The US Deficit

[budullewraagh]

with deficit spending skyrocketing, we have to ask ourselves whether it matters.

 

my stance is that it doesn't really matter so long as the national income is not surpassed by the interest we pay on our debt and so long as other nations keep buying our bonds.

 

this not only means that the possible extent of our deficit spending is limited, but also means that we are putting ourselves at the mercy of other nations. and, even if other nations are merciful, we are also in the position where we're screwed if those kind nations are to run into economic difficulty.

 

it's an issue i thought of today during my econ class. your thoughts?

[Pangloss]

Boy I wish I knew what was going to solve this. That's an interesting point about the income not being surpassed by interest on debt, but I think really the ultimate problem that we can't seem to address is simply not spending money we don't have. We've come to see the federal budget as a feeding trough and a problem solver for any manner of ills, just because it's so darn BIG. That's pretty screwed up thinking, if you ask me.

 

I think it's reasonable to have emergency/disaster/wartime expenditures and all that jazz, but the fact of the matter is that Iraq and Katrina put together are barely a fly speck on the chrome grill of this economy. What we should have done was cinched our belt and cut a few entitlement programs. Now is not the time for a massive highway bill, for example, or a massive energy bill with huge tax breaks to energy companies at the same time they they're showing record profits. These things just make no sense at all.

 

Of course, part of the reason that we have those things is because we have our collective heads in the sand when it comes to that spending. When people are jumping up and down and screaming and shouting about unemployment and outsourcing in a market where virtually everyone is employed, lawmakers are left with no choice but to treat that as a real issue. And so the budget becomes a great big teat for everyone to suck at. Fewer people crying = lawmakers re-elected.

[bascule]

with deficit spending skyrocketing' date=' we have to ask ourselves whether it matters.

 

my stance is that it doesn't really matter so long as the national income is not surpassed by the interest we pay on our debt and so long as other nations keep buying our bonds.[/quote']

 

This guy sees it differently:

 

http://blogs.salon.com/0002007/2006/01/26.html

 

Specifically:

 

If the US had to pay, say, 9% interest on its debt (spikes like that are not unprecedented) instead of 3%, that would add over $0.5 trillion in annual interest expense, nearly doubling the annual deficit. And since the interest rate spike and inflationary price increases will cut into corporate and individual earnings, it will also lower government revenues to the point they are only half of expenses, a rate of debt accumulation that, as in Argentina a few years ago, could make the US dollar virtually worthless and produce an economic collapse that will be felt around the world.

 

There are two ways to prevent this. The first is to double tax rates, and you know no Republican regime will do that. The second is to sell off large amounts of public property to private interests at a greatly accelerated rate. This second alternative fits precisely with the Norquist/neocon "weaken government until you can drown it in a bathtub" agenda. They would then be doing exactly what corporations do -- treat the entire country's public property, the Commons, as an enterprise in liquidation, as economist Herman Daly has described. Until they're sold off to private developers, they're 'worth' nothing because they generate little or no cash revenues.

[Pangloss]

Typical anti-right blather. It's easy for a two-bit hack at Salon to say that no Republican regime (sic) would double the tax rate. Frankly no Democratic "regime" would do that either. ANY politician who supported that kind of hike would be committing political suicide. If you actually parse his "solutions", he doesn't even *have* one, just a litany of complaints against conservatives.

 

That partisan nonsense isn't going to solve the problem.

[Saryctos]

Typical anti-right blather. It's easy for a two-bit hack at Salon to say that no Republican regime (sic) would double the tax rate. Frankly no Democratic "regime" would do that either. ANY politician who supported that kind of hike would be committing political suicide. If you actually parse his "solutions"' date=' he doesn't even *have* one, just a litany of complaints against conservatives.

 

That partisan nonsense isn't going to solve the problem.[/quote']

 

 

well, to be fair the democrats have a higher likelyhood of raising the taxes than the republicans...but then again it will be instantly spent on more social programs anyways

[JustStuit]

Is anyone starting to worry about the future of the country? Nothing seems to be going particularly great now a days.

[Saryctos]

Is anyone starting to worry about the future of the country? Nothing seems to be going particularly great now a days.

I don't see much going wrong 'round my neck of the woods(wait...Ford motor company, heheh). But that seems more of a logical conclusion to the building fall of the union state.

[Sisyphus]

well, to be fair the democrats have a higher likelyhood of raising the taxes than the republicans...but then again it will be instantly spent on more social programs anyways

 

To be more fair, Bush is the biggest government spender since Lyndon Johnson.

[Severian]

To be more fair, Bush is the biggest government spender since Lyndon Johnson.

 

That is presumably a war thing though? Wars are expensive.

[Sisyphus]

That is presumably a war thing though? Wars are expensive.

 

They sure are. Of course, he knew he was going to war in Iraq (voluntarily) before he even took office, and he still lowered taxes.

[Pangloss]

Maybe, but the budget has been growing by leaps and bounds for quite a while now. The Defense budget surged dramatically under Clinton and while I'd have to do the math it may have grown faster percentage-wise under Clinton than Bush (but probably not). (I think it's something like 200-350 under Clinton, and 350-425-ish now under Bush. But these are just top-of-head figures.)

 

So catch-phrases like "Bush is the biggest spender since Johnson" are easy to utter, and may even turn out to be supportable by statistics, but they don't cut to the heart of the problem at all. It's true he hasn't used the veto pen, for example, and that's unfortunate, but equal (if not greater) blame has to go to Congress, which is where virtually all of the local-issues influence on the budget takes place (except when it's a media frenzy item like Katrina).

[Sisyphus]

I was responding more to the stereotype of Democrats as irresponsible socialists by pointing out that even this very conservative administration and a Republican-controlled Congress, for all their rhetoric, have increased spending, not decreased it, which combined with tax cuts doubly compounds the deficit problem. I didn't mean to imply that Bush single-handedly caused the deficit. He's part of the problem, and so are both sides of the aisle in Congress. The neocons are worse, IMO, though, because of supporting tax cuts we can't afford, pushing for unnecessary wars, shoving in at least as much pork-barrel nonsense as Democrats, and still having the gall to claim to be the party of small government and fiscal responsibility.

[Saryctos]

My comment was more directed at the fact that I am against almost all socialist properties in a capitolist economy.

[pcs]

This guy sees it differently:

 

http://blogs.salon.com/0002007/2006/01/26.html

 

Specifically:

 

So what does this guy think the government does with the 'commons' anyway? You know, when it's not selling it off. Interesting sidenote, but not really relevant to the current discussion.

[Maddad]

A large part of the problem is that spending is how politicians get re-elected. If they do not pass bills for their own locality, then they are not the representative the next time around. Politicians are not dumb, so they vote for pork. We all knew that it was a bad idea to give away all that tax money, but congress voted for it.

 

Harry Homeowner wanted it because he was told he would get several hundred dollars, and he did. For that moment. Then the inevitable expenses came along, and now he's got to pony up several $thousand to replace the several $hundred he got earlier. He was told it was going to happen, but all he saw was the several $hundred being held in front of him by a politician asking if he wanted it.

 

It's the way politics works, and blaming just one of them ignores the big picture.

[padren]

Part of the national mentality is that "a dollar in hand is more powerful than two in the bank" so to speak: the idea with a dollar in hand, you can build a better mouse trap or become a realestate mogel, etc.

 

We believe the borrowing will pay off in being a richer and stronger nation in the long run than if we tighten our belts and live within our means.

 

Unfortunately not much attention is placed in seeing that the over spending has this desired effect, and ends up being very wastefull.