Economics question

[padren]

I've kinda asked similar questions before, but I think I can clearly define the real thing that bugs me with how we politically deal with debt, the economy and our budgets.

 

1) Republicans condemn out of control federal spending, saying how we are borrowing money to pay for programs we can't afford - Democrats defend programs because the money creates jobs and provides useful services.

 

2) Democrats try to cut anything Republicans like (say DoD) or raise taxes - Republicans defend how DoD creates jobs, provides useful services, and how rich people "don't sit on their wealth" but create jobs, provide useful services.

 

 

Honestly, I can't see how the benefits and liabilities of either are any different. If the federal government spends money on programs - yes, it goes into the economy and creates jobs. If wealthy people get to keep more of their money - yes, it goes into the economy and creates jobs.

Whether it's defense, education, social security, or privately invested funds the money does the same basic stuff.

 

Yet each side claims the other side is bankrupting the country and only their favored fund-allocations can save it - even though there is no definable difference.

 

What am I missing here?

[jackson33]

1) Republicans condemn out of control federal spending, saying how we are borrowing money to pay for programs we can't afford - Democrats defend programs because the money creates jobs and provides useful services. [/Quote]

 

padren; What's going on today and since 2008 (includes Bush/Paulson TARP), is not ordinary "out of control spending", adding the Republican Congress's after 2000 were not much help either. Where most of this is coming from are the few hard core Conservatives (not that many in real life). GDP or growth, constant since the late 1980's and neither party really has done that much to cover pending obligation which has been begging for attention.

 

On the jobs; This really isn't that complicated and private industry in the US creates those jobs, government by some actions can encourage jobs, but create none, other than what's is created for and by Government, IMO very costly, but another thread.

 

2) Democrats try to cut anything Republicans like (say DoD) or raise taxes - Republicans defend how DoD creates jobs, provides useful services, and how rich people "don't sit on their wealth" but create jobs, provide useful services. [/Quote]

 

Discretionary spending for the Defense Department is not really all that much, compared to what's obligated funding from year to year and felt Federal Responsibility by both major parties.. Possibly Education would make more sense and where the Parties do differ or the Department of Health & Human Services either questionably a Federal responsibility. I'm not sure Republican believe DoD creates that many jobs, other than what Federal Spending to suppliers can create, but they ® do believe in being prepared for international problems.

 

Yet each side claims the other side is bankrupting the country and only their favored fund-allocations can save it - even though there is no definable difference.

 

What am I missing here? [/Quote]

 

I think you might be mixing political maneuvering and rhetoric, with actual practice; As a Constitutional Conservative, this is where I get into trouble around here. Conservatives, have been saying for 30 years, programs and regulations have been strangling future economies, with obligations that cannot be sustained, while actually both parties have felt GDP or Growth will take care of future needs, the Dem's somewhat more optimistic.

 

I'll watch where your thread goes, but depending on you political philosophy, you may not be missing anything. Nothing is ever for sure, or can the future be predicted. I base most of my understands of what have been results. both in the US since forming and around the World through history.

[Mr Skeptic]

Well, it seems to me that the Democrats' favorite programs would benefit the people, whereas the Republicans' favorite programs make us a more powerful nation (or bigger dicks, as the case may be). Military spending is economically waste, unless you value their product (the ability to do violence).

[padren]

padren; What's going on today and since 2008 (includes Bush/Paulson TARP), is not ordinary "out of control spending", adding the Republican Congress's after 2000 were not much help either. Where most of this is coming from are the few hard core Conservatives (not that many in real life). GDP or growth, constant since the late 1980's and neither party really has done that much to cover pending obligation which has been begging for attention.

Thanks for taking the time, I quite enjoyed your response.

 

I agree, but I think the momentary "out of control spending" has more to do with how to deal with the Disaster Area known as the current US economy, without being able to declare it as such.

The number of people out of work is crazy, the numbers for how long people have been out of work doubly so, and how strained people have been due to a combination of poor financial planning and just being stretched entirely too thin before the recession make this a pretty unusual momentary situation.

 

It's a combination of trying to keep those people from completely crashing while unemployed, and funding jobs so some can be temporarily employed. I agree that it is disconcerting to say the least but while we probably disagree on the necessity and approach I think it's somewhat aside from the core issue I am trying to sort out.

 

I also agree that entitlement is a huge issue.

 

On the jobs; This really isn't that complicated and private industry in the US creates those jobs, government by some actions can encourage jobs, but create none, other than what's is created for and by Government, IMO very costly, but another thread.

Every dime government spends on highways goes to some private contractors who then have to hire more people, right? Every check cut to a welfare bum allows some liquor store owner to pursue the dream of sending their kids to college. Private companies build all the government hardware.

 

If a millionaire gets a tax break, and invests in a business that then hires a bunch of people they do create jobs. When the government provides a grant so a business can do the same, or so a construction project can be completed, how is it any different in how it impacts the economy?

