Spending less: Household budget vs. Political Gubment budget

[IceBergSLiM]

So wouldn't the best solution, in order to not disrupt our current lifestyle, be to raise the amount of money we make? How will cutting our expenditures to the bone ever hope to pay off the $327,000? Even if the spending is cut from $75k to $25k a year (an absurd cut, basically forgoing an semblance of a happy life and just working and sleeping) that only frees up $32k a year, taking more than a decade to pay down that insane debt which will still grow with interest.

Sounds like we need to look at making more money.

From an individual perspective you would need to do both. Get a second job and severely downgrade your lifestyle. With the right discipline you could be out of trouble with in 10 years or less.

 

[werepossum]

So wouldn't the best solution, in order to not disrupt our current lifestyle, be to raise the amount of money we make? How will cutting our expenditures to the bone ever hope to pay off the $327,000? Even if the spending is cut from $75k to $25k a year (an absurd cut, basically forgoing an semblance of a happy life and just working and sleeping) that only frees up $32k a year, taking more than a decade to pay down that insane debt which will still grow with interest.

Sounds like we need to look at making more money.

Making more money is always the preferred solution, but government is essentially a symbiotic parasite on society. It offers real benefits, but it also exacts real metabolic costs. When government increases its share of the organism's energy output (i.e. GDP), the organism has less energy left over after feeding the parasite for growth (i.e. creating wealth.)

The preferred method of raising government's income is to increase the size of the pie. Therefore government can take the same or even a smaller portion of this larger pie and yet still have more. Problem is we don't have a good way to increase the size of the pie because of the way we've structured our fiscal house. The only currently working methods of increasing American wealth are outsourcing and government spending. The former directly takes back much of the gains in lower wages, the latter typically consumes a high proportion of that wealth in the taking and distributing, and both are funded only by borrowing more money. Both are false wealth creators. Right now neither party knows how to actually create wealth in America. Until someone figures this out, we're screwed. And it's entirely possible that there IS no way to create net wealth - and this possibility gets larger as we get further in debt. The number of ways to get out of a hole drop as that hole gets deeper.

 

[IceBergSLiM]

Making more money is always the preferred solution, but government is essentially a symbiotic parasite on society. It offers real benefits, but it also exacts real metabolic costs. When government increases its share of the organism's energy output (i.e. GDP), the organism has less energy left over after feeding the parasite for growth (i.e. creating wealth.)

The preferred method of raising government's income is to increase the size of the pie. Therefore government can take the same or even a smaller portion of this larger pie and yet still have more. Problem is we don't have a good way to increase the size of the pie because of the way we've structured our fiscal house. The only currently working methods of increasing American wealth are outsourcing and government spending. The former directly takes back much of the gains in lower wages, the latter typically consumes a high proportion of that wealth in the taking and distributing, and both are funded only by borrowing more money. Both are false wealth creators. Right now neither party knows how to actually create wealth in America. Until someone figures this out, we're screwed. And it's entirely possible that there IS no way to create net wealth - and this possibility gets larger as we get further in debt. The number of ways to get out of a hole drop as that hole gets deeper.

Yet we opt to continue digging....
and anyone who says otherwise is an extremist.

 

[HendrixFan]

Making more money is always the preferred solution, but government is essentially a symbiotic parasite on society. It offers real benefits, but it also exacts real metabolic costs. When government increases its share of the organism's energy output (i.e. GDP), the organism has less energy left over after feeding the parasite for growth (i.e. creating wealth.

You talk in theory but not in practice. The "starve the beast" approach doesn't actually try to solve the problem, it just tries to run it into the wall faster, all while private business profits. In case you haven't been paying attention, the "creating wealth" group has not been helping growth for a decade now, despite the lowest tax revenues in 50 years.

Simply put, you couldn't be more wrong. Your theory when put to practice over the last decade falls to shambles. The companies are so massive these days thanks to special exceptions being made for mergers that there is no real capitalism involved in their business. Aside from the barrier to entry due to sheer size, they can outprice as a loss leader in one sector to push aside a competitor while another keeps them afloat. They can wield destructive power through lobbyists and legislation as well as tying up competitors in court.

You then turn around and act like these businesses will act in the best interest of the people if we "just give them a chance". Like I said, revenues as a percentage of GDP are at lows the majority of us have seen in our lifetimes. Despite that fact, business refuses to grow the economy and instead drains from it. Corporate profits are nearing record levels, all while government revenues are near record modern lows, yet we are seeing the opposite of growth.

