Puffnstuff
Lifer
- Mar 9, 2005
- 16,256
- 4,930
- 136
Entitlements are where the government has a huge problem and it's growing every day. Many of the sources of income the government currently has will decrease while those entitled to government payouts will increase and that will only become worse as our population ages while fewer young taxpaying people enter the workforce.
Jadow
Diamond Member
- Feb 12, 2003
- 5,962
- 2
- 0
I AM concerned about our Debt / Deficet and hope we can get in under control and start paying it down. It's going to become a lot more painful as interest rates rise. The govt is not paying 5+ percent interest on the debt!
I don't believe in debt relief or reducing the deficet by raising taxes however. We need to fix this problem by cutting spending.
I don't believe in debt relief or reducing the deficet by raising taxes however. We need to fix this problem by cutting spending.
LunarRay
Diamond Member
- Mar 2, 2003
- 9,993
- 1
- 76
There are Economic models that would indicate that all's well in the US at the moment and extrapolate to 'no major concerns' ahead.
But, each of them fails in one fundamental factor omitted and a few included. One is, for instance:
Including historical relationships that permit variables to mitigate against each other like using the manufacturing backbone of the US back a number of years ago not being replaced by a service sector increase today. How they mitigate the variables is to rely on the strength of manufacturing to be the foundation regardless of the short term vista. Today if the 'poop' hits the fan so will the service sector and therefore, the underpinning of the economy sits on quick-sand.
So.. the Debt/GDP ratios accepted as 'norm' and no issue need to be seen based on just what it is that makes up the GDP today vs the yesterdays considered.. I'd opine that to fairly look at percentages today you must factor in all the realities and subtract the history gone south, west, east and north...
IMO, that is..
But, each of them fails in one fundamental factor omitted and a few included. One is, for instance:
Including historical relationships that permit variables to mitigate against each other like using the manufacturing backbone of the US back a number of years ago not being replaced by a service sector increase today. How they mitigate the variables is to rely on the strength of manufacturing to be the foundation regardless of the short term vista. Today if the 'poop' hits the fan so will the service sector and therefore, the underpinning of the economy sits on quick-sand.
So.. the Debt/GDP ratios accepted as 'norm' and no issue need to be seen based on just what it is that makes up the GDP today vs the yesterdays considered.. I'd opine that to fairly look at percentages today you must factor in all the realities and subtract the history gone south, west, east and north...
IMO, that is..
Economics 101. The debt has ALWAYS an effect NOW. Is it a drastic effect? No.
The fact that in the future the present accumulated debt might have drastic effects has nothing to do with the fact that right now the national debt is preventing different investments. Compounding interest rates mean you will never be better off, and you start paying now.
So, our children will be MUCH worse off, while right now we are just a little bit worse off. A little bit worse off doesn't mean uneffected.
That makes NO sense whatsoever.
The Social Security SURPLUS currently covers a large portion of Bush deficits. The real on-budget deficit is indeed quite large as a %GDP. The SS surplus will begin to shrink in a few years and the true magnitude of GOPie mismanagement will become more apparent.
Assuming nothing happens, the surplus will disappear in just over a decade. But the reality is that several trillion dollars that SHOULD have been invested in trying to fix SS will be gone.
But it's relatively easy to fix. A tweak on eligibility, tweak on COLA, and a tweak on taxes solves SS.
Now Medicare is a totally different issue. It is indeed a future liability of unprecedented magnitude. Unfortunately, Bush is messing that up big time! The US has experienced double digit inflation in drug costs EACH year since the mid80s. So naturally, Bush GOP junta added a drug benefit to Medicare.
The debt has already had effects that you can see.
It cuts into investment, and when it comes down to it is little more than a wealth transfer scheme (with obdvious benficiaries).
LunarRay
Diamond Member
- Mar 2, 2003
- 9,993
- 1
- 76
Perhaps in the Tango household.. but the National Debt is simply the bucket into which some paper resides.. the Debt is the means Government regulates fiscal policy needs. It is far better to stimulate the economy via tax cuts and incur debt than allow sectors to fold. (assumes directed, intelligent taxing policy) Or to increase government spending to effect national interests at home and abroad that are reasonable... The FED is the other side of that thinking.. imo... they tend to monetary issues.. and try to insure that not-with-standing the Fiscal intentions the inflation/deflation etc are healthy... so I'd opt of a current worse off Debt to what ever ratio to enable growth or any other prudent policy than to worry about it now..
