US Budget Deficit

[kallend 1,623]

Up nearly 50% under Trump.

Whatever happened to the GOP's deficit hawks?

[JoeWeber 2,297]

4 hours ago, kallend said:

Up nearly 50% under Trump.

Whatever happened to the GOP's deficit hawks?

They flew the coop if, that is, any were ever in the coop at all. I'm actually getting to where I think these giant deficits, at the world economy level, don't matter much at certain growth stages. Like Brentworld CO2 levels, maybe a fair bit more right now would be salubrious. Money is cheap so borrowing big to repair our crumbling infrastructure, build out super fast and upgradable digital networks everywhere, new energy technologies, free Grad School for high GPA students, those sorts of national investments, might be good plays. Maybe we should be building out at a loss as if we were prepping for an IPO. The big win would be that at some point, like when even Argentina won't buy our T-Bills, the debt would be so scary, and it obviously is not at the moment, that fiscal responsibility would return. Like the buried in debt dude down the street who just realized he can not afford a third Corvette, maybe we'll forego a 14th Nuclear powered Aircraft Carrier Battle Group or another it's just a teeny war in some place like Yemen, which as I just noticed typing it, is an anagram of Enemy. Hmm...

[BIGUN 1,051]

On 10/27/2019 at 4:10 AM, kallend said:

Whatever happened to the GOP's deficit hawks?

No need to worry until the the Bond Market is worried. 

[wolfriverjoe 1,340]

So why did they shut down the government when Obama was president?

[gowlerk 1,904]

10 minutes ago, wolfriverjoe said:

So why did they shut down the government when Obama was president?

I believe it was to protect the health insurance industry and to prevent poor people from receiving medical care that they don't deserve because they can't pay for it.

[JoeWeber 2,297]

Just now, gowlerk said:

I believe it was to protect the health insurance industry and to prevent poor people from receiving medical care that they don't deserve because they can't pay for it.

Sort of, but the $16.99 Trillion Debt ceiling was also in play giving them cover from being identified as the hypocritical, callous, self serving, self dealing, racist, low life assholes they really are.

[wolfriverjoe 1,340]

1 minute ago, JoeWeber said:

Sort of, but the $16.99 Trillion Debt ceiling was also in play giving them cover from being identified as the hypocritical, callous, self serving, self dealing, racist, low life assholes they really are.

How so? 

They shut down the government when Obama was president because they 'were against raising the Debt Ceiling'.

They've allowed both the budget deficit AND the overall debt to balloon tremendously since the Mango Mussolini took over.

Of course, their supporters simply ignore that. 

[JoeWeber 2,297]

4 minutes ago, wolfriverjoe said:

How so? 

They shut down the government when Obama was president because they 'were against raising the Debt Ceiling'.

They've allowed both the budget deficit AND the overall debt to balloon tremendously since the Mango Mussolini took over.

Of course, their supporters simply ignore that. 

Poor phrasing on my part, I guess. As I recall they used the debt ceiling as an excuse for the shutdown when the real purpose was to defund Obamacare.

[JoeWeber 2,297]

3 hours ago, BIGUN said:

No need to worry until the the Bond Market is worried. 

The Fed's pumping $100B a day in freshly printed repo money into the market to keep those players happy. That will stop sooner than later.

[BIGUN 1,051]

4 hours ago, JoeWeber said:

That will stop sooner than later.

Joe, not all deficits are alike.

When the government increases non-capital spending, it shrinks the private economy. When a government cuts taxes, particularly those on capital, it can release resources and leave future generations with a larger economy. In general, the full effects of tax cuts on growth aren’t felt for a decade or more. One future (the next) generation can have benefits in the form of higher productivity and wages. But we always swing too far each way depending on the party in power.

While great in theory and in practicality; politics plays havoc on the models. Say, the interest costs jump three times higher than expected and growth is one-tenth smaller.  In that case, future generations would barely break even. They would be saddled with debt and have barely enough output to pay for it. Politicians should be cautious about increasing the government’s long-term spending non-capital commitments. And IMO, they should continue to seek growth-enhancing tax reductions.