Your ideology is bunk.

 

[Ausm]

Actually he totally missed it.

The tea party is made up of people who were pissed at Bush but had no other choice. Now they have a choice and they are making their voice heard.

You seem to forget that many of the biggest Bush supporters on here bitched endlessly about his spending and debt. I started many threads about it myself.

I thought they were started by the faked ginned up angst against Obama's Healthcare legislation which was funded by the Koch bros.

 

[QuantumPion]

You talk in theory but not in practice. The "starve the beast" approach doesn't actually try to solve the problem, it just tries to run it into the wall faster, all while private business profits. In case you haven't been paying attention, the "creating wealth" group has not been helping growth for a decade now, despite the lowest tax revenues in 50 years.

Simply put, you couldn't be more wrong. Your theory when put to practice over the last decade falls to shambles. The companies are so massive these days thanks to special exceptions being made for mergers that there is no real capitalism involved in their business. Aside from the barrier to entry due to sheer size, they can outprice as a loss leader in one sector to push aside a competitor while another keeps them afloat. They can wield destructive power through lobbyists and legislation as well as tying up competitors in court.

You then turn around and act like these businesses will act in the best interest of the people if we "just give them a chance". Like I said, revenues as a percentage of GDP are at lows the majority of us have seen in our lifetimes. Despite that fact, business refuses to grow the economy and instead drains from it. Corporate profits are nearing record levels, all while government revenues are near record modern lows, yet we are seeing the opposite of growth.

Your ideology is bunk.

Everything you said is just a bunch of liberal cliches strung together. Your words have no meaning, you don't even know what you are trying to say. You sound like the hippies in that episode of south park with the music festival.

 

[HendrixFan]

Everything you said is just a bunch of liberal cliches strung together. Your words have no meaning, you don't even know what you are trying to say. You sound like the hippies in that episode of south park with the music festival.

I'll simplify it for you.

He said the government is a leech on the system that allows business to grow the economy. I pointed out that government revenue is at its lowest point in modern times, and that coupled with deregulation have taken away any credibility to the idea that government is holding back business right now.

With that being said we are in the middle of the worst economic time in a lifetime. All while business is having free run.

 

[QuantumPion]

I'll simplify it for you.

He said the government is a leech on the system that allows business to grow the economy. I pointed out that government revenue is at its lowest point in modern times, and that coupled with deregulation have taken away any credibility to the idea that government is holding back business right now.

With that being said we are in the middle of the worst economic time in a lifetime. All while business is having free run.

Government revenue is down because the GDP is down. Just because the absolute value of the tax revenue is down is not an indicator of a deregulated business sector having a free run. This notion is patently absurd.

 

[HendrixFan]

Government revenue is down because the GDP is down. Just because the absolute value of the tax revenue is down is not an indicator of a deregulated business sector having a free run. This notion is patently absurd.

Revenue as a percentage of GDP is at all time lows in the modern era. Sorry try again.

 

[Throckmorton]

Government revenue is down because the GDP is down. Just because the absolute value of the tax revenue is down is not an indicator of a deregulated business sector having a free run. This notion is patently absurd.

Taxes are at an all time low. Regulation is at an all time low.

 

[ConstipatedVigilante]

So wouldn't the best solution, in order to not disrupt our current lifestyle, be to raise the amount of money we make? How will cutting our expenditures to the bone ever hope to pay off the $327,000? Even if the spending is cut from $75k to $25k a year (an absurd cut, basically forgoing an semblance of a happy life and just working and sleeping) that only frees up $32k a year, taking more than a decade to pay down that insane debt which will still grow with interest.

Sounds like we need to look at making more money.

Sure, but how do you do that? Raising taxes doesn't necessarily bring in more money, as the "progressives" would have you believe. We have to slash spending and pay down our debt instead of paying it off with another credit card.

 

[HendrixFan]

Sure, but how do you do that? Raising taxes doesn't necessarily bring in more money, as the "progressives" would have you believe. We have to slash spending and pay down our debt instead of paying it off with another credit card.

We just passed a bill that will cut spending. Raising taxes is an important part of the equation since much of the new (last decade or so) debt that we have accrued would have been eliminated without the Bush tax cuts.

