It's because they're running a deficit (spending more than they're taking in).

Yeah, some gov sector jobs were temporarily saved. I say "temporary" because unless Obama does it all again (sending money to state/local gov) we'll be right to square one and all those "saved jobs" threatened again. It was mostly a damned expensive way to delay the inevitable and necessary.

In my state (NC) it's common knowledge that the "shovel ready" projects in the stim bill were things already budgeted for by the state. They just switched those projects over to the stim funds and reallocated already budegeted state money elsewhere. I.e., nothing new is getting built - no new jobs or saved ones.

I don't have a problem with deficit spending in a recession, just how this one was executed - little to no 'bang for the buck'.

Where we need is employment in the private sector, they actually produce GDP; the gov doesn't, it just reallocates funds and take a big 'skim' off the top.

Fern
 

Throckmorton

Lifer
Aug 23, 2007
16,830
1
0
Municipal bonds require a successful referendum vote.

What you are saying about money being redirected is exactly where basic addition and subtraction comes in.

OK, a state directs money away from a project they had budgeted. What do they do with that money? Flush it down a toilet? No, they use it to keep someone else employed. Money is fungible.

Here is an analogy. You have a certain amount of money budgeted to pay rent, food costs, bills, etc. The stimulus gives you a tax break, which you put toward your rent check. Does that mean the tax break was useless? No, because it makes more money available to you for other things. It's just a shift.

Addition and subtraction. Think about it.
 
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Throckmorton

Lifer
Aug 23, 2007
16,830
1
0
The private sector doesn't "create jobs". Profitability creates jobs. Employers hire people if it's profitable FOR THEM to do so, not out of charity and not out of concern for the greater good.

If you own a business do you say "I better employ more people even if they won't make me more profit because it will help out the economy"??? NO, but government does.
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,907
173
106
Municipal bonds require a successful referendum vote.

What you are saying about money being redirect is exactly where not understanding basic addition and subtraction comes in.

OK, a state directs money away from a project they had budgeted. What do they do with that money? Flush it down a toilet? No, they use it to keep someone else employed. Money is fungible.
Jeebus man. Here in NC they used it (gov) money to keep down our budget deficit.

It's a swap trading what would otherwise be additional state debt for more fed gov debt. Either that or raise taxes (bad choice in a recession since income and sales tax revenues are down anyway) or slim down and cut spending.

Again, it's an expensive and temporary postponement of the inevitable.

Fern
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,907
173
106
The private sector doesn't "create jobs". Profitability creates jobs. Employers hire people if it's profitable FOR THEM to do so, not out of charity and not out of concern for the greater good.

If you own a business do you say "I better employ more people even if they won't make me more profit because it will help out the economy"??? NO, but government does.
You're off some on some straw man tangent. Re-read what I wrote:

Where we need is employment in the private sector, they actually produce GDP; the gov doesn't, it just reallocates funds and take a big 'skim' off the top.
What we need is growth in GDP. More GDP generates more gov revenue (vis-a-vis), we're going to have to grow our way of this debt or we're screwed. Gov generates no real GDP, that's private sector.

Your last paragraph indicates some wierd idea that we can get out of this recession by putting everyone on the government payroll. The problem with that (and the stim bill) is that the there's no way to pay for it because the gov generates no income. Private business does generate "income". I.e., they targeted the wrong sector.

Fern
 

Throckmorton

Lifer
Aug 23, 2007
16,830
1
0
Jeebus man. Here in NC they used it (gov) money to keep down our budget deficit.

It's a swap trading what would otherwise be additional state debt for more fed gov debt. Either that or raise taxes (bad choice in a recession since income and sales tax revenues are down anyway) or slim down and cut spending.

Again, it's an expensive and temporary postponement of the inevitable.

Fern
EXACTLY!!! Raising taxes and cutting spending are both bad things to do during a recession. Postponing the inevitable as you put is A GOOD THING. That is what stimulus spending is
 

Throckmorton

Lifer
Aug 23, 2007
16,830
1
0
You're off some on some straw man tangent. Re-read what I wrote:



What we need is growth in GDP. More GDP generates more gov revenue (vis-a-vis), we're going to have to grow our way of this debt or we're screwed. Gov generates no real GDP, that's private sector.

Your last paragraph indicates some wierd idea that we can get out of this recession by putting everyone on the government payroll. The problem with that (and the stim bill) is that the there's no way to pay for it because the gov generates no income. Private business does generate "income". I.e., they targeted the wrong sector.