The problem is, however, our fiscal policy seems to be out of kilter with the stated objectives.. unless they are so bright that what they are doing today will show intellectual superiority in them when the future rolls around.. or when Arabia claims eminent domain on Florida...
You're right. If you incur in debt because you are trying to stimulate growth all is fine. The problem is the current US debt is in large part going in mantaining military expenses. Military expenses don't produce sustainable growth in the future. Real median income has actually gone down in the US in the last 4 years and while the US economy is in no way in a very bad situation there would have been many other way to build such a debt. As you know, at some point not only you have to pay it back, but you are also losing positive interest and paying instead negative interests. Conpounding the interest rates the effect can reach a quite significant magnitude.
If this debt were coming from scientific research and education subsidies I wouldn't be that negative about it. It would very likely mean that future returns would offset the financial stress coming from the debt servicing. So it's not just a matter of how big it is, but also where it's coming from.
Yeah well it was Reagan who really decided to ratchet up the debt, and there was some D in the middle who first balanced the budget and then created a surplus, his name is Bill or something I vaguely remember him.
Back to reality....
the problem with the debt is the danger of runaway inflation, which the Fed is trying to stem off by increasing interest rates, which they have done like 16 consecutive times now.
That makes borrowing money more expensive for everyone, guess you don't care about that.
Read your copy of the Constitution again - Congress appropriates funds. And yes, while the president does have veto power, because he/she must veto/sign entire bills, and these days is presented with 1000+ page all-encompassing spending bills, he has little power to prevent frivolous spending. He can either sign a bill he doesn't like because it contains waste, or shut down whole branches of government indefinitely in a game of chicken with Congress.
Congress spends money because people like gov't benefits, and re-elect spendthrifts. As long as the gov't can keep this up for the short-term via deficit spending, it's going to be hugely popular, because this is a short-term nation in mentality. All gain, no pain. The only way to stop they cycle is to follow the example of several states by requiring Congress to balance the budget and cripple Congress's ability to borrow (Balanced Budget Amendment or something similar). I'm not saying the federal gov't should have no power to borrow whatsoever (there will be national emergencies), but it should require a super-majority or some such.
And what was the Democrats' chief complaint with this law? That it didn't go far enough.
And that's why they have no credibility on the deficit issue. Which is a shame - somebody ought to be for fiscal responsibility. The GOP certainly isn't.
Actually, the chief Democratic complaint was that it didn't allow for drug price bartering or trying to get a "low-cost guarantee" by including other nations such as Canada in the equation.
You are only parroting (whether unintentionally or not) the GOP point of view/talking point/spin of what the Dems compaint was.
Whatever.
The Urban Institute (quoting the NY Times) says:
The sums needed are enormous; over the next 10 years, Medicare beneficiaries are expected to spend $1.8 trillion for drugs. Thus, while the Senate Republicans' top offer of $370 billion over eight years is a lot of money, it represents only a bit more than one-fifth of drug spending over that period. The Republican plans contain big gaps in coverage and allow restrictions on what drugs will be covered. Democrats offer more coverage, but at a cost of $500 billion or more.
Now obviously, there were lots of proposals offered, but the Democratic ones tended to cost more (and cover more people sooner) than the Republican ones. It's not talking points; it's facts.
Whatever indeed.
Whatever.
Indeed
But I guess your editorial about what the Dems where fighting for trumps the actual proposed legislation that they put up. :roll:
1) I don't give a flying monkey poop what Democrats' complained about . . . I used to be a Republican. But like Barkley, I left when they lost their GD minds.
Republican wanks at CMS LIED about how much it would cost! Bush's inner circle knew it. The respective chairs of the committees should have known it (Senate and House). And if they had bothered to ask GAO or CBO or even the SSA bean counters . . . they would have told them that $400B over 10 years was a farce. Akin to saying Bush's war in Iraq will only cost $500B over 5 years . . . if you start counting in 2001 with the planning. Truthiness . . . it ain't just a word . . . it's an agenda.