Of course, it won't be the magic bullet that cures all. The economy is in too weak of a shape from the businesses that looted it a couple years ago and got bailout money as "punishment".

Raise taxes, redirect more spending towards investment and work on tariffs to balance out trade. There is plenty more spending that can be reallocated towards investment, as opposed to being cut.

 

[QuantumPion]

Taxes are at an all time low. Regulation is at an all time low.

Please, only in liberal fantasy land. You, like Hendrix, are merely spouting your emotional beliefs which have no basis in reality. Obamacare alone is instituting tens of thousands of new regulations across the board and is the single biggest job-killer of the decade. Not to mention the slew of new corporate and banking regulations in the wake of the housing crash. Not to mention the slew of new exploration regulations in the wake of the BP spill and fracking. Not to mention the bans on incandescent light bulbs. I can go on and on. Don't even get me started on the new regulations in my industry. The only single regulation I can think of that has been lifted is the ban on third-party political media 30 days before an election. But I'm sure you will equate that with "corporations run amok in a libertarian anarchy threatening to destroy the world".

 

[QuantumPion]

We just passed a bill that will cut spending. Raising taxes is an important part of the equation since much of the new (last decade or so) debt that we have accrued would have been eliminated without the Bush tax cuts.

If you are willing to balance the budget in return for repealing the Bush tax cuts, I'm game. So we agree to raise taxes, on the rich only I presume, which comes out to be around $100 billion. And you agree to cut spending by $1600 billion per year. And you don't get your projected 10% increases per year, you're tired to the economy. I'd go for that.

 

[HendrixFan]

Please, only in liberal fantasy land. You, like Hendrix, are merely spouting your emotional beliefs which have no basis in reality. Obamacare alone is instituting tens of thousands of new regulations across the board and is the single biggest job-killer of the decade.

Speaking of emotional beliefs that have no basis in reality! Unemployment went from 4.5% to 10.1% in Apr '07 to Oct '09, shedding millions of jobs along the way. Unemployment from March '10 when Obamacare was passed was at 9.7% and now it sits at 9.1%. I don't understand how you ignore the largest spike in decades of unemployment and instead focus on a drop in unemployment and call that job killing. Please explain.

Not to mention the slew of new corporate and banking regulations in the wake of the housing crash. Not to mention the slew of new exploration regulations in the wake of the BP spill and fracking. Not to mention the bans on incandescent light bulbs. I can go on and on.

New banking regulations as a result of housing crash? What? They handed banks trillions of dollars and put in zero conditions and have done nothing to prevent another runup. Incandescent light bulbs aren't banned at all. Reality brother!

 

[HendrixFan]

If you are willing to balance the budget in return for repealing the Bush tax cuts, I'm game. So we agree to raise taxes, on the rich only I presume, which comes out to be around $100 billion. And you agree to cut spending by $1600 billion per year. And you don't get your projected 10% increases per year, you're tired to the economy. I'd go for that.

Ending Bush tax cuts for the rich would currently net around $100B, each year. As the economy picks up that number would rise. Not only would I want the entire range of the Bush cuts gone, I would be in favor of broader tax increases to put us closer to the historical norm of taxes to GDP.

Trying to balance the budget in one year would be exceedingly foolish though. The shock to the system and panic it would provoke would do way too much harm. Stability is key for business investment, and a shakeup like that would constrain the flow of money even more than it currently is.

 

[BoberFett]

Raising taxes is an important part of the equation since much of the new (last decade or so) debt that we have accrued would have been eliminated without the Bush tax cuts.

That's just foolishness.

Does anybody even remember why the Bush tax cuts were put in place? It's because the US was headed into a recession after 9/11 and Bush the idiot, rather than allow a soft recession, started pumping money into the economy trying to reinflate the tech bubble.

Without the Bush tax cuts, consumer spending would have slowed, the economy wouldn't have roared (in an unhealthy way, unfortunately) and tax receipts wouldn't have been nearly what they were. So to say the Bush tax cuts are some huge part of our revenue problem is a simplistic view of a complicated system. It's a feedback loop, and without the tax cuts, GDP would have been smaller which would have meant less revenue anyway.

 

[BoberFett]

Ending Bush tax cuts for the rich would currently net around $100B, each year.

You're ignorant or a liar. It isn't even close to that number.

 

[QuantumPion]

Ending Bush tax cuts for the rich would currently net around $100B, each year. As the economy picks up that number would rise. Not only would I want the entire range of the Bush cuts gone, I would be in favor of broader tax increases to put us closer to the historical norm of taxes to GDP.

