What is the justification for spending such large amounts of money?

[SH3RL0CK]

What is more critical than the overall debt, is the debt as a percentage of the GDP.

 

If you owe $1M that would be somewhat of a problem for someone making $100k a year. But its manageable for someone making $1B a year. A rising debt isn't a problem if the GDP grows faster. But as you imply, it would be far better still to have savings rather than debt.

 

Which is why it is important that the economic recovery happen sooner and stronger, rather than later and weaker. Too bad no one really knows how to make this happen.

 

As an aside, I'm neither republican nor democrat. There is little fiscal difference between them, both parties have shown they have a spending problem. Democrats spend, and raise taxes to cover the shortfall. Republicans spend, and whose business-friendly policies raise the GDP to cover the shortfall. IMO, we got lucky in 2000 when Clinton (D) raised taxes and Congress ® enacted policies to raise the GDP resulting in an actual reduction of savings (the last time this happened).

[bascule]

Republicans spend, and whose business-friendly policies raise the GDP to cover the shortfall.

 

I'm sorry, were you not paying attention during the past decade? Their "business friendly policies" lead to one of the worst financial crises in history, a monumental drop in tax revenue, and a staggering increase in the budget deficit.

[SH3RL0CK]

I'm sorry, were you not paying attention during the past decade? Their "business friendly policies" lead to one of the worst financial crises in history, a monumental drop in tax revenue, and a staggering increase in the budget deficit.

So are you saying the economy went south because the Democrats took control of Cogress?

 

You cannot deny the great economic boom of the 1980's (under Reagan and Tip O'Neil), of the 1990's (under Clinton and Gingrich) and of a good economy during most of the early part of the 2000's (under Bush and a Republican congress). I suppose if Bush gets all the blame for this current recession, then we need to assign the blame for the 2001-2 recession to Clinton, the 1992-3 recession to GHW Bush, and the 1980-82 recession to Carter.

[bascule]

You cannot deny the great economic boom of the 1980's (under Reagan and Tip O'Neil)

 

Your argument was that Republicans' "business-friendly policies raise the GDP to cover the shortfall," and you cite Reagan? Zuh?

 

 

Yes, that would be the national debt, as a percentage of the GDP, skyrocketing under Reagan. This is certainly not evidence of your assertion that the Republicans' "business-friendly policies raise the GDP to cover the shortfall". If anything it is a blatant counterexample.

[Pangloss]

It's certainly better than cutting taxes and spending more money, which is what the Republicans did.

 

You're right, and I should have acknowledged the point earlier, recalling that I argued against rescinding the tax cuts in previous discussions. Consider me appropriately rebuked.

 

 

You mean like reinstating PAYGO, whereas the Republicans let it lapse, shortly before a costly and unnecessary war with no plan to pay for it, and creating a huge new entitlement?

 

They are not exactly the same, Pangloss. The Democrats tax and spend. The Republicans cut taxes and spend. Clearly one of these strategies is better than the other.

 

I agree that in general one of these strategies is better than the other. But we're still talking about taking out a trillion dollars in new loans from the Chinese in the hopes that we can pay them off in twenty years.

 

Let me just say that again with a bit more information -- we're going to take out another trillion dollars in new loans from the Chinese to pay for 31 million Americans' health care for ten years, with the hopes that we'll be able to pay it back within twenty years based on savings we hope will be realized from getting them preventative care (instead of hospital emergency room care) and making the insurance companies ask for rate hikes, which they already do in something like like 20 states (and get the hikes anyway).

 

I just think you're arguing about the shape of the door that stands open to an empty barn. You're saying we should use hemp ropes to tie down the Titanic when it returns from America. In my opinion, the reasoning you're talking about isn't just being used to justify past spending, it's being used to justify new spending -- spending we cannot afford.

 

 

What is more critical than the overall debt, is the debt as a percentage of the GDP.

 

As of the extension a couple of weeks ago that figure is now up to 80%, up from 55% just a few months ago. And that's assuming GDP stays at the level it was at before the current economic collapse, which nobody thinks will be the case.

 

(Bascule is using the 2008 chart. There've been, what, half a dozen extensions on the debt ceiling since then?)

[Mr Skeptic]

I agree that in general one of these strategies is better than the other. But we're still talking about taking out a trillion dollars in new loans from the Chinese in the hopes that we can pay them off in twenty years.

 

Let me just say that again with a bit more information -- we're going to take out another trillion dollars in new loans from the Chinese to pay for 31 million Americans' health care for ten years,

 

Yes yes, Pangloss' opinions. Care to back up your notion that 100% of this loan is coming from China? Or alternately that the healthcare deficit will be twice or so it's projected value?

[Sisyphus]

Only about a quarter of the national debt is foreign-owned, and only about 20% of that is owned by China, for about 5%. Japan owns more.

