$1 trillion deficits seen for next 10 years

[TheBachelor 5]

From: http://news.yahoo.com/s/ap/20090320/ap_on_go_pr_wh/obama_budget

"The Congressional Budget Office figures released Friday predict Obama's budget will produce $9.3 trillion worth of red ink over 2010-2019. That's $2.3 trillion worse than the administration predicted in its budget just last month." Geez, I hate to see what it is by next month...

"...the White House insisted Friday that the flood of red ink won't swamp its costly agenda."

Now before you reply, read the article. They administration has already blamed it on Bush.

There are battered women? I've been eating 'em plain all of these years...

[BDashe 0]

I still can't get over this guy's name. Been reading about him for a while now and i actually never heard it pronounced, or wasnt paying attention when it was.

Dont mean to hijack the thread but is this as bad as it looks?

John Boehner


Back on track, can someone explain to me again how getting into HUGE debt through record breaking spending magically makes the debt disappear? I dont get why there can't be a balance of cutting fat and pumping up programs that generate the most long term jobs.

At least we know he's been spending time on the NCAA bracket and his bowling game. I for one, am feeling reassured.

So there I was...

Making friends and playing nice since 1983

[billvon 2,464]

> can someone explain to me again how getting into HUGE debt through
>record breaking spending magically makes the debt disappear?

Nope. That's as stupid as saying that cutting taxes will make the debt disappear.

[BDashe 0]

*** taxes and spending*** maybe not at the same time... spending, then taxes.

At least we agree on something... sort of...

So there I was...

Making friends and playing nice since 1983

[billvon 2,464]

>spending, then taxes.

Right, that's the idea. Spend during recession, tax during economic good times; the classic Keynsian solution. But I don't think the government should be messing about with the economy to that degree. Set good fiscal policies, set taxes to equal expenditures, and then leave things alone. Ignore people who want to spend more than we take in and ignore people who want to cut taxes below what we are spending. Or, better yet, get them talking and make _them_ work it out.

[BDashe 0]

[email]Sooooo are you for theory A or B of your most recent post?

cuz this "can someone explain to me again how getting into HUGE debt through
>record breaking spending magically makes the debt disappear?

Nope. That's as stupid as saying that cutting taxes will make the debt disappear. "

doesn't agree with theory A, and only sort of agrees with theory B.

Plus, is the keynsian theory an economic encyclopedia? Proven facts... or a theory? more debt while in debt just doesn't_make-logical=sense+to\me.

he he he.

edit: I completely agree with your second option btw- make it even out.

So there I was...

Making friends and playing nice since 1983

[lawrocket 3]

We're gonna get out of this. The economy will pick up and tax revenues will increase.

Who here wants to bet that deficits will continue to grow at a faster rate than the increase in revenue?

My wife is hotter than your wife.

[dreamdancer 0]

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>spending, then taxes.

Right, that's the idea. Spend during recession, tax during economic good times; the classic Keynsian solution. But I don't think the government should be messing about with the economy to that degree. Set good fiscal policies, set taxes to equal expenditures, and then leave things alone. Ignore people who want to spend more than we take in and ignore people who want to cut taxes below what we are spending. Or, better yet, get them talking and make _them_ work it out.

they're scared of deflation so they've got to get money into the economy - and spent.

stay away from moving propellers - they bite
blue skies from thai sky adventures
good solid response-provoking keyboarding

[billvon 2,464]

>Sooooo are you for theory A or B of your most recent post?

Keynesian economics does work in that you can "spend your way" out of a recession. Increased government spending and decreased taxes will shorten a recession and speed recovery, because recovery is caused by increased consumer spending (at least in a consumer economy.) The government basically supplants consumer spending.

However, the bigger question is - "is it worth it?" Is the faster recovery worth changing the underpinnings of the economy by basically purchasing companies? Is it worth the wildly swinging prime lending rates and the resultant often-nonsensical behavior we see in the debt markets? Is it worth the much higher taxes you have to pay during the good times? I don't think it is.

Now, not trying to help the economy means we have to "bite the bullet" and deal with a much longer and deeper recession, but in the long run, that's how economies work. They're like forest fires. You can put them out, but they're part of the system, and if you put them out for too long everything gets out of whack - and the risks go way up.