2) Here's the kicker though . . . if Democrats had been ruling Congress . . . they might have proposed a more expansive drug benefit. The three most likely outcomes: Republicans in the Senate would block it with a filibuster OR Republicans in the House peel off enough conservative Democrats to kill it in the House OR the fiscal conservative at 1600PA would have vetoed the bill due to its excess expense . . . :shocked::laugh: . . . OK maybe the last one is a little implausible.
3) The explicit PROHIBITION of reasonable means of cost control (negotiate prices) is beyond retarded. When you consider the US has experienced 14% per annum inflation in drug costs since the mid80s . . . the absence of price mitigators borders on criminal incompetence. We are in a terrible state of affairs when the elected government favors business interests over the best interests of the people. Almost every country in the world with a drug benefit uses a combination of price negotiation (control), effectiveness evaluation, and at least one government plan. What did the GOP use? Nothing!
4) The GOP House passed this bill in the middle of the night after hook, crook, threat, and bribe. The GOP Senate passed this bill. The GOP President then made a big deal out of signing . . . Perpetual Deficit Generating Drug Company Welfare Program of 2003. I don't give a flying flip if Hugo Chavez, Castro, and Che's bones are in the Congress . . . they would have more credibility on the issue than the people responsible for ENACTING this turd!
dullard
Elite Member
- May 21, 2001
- 26,196
- 4,868
- 126
I know the constitution well. That is why I specifically mentioned the veto power in my post. A strong president will shut down whole branches of government and a strong president will get spending under control that way. In the past, it has worked on the federal level as well as the state/city level. It is a nasty tactic, but it is the only tactic we have at the moment to prevent runaway spending.
There is a major problem with forced balanced budgets. Suppose our government had a balanced budget. When the economy goes bad, the government has less money to work with. Thus the forced balanced budget means (a) increased taxes or (b) reduced spending. The problem is that when the economy goes bad, increased taxes are much more painful and that is the time when we most need the government spending to help those who lost their jobs. The balanced budget forces the government to make the recession/depression WORSE. I don't like magnifying the pain.
On the flip side, the balanced budget pretty much forces the government to start wasteful spending whenever the economy is good. They have to spend because they are forced to balance the boost in revenues. Are you honestly arguing that we should massively increase wasteful spending everytime the times are good?
No, we need the exact opposite of a balanced budget. We need the government to cut taxes and increase spending to help those harmed by the recession when the economy sours. That'll bring large debts, but it'll minimize the recession. Conversely, when times are good, the government should raise taxes (when times are good, this isn't that harmful) to pay off the previous debts and should slash spending to minimize government waste.
On a ~10 year scale, the budget should be balanced. But on each individual year the budget absolutely should NOT be balanced.
That's a fine, intelligent response, argued in a reasonable, rational way. But two thoughts come to mind - 1) regarding your argument of gov't fiscal policy serving as a cushion against economic swings, there's nothing preventing the gov't from maintaing a 'rainy day' fund, to be built up during good times and tapped during bad times.
2) (which also goes to why 1 is hard to make work) the fact of the matter is, cutting spending/raising taxes is political suicide, which is why it rarely happens, and the gov't budget has been more out of balance than in during my lifetime. Therefore, I'd say it's impractical to think that, if allowed to deficit spend during a recession, Congress with 'reign itself in' during an expansion (unless, such as was the case during the '90's, the expansion is so large revenues outpace Congress's ability to spend money).
dullard
Elite Member
- May 21, 2001
- 26,196
- 4,868
- 126
I don't think the idea of a rainy day fund works with the idea of a balanced budget. Hey look, I balanced the budget in my left pocket by making my right pocket fluctuate! Anyone looking at the whole picture just adds the two pockets together and sees the budget isn't balanced.
I do agree with you that my ideal is not practical in our current setup. Times were good in 2000 and Bush swept in with a tax cut plan. It passed easilly and many people are happy. That is the exact opposite of what my plan would have done. My plan is just the ultimate goal. I don't think it is a reachable goal without major fundamental changes to our political system.
Well, we agree on that last part. Congress isn't going to put itself on a diet, and people aren't likely to elect budget cutters/tax raisers any time soon. It seems most major, longstanding democracies have budget deficit issues - what political philosopher said democracies are doomed once people figure out they can vote themselves benefits out of the public treasury? I agree with that guy.
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