 

Is there any difference between the government buying a Gulfstream jet that's overpriced, and a business executive buying one? They both could make due with a less costly jet, but we always applaud the executive because "hey, luxury creates jobs" and then condemn the government when it's wasteful.

 

Now, to be clear I am not in favor of government waste! I am just not satisfied with my intuitive differentiations between "good" corporate waste and "bad" government waste. I want to understand the nuances more.

 

Discretionary spending for the Defense Department is not really all that much, compared to what's obligated funding from year to year and felt Federal Responsibility by both major parties.. Possibly Education would make more sense and where the Parties do differ or the Department of Health & Human Services either questionably a Federal responsibility. I'm not sure Republican believe DoD creates that many jobs, other than what Federal Spending to suppliers can create, but they ® do believe in being prepared for international problems.

Honestly I think our military spending doesn't need to be more than the rest of the world combined. It may allow for a certain luxury of unilateralism but it's at a pretty high cost. Most countries are prepared to gear up their military in a hurry should World War Three start tomorrow and not be ended with nukes by the afternoon - I think we're the only ones that are ready to respond full-force 24/7 365 at a moment's notice.

 

That's a bit of a side topic though. Correct me if I am wrong, but I think most contemporary Republicans and Democrats can denounce pork in general all they want, but defend their own earmarks for their own constituents tooth and nail with the same rhetorical attack/defense arguments as is used when they are on the offense instead of defense.

I think you might be mixing political maneuvering and rhetoric, with actual practice; As a Constitutional Conservative, this is where I get into trouble around here. Conservatives, have been saying for 30 years, programs and regulations have been strangling future economies, with obligations that cannot be sustained, while actually both parties have felt GDP or Growth will take care of future needs, the Dem's somewhat more optimistic.

I am honestly fairly skeptical of deregulation, and I don't believe "strangling" would be the right word - stifling could be a bit harsh even, though true. It "regulates it" in the same way that a hose regulator works - slows it down sometimes when it could get going pretty fast, but does so to even it out.

Net gain is undoubtedly less, but reduces the volatility.

 

Again, that's a bit of a side issue I think. What bothers me about the growth issue though is (A) it's unsustainable, though through technology we may find new ways to grow previously unheard of, and (B) I don't believe we have any idea of how much we can grow, nor cope with dips along the way.

I'll watch where your thread goes, but depending on you political philosophy, you may not be missing anything. Nothing is ever for sure, or can the future be predicted. I base most of my understands of what have been results. both in the US since forming and around the World through history.

 

There has to be more to it in my mind. On the one hand, if we all were subsistence farmers who built our own houses and equipment, we'd have very little (not enough for everyone, really) but we'd be entirely stable. If some people farm enough to feed other people who are then free to trade labor for food, we have a basic yet stable economy... and we are supposed to be an extrapolation of that.

 

Somehow though, along the way we decided since we are so great at building things and farming food, if we come up a little short we can just borrow some resources from abroad so more people can eat and still pursue non-farming ventures.

Then it got to the point where we never have enough, and borrow more every year.

 

How do we fix this? We have a lot of people who do all types of labor for food, but in order to pay them for their labors so they can get food we have to borrow money from foreign entities every year.

 

Is this tied to the trade deficit? Are we borrowing money because we don't have enough, because we choose to spend so much of it overseas?

 

It seems like it should be simple, but it kind of makes my brain hurt to be honest.

[tomgwyther]

The way I see it: the only real difference between the left and the right; the red and the blue, is the level at which the government interjects with economic flow.

In one scenario:

 

The government decides it needs some money to build something, it borrows money from the Fed or similar investor (Bank or otherwise) and then spends it into the economy on building what-ever the government needs where it eventually ends up going to private companies, then untimately into the pockets of individuals, the original loan is then paid back via taxation of said individuals

 

In another scenario:

A person or personality decides he/she or it needs some money. The money is borrowed from a bank or similar investor, the money is then spent into the economy, where it eventually ends up going to private companies, then untimately into the pockets of individuals. The original loan is then paid back to the bank via the personalities profit which come from the pockets of the afore mentioned individuals.

 

These are two simple extemes. Either side of the political bench would favour more of one scenario than the other; each claiming the one scenario is better overall than the other.

The former has the benefit of a more shared liability, but is at higher risk of money being miss spent as it is logistically more complex

The latter suffers more from an increase in individual liability but is usually less wastful (people spend/invest their own money more wisely the goverments spend/invest other people's money.)

 

In both cases, money is borrowed from and ends up back in the bank.

To put it peotically, money is like water, nourishing a crop

The first scenario is like a rain cloud, the second is like a hose pipe.

It came came from - and returns to - the ocean.

 

p.s. The application of interest to either system will eventually collapse them both.

Unless of course, more money is created as bank credit (debt) to service the previous debt.

Edited June 11, 2010 by tomgwyther