Trying to balance the budget in one year would be exceedingly foolish though. The shock to the system and panic it would provoke would do way too much harm. Stability is key for business investment, and a shakeup like that would constrain the flow of money even more than it currently is.

Ok, gradual change is fine for me. But you only get your tax increases gradually, and in proportion to the cuts, as well. We're not falling for the tax-increases-now-for-promises-of-reduced-spending-10-years-from-now ploy. E.g. $25 billion tax increases this year = $400 billion spending cuts this year.

Yes you can increase government spending as the economy grows, but it must remain in the black.

 

[IceBergSLiM]

We just passed a bill that will cut spending. Raising taxes is an important part of the equation since much of the new (last decade or so) debt that we have accrued would have been eliminated without the Bush tax cuts.

Of course, it won't be the magic bullet that cures all. The economy is in too weak of a shape from the businesses that looted it a couple years ago and got bailout money as "punishment".

Raise taxes, redirect more spending towards investment and work on tariffs to balance out trade. There is plenty more spending that can be reallocated towards investment, as opposed to being cut.

We didn't actually cut spending though. See the OP for what happened. We spent 100 this year and instead of spending 150 in 2013 or whatever we are only going to spend 125. Thats still a net increase in spending. This type of double talk doesn't apply to house hold budgets and clearly doesn't work for reducing gubment debt either.

 

[werepossum]

You talk in theory but not in practice. The "starve the beast" approach doesn't actually try to solve the problem, it just tries to run it into the wall faster, all while private business profits. In case you haven't been paying attention, the "creating wealth" group has not been helping growth for a decade now, despite the lowest tax revenues in 50 years.

Simply put, you couldn't be more wrong. Your theory when put to practice over the last decade falls to shambles. The companies are so massive these days thanks to special exceptions being made for mergers that there is no real capitalism involved in their business. Aside from the barrier to entry due to sheer size, they can outprice as a loss leader in one sector to push aside a competitor while another keeps them afloat. They can wield destructive power through lobbyists and legislation as well as tying up competitors in court.

You then turn around and act like these businesses will act in the best interest of the people if we "just give them a chance". Like I said, revenues as a percentage of GDP are at lows the majority of us have seen in our lifetimes. Despite that fact, business refuses to grow the economy and instead drains from it. Corporate profits are nearing record levels, all while government revenues are near record modern lows, yet we are seeing the opposite of growth.

Your ideology is bunk.

Rule of thumb: When the beast is eating more than ever before, during our entire history, it is NOT starving, even if its portion of the economy is ever so slightly smaller than in recent years.

The private sector's job is NOT to grow the economy. The private sector's job is to create and exchange wealth, preferably at the least possible cost. Growing the economy is a side effect of companies acting in their own best interest. The two differences between government growing the economy and the private sector growing the economy are that government only consumes rather than creating wealth, and that anything done by government is inherently less efficient than that thing done by the private sector. Government generally has no competition, and in those rare cases it does have competition, government writes the rules. He who makes the rules has an enormous advantage. This is why government should only do those things which the private sector cannot practically do and those things we deem essential, but for which there are no effective private sector profit motives.

You have a point about companies growing so huge and having a disproportionate effect through lobbying, but again, that is at least equally a function of our ever larger, ever more intrusive government. With a small, Constitutionally limited government which raised revenue through import tariffs and possibly a sales tax, mega corporations would have little incentive to pay millions to lobbyists. As Microsoft famously learned the hard way, government is now far too powerful to leave you alone just because you leave it alone. Even with that said, I don't blame corporations for moving production out of the country. I blame the politicians who set up our system to make it impractical to produce so many things in this country. Even more, I blame all of us, who vote with our enfranchisement and our wallets for this behavior.

 

[BoberFett]

The two differences between government growing the economy and the private sector growing the economy are that government only consumes rather than creating wealth, and that anything done by government is inherently less efficient than that thing done by the private sector.

That's not entirely true. Infrastructure is wealth, and government is best equipped to do that due to the short-sighted only-care-about-next-quarters-numbers that Wall Street has given us. Inefficient though it may be, government can create wealth. Mostly though it just shuffles money around and gives favors to special interests.

 

[ElFenix]

<snip of OP>

If so how can anyone support any group calling real spend increases - "spending cuts"?

meh, households do the same thing.