 

Not that that's a great situation, but it's quite different than the impression you usually get listening to people talk about it, which is that all of our debt is owed to China.

[swansont]

I agree that the tax cuts have to be rescinded at this point, I'm just pointing out that spending increases have vastly outpaced revenue. That's elementary math too, swansont.

 

If only you had said that originally, then there would not have been an issue. "Spending is still outpacing revenue" is a true statement, as is "It's not enough to decrease the debt." "Increased revenue will do nothing to the debt" is not.

 

Your quote does not contradict mine, and I've bolded mine to indicate why. That's elementary too, swansont.

 

 

You're going to have to explain to me how "mix of Medicare cuts, tax increases and new fees on health care industries" is "doing nothing," regardless of whether it is during his entire time in office or only part of it.

 

And having a new spending plan and

doing nothing about its cost

during your entire time in office is NOT better than no plan at all. It is exactly the same.

 

I've emphasized the part to which I was objecting. Frankly, I don't know how to interpret the part you bolded, considering that Obama has only been in office a little more than a year. The spending plan is future, what he's done while in office is past.

Edited February 25, 2010 by swansont
clarification

[ecoli]

Well, the funny thing about money is that it is kind of useless if you don't spend it.

 

This premise is false. This money isn't just sitting around. You either have to tax, shift spending around and print dollars.

 

Either way, not spending money on universal health care is far from useless. Health care spending comes at an opportunity cost to something else. The question is if it's worth it.

 

If you still disagree, I demand you give me all the money you have sitting around uselessly in your savings account, so I can spend it properly.

---

Merged post follows:

Consecutive posts merged

Only about a quarter of the national debt is foreign-owned, and only about 20% of that is owned by China, for about 5%. Japan owns more.

 

Not that that's a great situation, but it's quite different than the impression you usually get listening to people talk about it, which is that all of our debt is owed to China.

 

Yes, but I think that only china keeps it's currency pegged to ours (the US) which makes them an important player. I think the media is at least semi justified in paying attention to it.

[Mr Skeptic]

This premise is false. This money isn't just sitting around. You either have to tax, shift spending around and print dollars.

 

Either way, not spending money on universal health care is far from useless. Health care spending comes at an opportunity cost to something else. The question is if it's worth it.

 

If you still disagree, I demand you give me all the money you have sitting around uselessly in your savings account, so I can spend it properly.

 

I fully intend for all my money to be spent, so sorry you get $0.00. There is no point to money other than to spend it, whether now or later.

 

I agree about the opportunity cost. Someone will spend money on something, but could some better use be found for it? For healthcare, having universal coverage without worrying about who will pay for what could very well be the most efficient way to do healthcare. It may not be particularly fair, but that way we don't spend absurd amounts of money trying to figure out who has higher risks of what or how to cheat people out of the big payments. Meanwhile, we have universal healthcare via the emergency room, which oddly enough seems to be an after-the-fact emergency type of care, which is rather expensive. Proper universal healthcare has the lowest price tag, and think of all the opportunity cost of that money we are wasting on doing it inefficiently like we are now?

[Phi for All]

For healthcare, having universal coverage without worrying about who will pay for what could very well be the most efficient way to do healthcare. It may not be particularly fair, but that way we don't spend absurd amounts of money trying to figure out who has higher risks of what or how to cheat people out of the big payments. Meanwhile, we have universal healthcare via the emergency room, which oddly enough seems to be an after-the-fact emergency type of care, which is rather expensive. Proper universal healthcare has the lowest price tag, and think of all the opportunity cost of that money we are wasting on doing it inefficiently like we are now?

We so rarely think like this these days, and it's a shame. We make everything more complicated than it has to be, often requiring experts paid to untangle these Gordian knots (*cough* IRS tax codes *cough*).

 

I always think back to all the expensive hydroelectric dams the US has built in third world countries that not only become obsolete soon after, but give us a bad name due to the corruption and pollution they caused. We could have spent a fraction of the dam money by buying every household some energy efficient refrigerators, washers and dryers. Then they wouldn't need more power and everyone would love us.

[ecoli]

I fully intend for all my money to be spent, so sorry you get $0.00. There is no point to money other than to spend it, whether now or later.

 

Sure, but I can invest my money and have more to spend later. Another opportunity cost if I forgo savings/investment now. And don't forget, saving money in banks increases the amount of money available for various loans.

 

I agree about the opportunity cost. Someone will spend money on something, but could some better use be found for it?

There's an ideological issue here. Is that money really the government's to spend?

