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ShcShc11

Ease Off Spending Cuts to Boost U.S. Recovery. -IMF

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http://www.imf.org/external/pubs/ft/survey/so/2013/CAR061413A.htm

Slowly but surely, economists are seeing the truth. The fund argued that the sequester and other forms of fiscal contraction will cut this year’s U.S. growth rate by almost half, undermining what might otherwise have been a fairly vigorous recovery. And these spending cuts are both unwise and unnecessary.


In other words (as it has been repeated numerous times), trying to cut deficits actually adds to the overall deficit.

Cheers! :)Shc

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ShcShc11

http://www.imf.org/external/pubs/ft/survey/so/2013/CAR061413A.htm

Slowly but surely, economists are seeing the truth. The fund argued that the sequester and other forms of fiscal contraction will cut this year’s U.S. growth rate by almost half, undermining what might otherwise have been a fairly vigorous recovery. And these spending cuts are both unwise and unnecessary.


In other words (as it has been repeated numerous times), trying to cut deficits actually adds to the overall deficit.

Cheers! :)Shc



[Url http://m.csmonitor.com/World/Backchannels/2013/0606/IMF-admits-it-got-Greece-wrong.-What-does-it-get-right]Yeah, and IMF is so dependable. Why don't we just ask the IRS to speculate.[/URL]
I'm not usually into the whole 3-way thing, but you got me a little excited with that. - Skymama
BTR #1 / OTB^5 Official #2 / Hellfish #408 / VSCR #108/Tortuga/Orfun

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Iago

***http://www.imf.org/external/pubs/ft/survey/so/2013/CAR061413A.htm

Slowly but surely, economists are seeing the truth. The fund argued that the sequester and other forms of fiscal contraction will cut this year’s U.S. growth rate by almost half, undermining what might otherwise have been a fairly vigorous recovery. And these spending cuts are both unwise and unnecessary.


In other words (as it has been repeated numerous times), trying to cut deficits actually adds to the overall deficit.

Cheers! :)Shc



The deficit has to come down sometime.

Why? The US has run a deficit in over 200 of the years it has been in existence. As long as the economy is robust enough (on average) to service the debt, it's good.

Europe took the austerity road to the dealing with the recession, and see how well that worked.
...

The only sure way to survive a canopy collision is not to have one.

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>The fund argued that the sequester and other forms of fiscal contraction will cut this
>year’s U.S. growth rate by almost half, undermining what might otherwise have been a
>fairly vigorous recovery.

That's OK. We don't need to start another bubble. A slow and steady recovery is pretty ideal. And it also allows us to spend less, which will mean that in twenty years we don't end up crushed under a mountain of debt.

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[Reply]That's OK. We don't need to start another bubble. A slow and steady recovery is pretty ideal.



There goes bill again. Identifying something that what one person finds to be the best (growth like we saw during the first six years of the Bush Admin) may not be what everyone finds to be the best.

Different strokes. Different folks.


My wife is hotter than your wife.

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ShcShc11

http://www.imf.org/external/pubs/ft/survey/so/2013/CAR061413A.htm

Slowly but surely, economists are seeing the truth. The fund argued that the sequester and other forms of fiscal contraction will cut this year’s U.S. growth rate by almost half, undermining what might otherwise have been a fairly vigorous recovery. And these spending cuts are both unwise and unnecessary.


In other words (as it has been repeated numerous times), trying to cut deficits actually adds to the overall deficit.

Cheers! :)Shc



More margin! We need more margin!

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Iago

*********http://www.imf.org/external/pubs/ft/survey/so/2013/CAR061413A.htm

Slowly but surely, economists are seeing the truth. The fund argued that the sequester and other forms of fiscal contraction will cut this year’s U.S. growth rate by almost half, undermining what might otherwise have been a fairly vigorous recovery. And these spending cuts are both unwise and unnecessary.


In other words (as it has been repeated numerous times), trying to cut deficits actually adds to the overall deficit.

Cheers! :)Shc



The deficit has to come down sometime.

Why? The US has run a deficit in over 200 of the years it has been in existence. As long as the economy is robust enough (on average) to service the debt, it's good.

Europe took the austerity road to the dealing with the recession, and see how well that worked.

Yep. That's what happens when people won't lend you anymore money to pay your bills.

The UK and France both had an AAA bond ratings until AFTER they imposed austerity measures.

:P:P:P
...

The only sure way to survive a canopy collision is not to have one.

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>Why? The US has run a deficit in over 200 of the years it has been in existence. As
>long as the economy is robust enough (on average) to service the debt, it's good.

If some is good, more must be better! There are certainly no examples of that being false.

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billvon

>Why? The US has run a deficit in over 200 of the years it has been in existence. As
>long as the economy is robust enough (on average) to service the debt,
it's good.

If some is good, more must be better! There are certainly no examples of that being false.



Yes, there are. Just ask your wife the MD.

Constraint highlighted in case you missed it the first time.
...

The only sure way to survive a canopy collision is not to have one.

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I do subcontract work for the government. In the last 20 months, our project has seen budget cuts of >50% and has laid off approximately 70% of staff. Those of us who remain are enjoying sequestration this year. In the grand scheme of things, it's probably inconsequential, but it's had a big impact on our local economy, and I doubt this is a unique situation.