"but these new shoes were 25% off! i saved $40!"

 

[werepossum]

That's not entirely true. Infrastructure is wealth, and government is best equipped to do that due to the short-sighted only-care-about-next-quarters-numbers that Wall Street has given us. Inefficient though it may be, government can create wealth. Mostly though it just shuffles money around and gives favors to special interests.

That's a point, although generally the government creates wealth by taking wealth from the private sector and hiring the private sector to use that wealth to create infrastructure. The one exception that springs to mind would be the Army Corps of Engineers, which actually does things like make additional waters navigable and create levee systems which increase production. But certainly government plays a valuable role in doing things which the private sector is not incentivized to do.

 

[HendrixFan]

Rule of thumb: When the beast is eating more than ever before, during our entire history, it is NOT starving, even if its portion of the economy is ever so slightly smaller than in recent years.

You really don't know what starving the beast is? Cutting revenues so that it can't spend. Revenues are at modern era lows.

The private sector's job is NOT to grow the economy. The private sector's job is to create and exchange wealth, preferably at the least possible cost. Growing the economy is a side effect of companies acting in their own best interest.

I understand that. The mantra from the right side has been to fix the economy put money in the private sector. That's why I bring it up. I agree it is nonsensical. The private sector will aggressively pursue profits, as it is designed to do. Bad economy? Cut jobs and make more profit! That isn't what we need now, so someone (government) has to step in and put things on course.

The two differences between government growing the economy and the private sector growing the economy are that government only consumes rather than creating wealth, and that anything done by government is inherently less efficient than that thing done by the private sector.

Not true at all. If the government wasn't spending $700B a year on defense, would the private market do so? Would we ask Boeing to make us jets? Would we pay companies to rebuild bridges in Iraq?

When the government taxes its citizens it pays that money out. The only difference between that money if it is or isn't taxed is where it goes. Government spending determines where those dollars go. Of course lobbyists have their say so in encouraging the flow of money in certain directions, so businesses (large ones) don't worry to much about it.

Government generally has no competition, and in those rare cases it does have competition, government writes the rules. He who makes the rules has an enormous advantage. This is why government should only do those things which the private sector cannot practically do and those things we deem essential, but for which there are no effective private sector profit motives.

There are things that the private sector can do, but won't because there are many things which are good for society that aren't good for the bottom line. They may be "ok" for the bottom line, but not profitable enough to pursue. That is the other way government can step in.

I hope you know by now that I'm fairly fiscally conservative. I'm not happy when either party run deficits nor do I want large scale government intervention in private markets. At the same time, I am socially liberal so I see the need for government to make a better society for all its members. Should the government spend less? Indeed. Spending is way too high and deficits are way too high.

But the government should be involved in areas that would make for a better society.

You have a point about companies growing so huge and having a disproportionate effect through lobbying, but again, that is at least equally a function of our ever larger, ever more intrusive government. With a small, Constitutionally limited government which raised revenue through import tariffs and possibly a sales tax, mega corporations would have little incentive to pay millions to lobbyists. As Microsoft famously learned the hard way, government is now far too powerful to leave you alone just because you leave it alone. Even with that said, I don't blame corporations for moving production out of the country. I blame the politicians who set up our system to make it impractical to produce so many things in this country. Even more, I blame all of us, who vote with our enfranchisement and our wallets for this behavior.

Simple tariffs and trade balances would fix the problem of it being impractical to produce things in this country. But don't throw the baby out with the bathwater.

Mega corporations are too powerful and have no check other than government. They are in bed with government for the most part, but it is our only avenue to balance ourselves against their might. Without the system the government has set up, we would be working in sweatshops for ten cents an hour just like the Chinese and Guatemalans who produce things for us.

Everything is a balancing act, we just need to find a good balance between private sector and government. The collusion between the two essentially has corporations wielding all the power. For all the decrying of big government that goes on from Tea Partiers and the like, government is little more than a puppet for corporations.

Going back to your point about government not being as efficient as the private sector. I agree with that completely, but as I said I think government plays a role private sector doesn't want to. The private sector though, doesn't want to compete in a free market. Why compete and have that uncertainty and have to work hard to stay competitive, when you have the option of not competing? Big government is little more than a way to funnel big contracts to companies. Medicare part D is a big payola. The military is a huge payola. And on and on and on.