[kelpdiver 2]

Long-term deficit predictions have proven notoriously fickle — George W. Bush inherited flawed projections of a 10-year, $5.6 trillion surplus and instead produced record deficits — and if the economy outperforms CBO's expectations, the deficits could prove significantly smaller.

----

Also important to clarify - you're incorrect in saying this means 1T deficits for next 10 years. That is the average. In 5 years, the BCO projects 673B, Obama claims a target of 5xxB.

A lot of this deficit will depend on the recovery and the stock market generating capital gains again. Next year the income limit on Roth IRA conversions is lifted so there will be some income in 2011 and 2012 from these conversions.

[dreamdancer 0]

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>Sooooo are you for theory A or B of your most recent post?

Keynesian economics does work in that you can "spend your way" out of a recession. Increased government spending and decreased taxes will shorten a recession and speed recovery, because recovery is caused by increased consumer spending (at least in a consumer economy.) The government basically supplants consumer spending.

However, the bigger question is - "is it worth it?" Is the faster recovery worth changing the underpinnings of the economy by basically purchasing companies? Is it worth the wildly swinging prime lending rates and the resultant often-nonsensical behavior we see in the debt markets? Is it worth the much higher taxes you have to pay during the good times? I don't think it is.

Now, not trying to help the economy means we have to "bite the bullet" and deal with a much longer and deeper recession, but in the long run, that's how economies work. They're like forest fires. You can put them out, but they're part of the system, and if you put them out for too long everything gets out of whack - and the risks go way up.

what do you do with the unwanted labour while the system gets back into whack?

and this has gone past recession and deep recession to depression territory now.

stay away from moving propellers - they bite
blue skies from thai sky adventures
good solid response-provoking keyboarding

[kelpdiver 2]

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and this has gone past recession and deep recession to depression territory now.

with 8% unemployment?

Not exactly a depression.

[billvon 2,464]

>what do you do with the unwanted labour while the system gets
>back into whack?

The real answer - they make do, as they always do.

The answer you want - all the greedy capitalists who got big bonuses from AIG hope they starve to death while they laugh and smoke cigars.

[dreamdancer 0]

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and this has gone past recession and deep recession to depression territory now.

with 8% unemployment?

Not exactly a depression.

and it started from a boom (the biggest in human history) - where's it going now?

stay away from moving propellers - they bite
blue skies from thai sky adventures
good solid response-provoking keyboarding

[jcd11235 0]

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We're gonna get out of this. The economy will pick up and tax revenues will increase.

Who here wants to bet that deficits will continue to grow at a faster rate than the increase in revenue?

That would be inconsistent with the previous two Democratic Presidents' terms, but consistent with the last 3-4 Republicans' terms.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[kelpdiver 2]

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and this has gone past recession and deep recession to depression territory now.

with 8% unemployment?

Not exactly a depression.

and it started from a boom (the biggest in human history) - where's it going now?

The Great Depression had 25% unemployment, as opposed to the typical 6% rate. In other words, 4x. Right now we're not even at 2x.

There's nothing to celebrate, but whining doesn't make the current affair a depression.

[lawrocket 3]

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>spending, then taxes.

Right, that's the idea. Spend during recession, tax during economic good times; the classic Keynsian solution. But I don't think the government should be messing about with the economy to that degree. Set good fiscal policies, set taxes to equal expenditures, and then leave things alone. Ignore people who want to spend more than we take in and ignore people who want to cut taxes below what we are spending. Or, better yet, get them talking and make _them_ work it out.

they're scared of deflation so they've got to get money into the economy - and spent.

Problem: the money isn't being spent! The banks STILL aren't lending it. The public isn't spending money, either. About the only thing people are buying is the rhetoric of "depression" and the like. Which becomes a self-fulfilling prophecy.

Let's say you've got dry farmland that needs irrigation. So a dam gets built. Let's call the banks the dam. The government provides bailout water and the reservoir is half filled.