 

For healthcare, having universal coverage without worrying about who will pay for what could very well be the most efficient way to do healthcare. It may not be particularly fair, but that way we don't spend absurd amounts of money trying to figure out who has higher risks of what or how to cheat people out of the big payments. Meanwhile, we have universal healthcare via the emergency room, which oddly enough seems to be an after-the-fact emergency type of care, which is rather expensive. Proper universal healthcare has the lowest price tag, and think of all the opportunity cost of that money we are wasting on doing it inefficiently like we are now?

but just because universal care would be more cost efficient/beneficial than our current methods (and I agree that this is most likely the case) doesn't mean that it is the most efficient/best/cheapest way to do it.

[Pangloss]

Care to back up your notion that 100% of this loan is coming from China?

 

Who cares who loans it to us? The fact that loans are taken up by various lenders hardly seems relevant to the point that they're new loans.

 

 

Or alternately that the healthcare deficit will be twice or so it's projected value?

 

I didn't say that. I was talking about its initial cost.

[Mr Skeptic]

But we're still talking about taking out a trillion dollars in new loans from the Chinese in the hopes that we can pay them off in twenty years.

 

Who cares who loans it to us? The fact that loans are taken up by various lenders hardly seems relevant to the point that they're new loans.

 

Then why claim that the 1 million is a loan from China? An empty talking point to make things sound worse than they are? Sorry, I can get plenty of those elsewhere.

---

Merged post follows:

Consecutive posts merged

Sure, but I can invest my money and have more to spend later. Another opportunity cost if I forgo savings/investment now. And don't forget, saving money in banks increases the amount of money available for various loans.

 

Yes; I'm perfectly alright with someone else spending my money now that I want to spend later, so long as they give it back when I need it with a little extra.

 

There's an ideological issue here. Is that money really the government's to spend?

 

Its our money that we are already spending, and spending in large quantities. If the government can spend less money and get better results, is that not progress?

 

but just because universal care would be more cost efficient/beneficial than our current methods (and I agree that this is most likely the case) doesn't mean that it is the most efficient/best/cheapest way to do it.

 

Well I'm a sucker for efficiency. I suppose that providing free healthcare no questions asked could be rather inefficient. And yes, there's also the chance that people might neglect their health a little bit more since they don't have to pay for it, but that's also a problem with insurance. The best solution I've heard is that the government give a set amount for each procedure that is needed, and people can choose what doctor they want, and the doctor can charge what he wants. The people can then pay the difference, and I think even keep the difference or a portion of the difference if it is cheaper. This gives them incentive to avoid expensive doctors, or expensive unnecessary treatments.

[Pangloss]

I guess that means you're not going to answer my question.

[Mr Skeptic]

In answer to your question, you care and you seem to think a lot of us should care.

[Pangloss]

Do you defend big spending programs on an ideological basis? If not, fine, I believe you and I respect your opinion that the spending you advocate is not ideological. You can do the same, and it's not going to kill you, I promise.

Edited February 26, 2010 by Pangloss

[jryan]

 

It's all a matter of perspective:

 

 

[Mr Skeptic]

So are you trying to show that you can modify graph labels, or that losing wars is good for the economy?

[moth]

aren't the red stretches on the graph by design? starve the beast was the name of the game (cut taxes and spend more to kill "big" government)

[jryan]

So are you trying to show that you can modify graph labels, or that losing wars is good for the economy?

 

Or that winning wars costs money.

[Syntho-sis]

Two of those wars we didn't technically lose...I'll let you decide which.

[jryan]

We didn't technically win it, either. Our failure to win that war haunts us today, almost 60 years later.

[Pangloss]

In answer to your question, you care and you seem to think a lot of us should care.

 

Apparently President Obama's Secretary of State, Hillary Clinton, thinks you need to care too, and that it's not just an economic concern, but actually a national security concern. Today she spoke up on the issue while defending her department's budget.

 

Clinton said the massive U.S. foreign debt had sapped U.S. strength around the world.

 

"We have to address this deficit and the debt of the United States as a matter of national security not only as a matter of economics," Clinton said. "I do not like to be in a position where the United States is a debtor nation to the extent that we are."

 

Having to rely on foreign creditors hit "our ability to protect our security, to manage difficult problems and to show the leadership that we deserve," she said.

 

But perhaps it's just an empty talking point.

[SH3RL0CK]

Your argument was that Republicans' "business-friendly policies raise the GDP to cover the shortfall," and you cite Reagan? Zuh?

 

 

Yes, that would be the national debt, as a percentage of the GDP, skyrocketing under Reagan. This is certainly not evidence of your assertion that the Republicans' "business-friendly policies raise the GDP to cover the shortfall". If anything it is a blatant counterexample.

 

I am surprised by this as I have seen credible information to the contrary (about a week ago). Right now I am quite busy and don't have time to look up my original source unfortunately. I'll try to do so when I get a little more time.