Fern
No, what I'm saying is that the private sector can't just spontaneously create jobs. That's not what it does. The private sector is about PROFIT. If "creating a job", or spending money on equipment isn't profitable, why would they do it?

That requirement doesn't apply to government. That's WHY government is exactly the entity best suited to stimulating the economy... whether that means spending money on projects or tax breaks for people who will spend the money.
 
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woolfe9999

Diamond Member
Mar 28, 2005
7,164
0
0
In answer to the OP's question, the answer depends, I'd say we'll know by the end of this year whether Obama's stimulus, TARP continuation, and current (bipartisan) jobs bill, plus some discretionary spending increases this year, have had their desired effect. He isn't responsible for the occurrence of the recession regardless, but if we start sinking back down after the stimulus wears off, then the stimulus either wasn't big enough or it was the wrong kind of stimulus. So yeah, by the end of this year, we'll know if the private sector can move forward on its own steam. If it can't, then he is responsible for failing to fix it.

- wolf
 

piasabird

Lifer
Feb 6, 2002
17,168
60
91
Fault is irrelevent. Why does the evil Facist government keep spending more and more money when they need to fire more and more people and start cutting programs we do not need. Families have lost both wageowners while president monkey for a brain is busy spending more and more money. Enough already. Lay off every goverment worker including all of his stupid czars. It is time for everyone in public office including the president and pelosi all representatives and all congressmen and all their staff to take a 30% pay cut.

Why does the government own a car company and why is the government investigating another car company they dont own? Can you see a possible conflict of interest? How come the banks can pay back all they lost and GM cant? People still need cars???
 
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rudeguy

Lifer
Dec 27, 2001
47,371
14
61
Fault is irrelevent. Why does the evil Facist government keep spending more and more money when they need to fire more and more people and start cutting programs we do not need. Families have lost both wageowners while president monkey for a brain is busy spending more and more money. Enough already. Lay off every goverment worker including all of his stupid czars. It is time for everyone in public office including the president and pelosi all representatives and all congressmen and all their staff to take a 30% pay cut.

Why does the government own a car company and why is the government investigating another car company they dont own? Can you see a possible conflict of interest? How come the banks can pay back all they lost and GM cant? People still need cars???
Welcome to the USSA. Its really starting to get scary around here...
 

shadow9d9

Diamond Member
Jul 6, 2004
8,132
1
0
After 8 years of bush, the economy collapsed... if after 8 years of Obama it has not recovered, I will blame him.
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,907
173
106
After 8 years of bush, the economy collapsed... if after 8 years of Obama it has not recovered, I will blame him.
Nah.

The economy is really Congresses' domain. The President's is foreign relations etc. I suppose the President could interfer by vetoing legislation, but I haven't seen that, at least as far as the economy is concerned.

Personally, I don't really hold Obama responsible. I do think with all the goodwill he had upon entering offcie he could have influenced the Stim bill, yet he punted to Pelosi/The House. But then again, he doesn't know squat about ecomonics. Comnstitutional law + community activism != economics/business.

BTW: The Democrats won control of Congress in 2006.

Fern
 

heyheybooboo

Diamond Member
Jun 29, 2007
6,278
0
0
Municipal bonds require a successful referendum vote.

What you are saying about money being redirected is exactly where basic addition and subtraction comes in.

OK, a state directs money away from a project they had budgeted. What do they do with that money? Flush it down a toilet? No, they use it to keep someone else employed. Money is fungible.

Here is an analogy. You have a certain amount of money budgeted to pay rent, food costs, bills, etc. The stimulus gives you a tax break, which you put toward your rent check. Does that mean the tax break was useless? No, because it makes more money available to you for other things. It's just a shift.

Addition and subtraction. Think about it.
Yes .... but :D

Locals have expanded statutes over the years that allow alternative methods of issuing debt (such as TIF - 'Tax Increment Financing' - revenue bonds) which do not require a vote of the people.

With a TIF bond the Locals are essentially pledging to pay off debt with the tax revenues a project may generate over and above the cost of delivering typical municipal services.

And in North Carolina (and I'm assuming elsewhere) we have something called the "2/3 bond rule" whereby a city or county may incurr additional debt principle without a vote of the people. If in any given year the municipality retires X amount of debt, they may incurr an additional 2/3's X of debt principle.

It's actually not as bad as it seems. The state Auditor oversees something called the 'Local Gov't Commission' in North Carolina which oversees the issuance of all local gov't debt (and the LGC has the authority to designate a municipality's local property tax rate to insure that the community does not default on their bonds).

But it does get worse. The State of North Carolina is now arguing between departments about a new financing method (without public approval) which would allow 'contractors' on major projects to provide a portion of the project cost 'upfront' with the State paying them back over 'X' number of years.

