Obama proposes 'grand bargain' for jobs. Wut?

[Zorkorist]

Not only that, but Government Debt, is because people are getting rich off of normal americans.

They are spending without regard to normal americans children.

They only care about themselves.

-John

 

[ivwshane]

Ummm...

Debt is debt. Yes, there is a difference between household debt and government debt, but it's still debt. We still pay interest on that debt. The result of those interest payments are higher taxes, because the interest is an additional burden on the budget. When this happens, our taxes go up. The first people to get hit with those taxes is almost always the business community. When this happens, businesses close, when businesses close people lose jobs. I also understand that our credit rating as a nation has been threatened in the past couple of years.

The primary difference is that if the government needs more money to pay their debt, it theoretically comes out of our pockets. Yes, the government can print more money, or rather it can make a journal entry and create that money digitally, but this has limits, and causes inflation. Inflation lowers the value of the dollar, this makes prices go up, wages don't keep up with inflation in a recession, so life becomes harder on the middle class. Reducing that debt is important, it maintains the value of our currency. So debt remains debt, regardless of who holds it.

I take issue with the bolded. Study after study shows this to be, at best, to have no significant correlation, and at worst to be a lie.
http://www.epi.org/publication/ib364-corporate-tax-rates-and-economic-growth/

You can find studies for both sides of the argument which suggests that taxes, either increases or decreases have very little affect in the economy.

 

[berzerker60]

Ummm...

Debt is debt. Yes, there is a difference between household debt and government debt, but it's still debt. We still pay interest on that debt. The result of those interest payments are higher taxes, because the interest is an additional burden on the budget. When this happens, our taxes go up. The first people to get hit with those taxes is almost always the business community. When this happens, businesses close, when businesses close people lose jobs. I also understand that our credit rating as a nation has been threatened in the past couple of years.

The primary difference is that if the government needs more money to pay their debt, it theoretically comes out of our pockets. Yes, the government can print more money, or rather it can make a journal entry and create that money digitally, but this has limits, and causes inflation. Inflation lowers the value of the dollar, this makes prices go up, wages don't keep up with inflation in a recession, so life becomes harder on the middle class. Reducing that debt is important, it maintains the value of our currency. So debt remains debt, regardless of who holds it.

No, debt is not the same exact same catch-all term in all situations. As much as you might like to make simplistic analogies that are easier to picture, they won't work. Government debt is a tricky concept and can't be reduced to household finances. There are no bill collectors for governments. There is no hard credit limit for governments. Government has the powers of fiscal policy, including issuing currency, meaning it can restructure its debt burdens in lots of way that have absolutely no analogue in daily life. The US government borrows most of its debt from its own citizens, and thereby pays interest back to its own citizens, something that would be nonsensical in a family finance setting. 'Income' doesn't mean the same thing, because families get funding from an external job and can try to increase income without impacting anything else; governments' 'income' is mostly internal taxes on its citizens, which again makes no sense in family finance terms. And would you care to make a clear family finance analogy for me that explains the meaning of China pegging their currency on the value of the dollar, which fluctuates as other countries seek to gather it as reserve currency behind their own currencies, thereby exacerbating a trade deficit with China?

Government debt is just different, start to finish. It's fine to think government debt beyond a certain debt-to-GDP ratio is bad policy in these circumstances, but not by using broken, childish analogies to get there and then casting moral condemnation on it.

Our credit rating hasn't gotten worse because we had any difficulty paying our debt in financial terms. It went down because the current House GOP is so completely insane that they risked the entire world economy in a hostage taking game with raising the debt ceiling. They're planning to do it again, too, and have already listed their demands to prevent them from destroying the world economy. If you look at the credit rating agencies' description of why they lowered the rating, it was the problems with our politics, not our finances.

You're right about the inflation thing in theory, but 1) some inflation is a good thing, and 2) there hasn't been much inflation since the recession started despite lots of printing, for a number of reasons. Can we continue to deficit spend huge stimulus packages forever? Of course not. But we should be doing that right now. Then, when the economy is strong again, we should cut back drastically and pay down debt - NOT just give big tax cuts to rich people with surpluses.

 

[gloom111]

Inflation hasn't risen because the Fed is artificially forcing inflation down. This only works for so long.

 

[michal1980]

No, debt is not the same exact same catch-all term in all situations. As much as you might like to make simplistic analogies that are easier to picture, they won't work. Government debt is a tricky concept and can't be reduced to household finances. There are no bill collectors for governments. There is no hard credit limit for governments. Government has the powers of fiscal policy, including issuing currency, meaning it can restructure its debt burdens in lots of way that have absolutely no analogue in daily life. The US government borrows most of its debt from its own citizens, and thereby pays interest back to its own citizens, something that would be nonsensical in a family finance setting. 'Income' doesn't mean the same thing, because families get funding from an external job and can try to increase income without impacting anything else; governments' 'income' is mostly internal taxes on its citizens, which again makes no sense in family finance terms. And would you care to make a clear family finance analogy for me that explains the meaning of China pegging their currency on the value of the dollar, which fluctuates as other countries seek to gather it as reserve currency behind their own currencies, thereby exacerbating a trade deficit with China?

Government debt is just different, start to finish. It's fine to think government debt beyond a certain debt-to-GDP ratio is bad policy in these circumstances, but not by using broken, childish analogies to get there and then casting moral condemnation on it.

Our credit rating hasn't gotten worse because we had any difficulty paying our debt in financial terms. It went down because the current House GOP is so completely insane that they risked the entire world economy in a hostage taking game with raising the debt ceiling. They're planning to do it again, too, and have already listed their demands to prevent them from destroying the world economy. If you look at the credit rating agencies' description of why they lowered the rating, it was the problems with our politics, not our finances.

You're right about the inflation thing in theory, but 1) some inflation is a good thing, and 2) there hasn't been much inflation since the recession started despite lots of printing, for a number of reasons. Can we continue to deficit spend huge stimulus packages forever? Of course not. But we should be doing that right now. Then, when the economy is strong again, we should cut back drastically and pay down debt - NOT just give big tax cuts to rich people with surpluses.

hows that debt working for Detroit.? They have so much they should have streets lined in gold, and everyone driving caddies

 

[berzerker60]

hows that debt working for Detroit.? They have so much they should have streets lined in gold, and everyone driving caddies

Oh you're right, Detroit is a sovereign nation that prints its own currency and has the tools of monetary and fiscal policy at its disposal, and is also the backbone of the world economy and literally the currency against which much of the world's other currencies are pegged, that's a perfectly valid rebuttal!