Blues,
Dave
"I AM A PROFESSIONAL EXTREME ATHLETE!"
(drink Mountain Dew)

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[Quote]As
>long as the economy is robust enough (on average) to service the debt, it's good.

That is the problem that places are having. The projections call for constant growth in revenues that would allow the debts to be serviced. Then a place like Greece gets hit. And the serviceable debts aren't serviceable anymore unless cuts come from someplace or revenues are increased - which is accomplished by raising taxes in a contracting economy.

The US has shown a willingness to increase spending in excess of revenues during booms like the 2000s - running up massive debt even with massive revenues. Then spend more with lesser revenues.

Eventually is hits critical mass.


My wife is hotter than your wife.

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>The US has shown a willingness to increase spending in excess of revenues during
> booms like the 2000s - running up massive debt even with massive revenues. Then
>spend more with lesser revenues.

And that's the problem. Running a debt isn't a bad thing. Running high debts during recessions might even be a good thing; Keynesian spending can indeed reduce the severity of recessions, as in this case.

The problem is that during good times you have to pay it back. It's easy to spend a lot during a recession to try to stimulate the economy. Everyone loves "free money." It's a lot harder to increase taxes to pay that back when the economy is doing well. Indeed, in a democracy, it is nearly impossible, since the demand is always "increase my spending and cut my taxes."

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billvon

>It's a lot harder to increase taxes to pay that back when the economy is doing well.



apparently it's a lot harder to decrease spending away from those emergency levels when the economy is doing well too.

so hard, that it's hardly ever mentioned

the Keynsians problem is that spending is increased during the bad times - then it's also increased during the good times - then it's also increased during the moderate times.

If we have on philosophy that's irresponsible during good times, then we have another philosophy that's irresponsible during bad times too. Our track record of making bad spending and taxing decisions is way more than just flipping a coin would give us.

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Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

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>the Keynsians problem is that spending is increased during the bad times - then it's
>also increased during the good times - then it's also increased during the moderate
>times.

Agreed. What works in the long run in a Keynsian system is:

Recession - lower taxes, higher spending to stimulate the economy
Good times - higher taxes, lower spending to repay the debt

Politicians love the "lower taxes and higher spending" part. And that's all that's ever discussed.

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billvon

>the Keynsians problem is that spending is increased during the bad times - then it's
>also increased during the good times - then it's also increased during the moderate
>times.

Agreed. What works in the long run in a Keynsian system is:

Recession - lower taxes, higher spending to stimulate the economy
Good times - higher taxes, lower spending to repay the debt

Politicians love the "lower taxes and higher spending" part. And that's all that's ever discussed.



agreed - but the stimulus spending needs to be better thought out, IMO than what Bush and Obama set up for their buddies these last 12-16 years.....we need politicians to understand that 'stimulus' <> "crony awards that last indefinitely"

(rough concept - "take the politics out of politics...." - in that case, it's impossible to do it 'right' like you say, in the 'real' world. At that point, you are kind of stuck with the only thing that doesn't destroy the ecomony is being stingy about spending - all the time regardless of the economy's health. The bad times will be bad, but the good times won't spiral out of control)

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

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OK. So we realize that the politicians aren't going to voluntarily cut spending. We saw that with how they howled over the sequester. People who don't pay taxes aren't ever going to want taxes raised. It seems a minority of people understand we can't keep doing this to ourselves forever. What's the answer?
Please don't dent the planet.

Destinations by Roxanne

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> What's the answer?

Legislation that links recovery spending to economic health indicators. Recovering economy -> no more new recovery projects.

Tax cut legislation with automatic increases when the economy recovers. Lower taxes now! Recovering economy -> gradually increasing tax rates.

The above play to politician's desires. They can then say "I cut your taxes and got you that new stadium/highway/airport! And support the troops!" When the economy recovers they can claim they didn't vote for any new tax hikes, and anyway aren't you happy the economy is recovering?

The trick is to make such legislation immune to buyer's remorse when the economy recovers (as it always does.)

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billvon

> What's the answer?

Legislation that links recovery spending to economic health indicators. Recovering economy -> no more new recovery projects. - and cancel those that served their purpose, and cancel some others too

Tax cut legislation with automatic increases when the economy recovers. Lower taxes now! Recovering economy -> gradually increasing tax rates. edited - I see the balance, lower taxes when it's bad, bring them back at recovery

The above play to politician's desires. They can then say "I cut your taxes and got you that new stadium/highway/airport! And support the troops!" When the economy recovers they can claim they didn't vote for any new tax hikes, and anyway aren't you happy the economy is recovering?

The trick is to make such legislation immune to buyer's remorse when the economy recovers (as it always does.)



without the red items, taxes and spending are diodes

still, if the 'good times' steady state status is out of whack (i.e., excessive spending, excessive taxes (still net positive to build that margin), then just adjusting from that baseline (lower tax higher spending), and then returning to it on recovery, you still are stuck with excessive everything.

I'd love it if we cut it all down to the bare bones (old discussion). Then taxed to a net positive balance. Then implemented exactly your proposal to deal with economic cycles.

But the baseline isn't very palatable still.

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

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