Under the new financing plan, the construction company or companies selected will finance $50 million of the $340 million costs, and the state will pay them back over 10 years.

Cowell, who oversees the issuing of debt and how much debt the state can afford, said the plan sets the precedent of an individual agency obligating the state to a debt with no oversight from her office or any other "financial body." Cole countered that the law he wrote provides an additional tool to pay for roads at a time of growing need and declining revenue.

On Tuesday, Cowell's office released the annual debt affordability study that warned that the state can only afford to borrow $9.1 million for each of the next five years to build roads and buildings if officials want to remain within self-imposed limits necessary to keep North Carolina's top bond rating. The AAA rating allows the state to get the best interest rate on bonds. The $9.1 million is little more than cushion for error in the context of a $6 billion debt load.

North Carolina, however, still has $1.9 billion in debt that already has been authorized and is available for other construction projects, Cowell said Wednesday.
Article here







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zinfamous

No Lifer
Jul 12, 2006
105,938
20,888
136
Is it time yet?
nope. It's still Reagan's fault. ;)



You can, however, blame his administration for the ratther fiscally conservative expenditure of only ~60% of the Bush Admin's TARP. Of which, only 50-75 billion currently remains outstanding.

Pretty impressive, actually. You won't here that from certain sources however. Hell, some will actually try to convince you, though, that TARP is an Obama thing. Odd, considering how it was passed before he even took office. I think it was actually prior to the election, no?
 

rudeguy

Lifer
Dec 27, 2001
47,371
14
61
nope. It's still Reagan's fault. ;)



You can, however, blame his administration for the ratther fiscally conservative expenditure of only ~60% of the Bush Admin's TARP. Of which, only 50-75 billion currently remains outstanding.

Pretty impressive, actually. You won't here that from certain sources however. Hell, some will actually try to convince you, though, that TARP is an Obama thing. Odd, considering how it was passed before he even took office. I think it was actually prior to the election, no?
didn't Obama say in some interview that no one including him liked TARP?
 

Zebo

Elite Member
Jul 29, 2001
39,386
2
81
The economy can not recover and will just get worse. When Govt is lender of last resort you get communism and we all know how well that did.

What is happening now is government and Wall Street is granting itself unlimited credit and credit is very limited to the private sector which is dependent on credit to survive. Instead of sound operations getting credit, lending is done on politics which is inefficient allocation and destined to fail.

Debt can not be serviced with private sector imploding causing more problems for banks in turn they get more bailouts. Soon banks and govt will own all while main street gets bent over, raped, robbed, and thrown in the gutter. Meanwhile, favored banks, favored corporations, federal politicians are making out like the bandits they are. And people wonder how the wealth gap continues to increase? You aint seen nothing yet.
 

bfdd

Lifer
Feb 3, 2007
13,312
1
0
The economy can not recover and will just get worse. When Govt is lender of last resort you get communism and we all know how well that did.

What is happening now is government and Wall Street is granting itself unlimited credit and credit is very limited to the private sector which is dependent on credit to survive. Instead of sound operations getting credit, lending is done on politics which is inefficient allocation and destined to fail.

Debt can not be serviced with private sector imploding causing more problems for banks in turn they get more bailouts. Soon banks and govt will own all while main street gets bent over, raped, robbed, and thrown in the gutter. Meanwhile, favored banks, favored corporations, federal politicians are making out like the bandits they are. And people wonder how the wealth gap continues to increase? You aint seen nothing yet.
But but Zebo if people would only vote for the party I'm affiliated with this would all go away! Why can't people see that progressives/conservatives/Democrats/Republicans are the ones we need to elect to fix this problem?!

keep running in circles sheeple, keep running in circles.
 
Dec 30, 2004
12,554
2
76
But but Zebo if people would only vote for the party I'm affiliated with this would all go away! Why can't people see that progressives/conservatives/Democrats/Republicans are the ones we need to elect to fix this problem?!

keep running in circles sheeple, keep running in circles.
I'll take you up on that and say that fiscal conservatives really would be a huge step forward. Government keeps growing yet so many of our roads need repaving despite Obama's $1T stimulus WHICH WAS SUPPOSED TO COVER THE ROADS.

Thing #1 that needs to happen is much smaller (less paperwork) government, so that more people can be employed in companies. This has to happen with fewer small business taxes so that new startups can flourish.

About the only parties that support this smaller government agenda are Libertarians and Conservatives, so yes, I'll say that one of those two are what we need for the economy.
 

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