Course it's a fifty-year argument at this point. Your party; my party. It really doesn’t matter who brings on the financial doom because everyone will blame the last one or two or current President. IMO, anything but a balanced budget will lead to eventual ruin (and you may not have read it in my previous posts – but have always supported a balanced budget and zero-based budgeting).

Quote

 

The president finally decided that only a bold domestic program, including tax cuts, would restore his political momentum. Declaring that the absence of recession is not tantamount to economic growth, the president proposed in 1963 to cut income taxes from a range of 20-91% to 14-65% He also proposed a cut in the corporate tax rate from 52% to 47%. Ironically, economic growth expanded in 1963, and Republicans and conservative Democrats in Congress insisted that reducing taxes without corresponding spending cuts was unacceptable. Kennedy disagreed, arguing that “a rising tide lifts all boats” and that strong economic growth would not continue without lower taxes.

The battle over the tax cut and the deficit continued unabated through 1963. The House Ways and Means Committee voted a tax bill out of committee in August and the grateful president reiterated that lowering taxes was the surest path to full employment and lower deficits.

https://www.jfklibrary.org/learn/about-jfk/jfk-in-history/john-f-kennedy-on-the-economy-and-taxes

 

If we don't learn to grow together; then we will continue to grow apart. 

   

[billvon 2,394]

28 minutes ago, BIGUN said:

Joe, not all deficits are alike.

When the government increases non-capital spending, it shrinks the private economy. When a government cuts taxes, particularly those on capital, it can release resources and leave future generations with a larger economy.

Nope.  

It's a lot simpler than that.  If you give people free stuff (i.e. lots of services without paying for them) the economy improves.  You can observe this in microcosm with anyone.  Give them more money, more services, more resources, and they will spend more.  But that's not sustainable (unless you're very rich and have nothing better to do with your money.)  That doesn't mean a bigger overall economy.  It just means going into debt (which harms the future economy, since you do have to pay it back) for the sake of some short term spending (which improves the economy.)

[BIGUN 1,051]

4 hours ago, billvon said:

If you give people free stuff (i.e. lots of services without paying for them) the economy improves. 

You're mistaken, Bill. It's not free stuff. 

[yobnoc 142]

7 minutes ago, BIGUN said:

You're mistaken, Bill. It's not free stuff. 

Of course - only the rich get substantial handouts in my 'Murica! /s

[JoeWeber 2,297]

30 minutes ago, BIGUN said:

You're mistaken, Bill. It's not free stuff. 

Free to the recipient, I’m sure he meant. 

[billvon 2,394]

35 minutes ago, BIGUN said:

You're mistaken, Bill. It's not free stuff. 

It is indeed free.  We get it and we don't pay for it; that's the GOP model.  Our kids will, but who cares, eh?

[BIGUN 1,051]

2 hours ago, billvon said:

It is indeed free.  We get it and we don't pay for it; that's the GOP model.  Our kids will, but who cares, eh?

You know; I'm not even tracking you on this one. What I thought may be a substantive discussion has again turned to snap rubber band - one liners. I'm done. Take care. Best to the family. 

[JoeWeber 2,297]

1 hour ago, BIGUN said:

You know; I'm not even tracking you on this one. What I thought may be a substantive discussion has again turned to snap rubber band - one liners. I'm done. Take care. Best to the family. 

Kieth, I think you are taking an adverse position too soon. I am grateful that you responded thoughtfully to my thinking. I am short of agreeing with you but as ever you show other views that are well considered. So, the thing of infusing liquidity into an economic system seems to be the interpretive problem here. From a macro economic perspective every expenditure has costs. No one argues against that fact. But macro economic stimulus decisions are usually based on the fact that the beneficiaries won't be reading The Wealth of Nations  whilst they are spending their dividend.

If this is too jumbled I apologize. I'm a bit beery now. I'll have another go tomorrow.

Edited October 29, 2019 by JoeWeber
I don't play Whist

[Coreece 190]

The economy goes up, it goes down, it goes up, it goes down, it goes up, it goes down, nobody knows why the fuck it happens. And I know this, because I took economics. . .