The people say, "Dam. Release this water." But the dam is worried about depleting its water right now and making it unavailable for use in the future. It could dry up and there's no guarantee it can fill up again. So the dam doesn't release the water.

The government, in it's ultimate wisdom, says, "There's still no water getting to the farmers. We need to get more water into the reservoir." The dam is now spilling over. But the dam is still worried about the water being depleted. So it builds the dam another hundred feet higher. And more water gets pumped in.

Soon, however, they realize, "Okay. We can release the water now." But the release was designed for the old dam - not with 100 extra feet of water on top. The release comes out like a goddamned nightmare and the dry and fallow fields get flooded.

Pumping more money into the banks isn't gonna do much if they don't release it. But when they do, the markets will be flooded with dollars - leading to inflation. This is creating a perfect storm for stagflation.

So you are waiting. This is also what the banks are doing - waiting. They've got the liquidity but don't want to lend it because of fears of default, etc. They have gone from irrational exuberance to irrational pessimism.

So the government is saying, "We need more liquidity to infuse into the credit market." What? That just puts a BUNCH of money out there that will sit like the water behind the dam.

Then it will happen - the market will pick up and lending will start anew. And a goddamned AVALANCHE of lending will start again. Like floodgates opened.

And in the hyperliquidity that will happen, there will be another logjam. This means inflation. And more...

My wife is hotter than your wife.

[lawrocket 3]

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We're gonna get out of this. The economy will pick up and tax revenues will increase.

Who here wants to bet that deficits will continue to grow at a faster rate than the increase in revenue?

That would be inconsistent with the previous two Democratic Presidents' terms, but consistent with the last 3-4 Republicans' terms.

So if I were to say that public debt now as a percentage of GDP is roughly the same now as in 1997, would that change your thinking? And that with the exception of two years during the Clinton Admin (which I give equal credit to him and the Congress) gross debt has skyrocked.

Would that change your thought that the deficits decreased during the Clinton presidency?

I'll put it this way - debt increased in Carter's admin, Reagan's, Bush's, Clinton's and Dubya's, as well. I would have liked to see the number continue to plummet like they did in 97 and 98. But they didn't. They picked up sharply again before Clinton left office.

Government is not in the business of cutting costs.

My wife is hotter than your wife.

[dreamdancer 0]

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Problem: the money isn't being spent! The banks STILL aren't lending it. The public isn't spending money, either. About the only thing people are buying is the rhetoric of "depression" and the like. Which becomes a self-fulfilling prophecy.

i agree. the money is being loaded into the system, but it's not wanted. it's the demand for credit money that has slumped. this is why the money has to be put into the economy through an increase in the minimum wage. this money would be spent

stay away from moving propellers - they bite
blue skies from thai sky adventures
good solid response-provoking keyboarding

[Gawain 0]

Quote

>Sooooo are you for theory A or B of your most recent post?

Keynesian economics does work in that you can "spend your way" out of a recession. Increased government spending and decreased taxes will shorten a recession and speed recovery, because recovery is caused by increased consumer spending (at least in a consumer economy.) The government basically supplants consumer spending.

However, the bigger question is - "is it worth it?" Is the faster recovery worth changing the underpinnings of the economy by basically purchasing companies? Is it worth the wildly swinging prime lending rates and the resultant often-nonsensical behavior we see in the debt markets? Is it worth the much higher taxes you have to pay during the good times? I don't think it is.

Now, not trying to help the economy means we have to "bite the bullet" and deal with a much longer and deeper recession, but in the long run, that's how economies work. They're like forest fires. You can put them out, but they're part of the system, and if you put them out for too long everything gets out of whack - and the risks go way up.

Unfortunately, the Fed monitized our $1Tr in debt this week with Treasury...Keynesian, I thought, was based on government spending through appropriations, not sending it into banks...

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[billvon 2,464]

>Keynesian, I thought, was based on government spending
>through appropriations, not sending it into banks...

Keynesian theory basically states that the government has a role in economics through:

-setting monetary policy via central banks
-setting fiscal policy to influence production and consumption.

"Government spending through appropriations" is one example of Keynesian economics in action. You'd call them 'earmarks' or 'pork' or the equivalent; basically spending that would not otherwise be needed intended to boost manufacturing and/or employment.