[wmw999 2,120]

Kind of like climate; we can't control it, but we darn sure can influence it to some degree. Just as I can't control how intelligent I am, or what I look like -- but I can darn sure influence how knowledgeable I am, or how I present myself.

Wendy P.

[gowlerk 1,904]

2 hours ago, Coreece said:

The economy goes up, it goes down, it goes up, it goes down, it goes up, it goes down, nobody knows why the fuck it happens. And I know this, because I took economics. . .

A tariff war is pretty much a guaranteed way to cause a downturn. Winning a hot war is a great way to pump up any economy. The dismal science is not completely without answers.

Edited October 29, 2019 by gowlerk

[Coreece 190]

54 minutes ago, gowlerk said:

3 hours ago, Coreece said:

The economy goes up, it goes down, it goes up, it goes down, it goes up, it goes down, nobody knows why the fuck it happens. And I know this, because I took economics. . .

A tariff war is pretty much a guaranteed way to cause a downturn. Winning a hot war is a great way to pump up any economy. The dismal science is not completely without answers.

"I'd explain it to ya... but I flunked that course. It's not my fault. They taught it at 8 o'clock in the morning. And there is absolutely nothing that you can learn out of one bloodshot eye. After I flunked the first two tests, I grabbed the professor by the throat and I said, "Why are you teaching this shit at this ungodly hour? Are you trying to keep this stuff a secret?"

[billvon 2,394]

12 hours ago, BIGUN said:

You know; I'm not even tracking you on this one. What I thought may be a substantive discussion has again turned to snap rubber band - one liners. I'm done. Take care. Best to the family. 

You're not?  OK.  Let's take a real world example.

If you spend money on something that you have, then you are paying for it.  Great.  An example would be buying a rig with cash.

If you spend money on something that you don't have the cash to buy, but you have a solid plan for paying it back, then you are planning to pay for it.   Not as ideal but often workable.  An example would be buying a rig with a loan, then paying the loan back.

If you spend money on something that you don't have the cash to buy, and you don't intend to pay it back, then you are getting it for free (or at least trying to.)  An example would be buying a rig or two with a loan, then declaring bankruptcy to get your debts cancelled or reduced.  (Guy at our DZ did this.)

Let's translate that to government.

If you spend money that you have on services, great.  You are being fiscally responsible.

If you spend money that you don't have on services, but have a plan to raise taxes, issue bonds, cut spending other places etc to make up for it, also great.  You are being fiscally responsible; you are planning to pay for it.  There's a lot more risk.

If you spend money that you don't have, but have a plan to reduce taxes and increase spending, then you are not being fiscally responsible.  You are planning on getting it for free and letting someone else deal with it.

[wolfriverjoe 1,340]

To expand on that a bit:

"Free shit" doesn't automatically mean giving stuff to people (welfare, SNAP, SSI, ect).

The 'military/industrial complex' is a good example. 

The military (government) orders lots and lots of expensive stuff from defense contractors. One such place is Oshkosh Defense. They make all sorts of nifty military vehicles. I have friends that work there. 

The government pays for those vehicles (pays a lot). That money goes to employees, suppliers, stockholders, ect. 

Those people then use that money to pay for their own stuff (housing, cars, food, entertainment, skydiving, ect). 

That money boosts the economy.

But the government has no plan to pay for the stuff. It just borrows the money. On top of other borrowed money. And then cuts taxes to 'boost the economy', so it has even less money to pay back the money it's borrowed. 

 

So, essentially, the government has gotten those vehicles 'for free'. 

[kallend 1,623]

The Tea Party has died of hypocrisy:

https://thehill.com/opinion/campaign/469204-the-tea-party-has-died-of-hypocrisy

[winsor 186]

On 10/27/2019 at 5:10 AM, kallend said:

Up nearly 50% under Trump.

Whatever happened to the GOP's deficit hawks?

It turns out that the deficit doesn't matter.

http://theconversation.com/why-the-22-trillion-national-debt-doesnt-matter-heres-what-you-should-worry-about-instead-111805

I had been subject to the delusion that every single time this approach had been taken historically, the results had been the same - economic disaster.  Silly me.