[dreamdancer 0]

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>Sooooo are you for theory A or B of your most recent post?

Keynesian economics does work in that you can "spend your way" out of a recession. Increased government spending and decreased taxes will shorten a recession and speed recovery, because recovery is caused by increased consumer spending (at least in a consumer economy.) The government basically supplants consumer spending.

However, the bigger question is - "is it worth it?" Is the faster recovery worth changing the underpinnings of the economy by basically purchasing companies? Is it worth the wildly swinging prime lending rates and the resultant often-nonsensical behavior we see in the debt markets? Is it worth the much higher taxes you have to pay during the good times? I don't think it is.

Now, not trying to help the economy means we have to "bite the bullet" and deal with a much longer and deeper recession, but in the long run, that's how economies work. They're like forest fires. You can put them out, but they're part of the system, and if you put them out for too long everything gets out of whack - and the risks go way up.

Unfortunately, the Fed monitized our $1Tr in debt this week with Treasury...Keynesian, I thought, was based on government spending through appropriations, not sending it into banks...

i understand keynesianism (in this narrow aspect) to be based on creating the least amount of extra money deemed necessary and placing it into the economy where it will be best put to productive use.

stay away from moving propellers - they bite
blue skies from thai sky adventures
good solid response-provoking keyboarding

[lawrocket 3]

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this is why the money has to be put into the economy through an increase in the minimum wage.this money would be spent

So you suggest giving it to employers to provide and extra buck an hour for minimum employees? The minimum wage doesn't work like that. The minimum wage mandates employers to pay more to certain classes of people - namely the unskilled.

Of course, for businesses an extra buck an hour for, say, five employees at 35 hours a week is an extra $175.00 per week. Or, for 50 weeks, that's $8,750.00 in increased wages per year.

What is minimum wage now? I don't know because I haven't paid an employee minimum wage in a while. I think it's $8.25/hour in Cali. One employee 35 hours a week will get 14,437.50 per year in wages (50 weeks).

Let's say I'm a businessman. I've just added 1/3 of an employee for no benefit. If I'm on a thin margin, I may not be able to afford it. So I cut costs (I don't know if you are aware of this or not, but there are a few employers here and there that are cuttign costs by layoffs.)

So I lay off an employee. My increase is now $7,000 instead of $8,750. But I've saved $14,437.50 per year.

If I up my other 4 employees to 40 hours per week I am paying $9,250.00 in wage increases over 50 weeks. So I may be able to do that.

Point? 4 folks just got an extra buck an hour. One fella just lost his job.

It's why unions have a tendency to enter into new CBA's that result in layoffs of a bunch of junior employees.


What should be done to improve this? I don't know. What's best for someone like me isn't best for you.

But I don't think that in the grand scheme of things, spending trillions for things worth billions is sound policy.

My wife is hotter than your wife.

[jcd11235 0]

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We're gonna get out of this. The economy will pick up and tax revenues will increase.

Who here wants to bet that deficits will continue to grow at a faster rate than the increase in revenue?

That would be inconsistent with the previous two Democratic Presidents' terms, but consistent with the last 3-4 Republicans' terms.

So if I were to say that public debt now as a percentage of GDP is roughly the same now as in 1997, would that change your thinking? And that with the exception of two years during the Clinton Admin (which I give equal credit to him and the Congress) gross debt has skyrocked.

Would that change your thought that the deficits decreased during the Clinton presidency?

I'll put it this way - debt increased in Carter's admin, Reagan's, Bush's, Clinton's and Dubya's, as well. I would have liked to see the number continue to plummet like they did in 97 and 98. But they didn't. They picked up sharply again before Clinton left office.

Government is not in the business of cutting costs.

You're looking at the wrong numbers if you're trying to support your assertion. An increase in debt does not imply that deficits grew more rapidly than revenues.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[rwieder 0]

Lets not forget "Slick Willy" left ol' Wyatt a surplus in excess of 3 trillion buckaroonies. Why were we not concerned about our financial condition until now?

-Richard-
"You're Holding The Rope And I'm Taking The Fall"