Progressive ideas on the budget defecit

[byu71]

Can't sleep so channel surfing. MSNBC at this time in the morning has a liberal guy named Hayes. This is interesting because they aren't afraid to hide their ideas. This morning was on taxes, the deficit, general debt, etc.

Wow, just wow. Here are some of the ideas.

Congressman Nadal:

Raise taxes on the rich, income over $250, do not eliminate state tax deductions because it hurts the states that have high tax rates. NY, Cal., Illiniois. In other words the run away spending states.

Do not cut one dime from medicare, medicaid or social security. Do not cut any descretionary spending, no additional increase for the military

Austerity doesn't work, look at the Europeans. Didn't mention their high tax rates historically and yet they are in trouble now.

A group made up of liberal journalists from entities I have never heard of. Also occupy Wall St. folks from something called RollingJubilee.

From RollingJubilee they are pushing forgiving debt for the non rich. They are raising money to pay off people's debt. OK if people want to contribute to that on their own that is OK. What keeps these people from going out and loading up on debt again. Oh they can't get credit, but in another segment they talk about how it is unfair that non rich do not have access to debt. Then they flip back to these folks should be subsidized so they don't go back into debt for necessities. Food, healthcare, drugs, housing. I imagine cars and TV's would be there but they didn't say that.

They quoted Christ when he said forgive debt? I never thought of that in terms of money, but there are times I have forgiven debt family and friends owed me. When it comes to those friends, I have never loaned to them again though.

Lastly one of the journalists from the obscure place bemoaned she had $120,000 in student debt. This is terribly unfair to her and others in the same place. There are those who go into fields where it is easier to pay down their debt. Something should be done about this unfair situation.

Someone else pipes in and said, yes our current system forces a lot of people to have careers they choose and stay in them, in order to have money to put kids through college vs quitting and doing something they would like to do.

A lot of this does sound nice, but it is totally unrealistic in my mind. Reminds me of children asking why not? I remember my 17 year old who had a nice car I provided, no job, money to do things and one time I asked him why he couldn't do something as simple as clean family room, bedroom and bathroom when I ask. After all (intended guilt trip) look at all I do for you.

His response serious and puzzled I didn't think of this, "you are the parent."

The others weren't coddled so, because he was the youngest and the one who came to live with me. He is the one who has struggled the most as an adult. It is a circle though. I now help him more than the others because I feel his problems are due to my getting him out of any problem he ever had as a teenager.

I know a rant, I would have preferred to be a quest on the show and say, do you folks have any concept of reality? If you read through this whole thing, you didn't have too. I feel better now just posting it.

[DU Ute]

This mentality is what frustrates me to no end. Take the home loan market. Clinton signed legislation forcing banks to loan to low income minority groups. These individuals went out in force and took advantage of these relaxed lending rules and bought homes. Then the market corrected and the job market softened and many of these people unfortunately couldn't make their payments and lost their homes. Clearly, they suffered having to move and have their credit trashed, but he banks who loaned them the money suffered massive financial hits.

Rather than acknowledge that it was a mistake to borrow more than they could afford, these individuals turn around and sue the same banks for "taking advantage of them" These are the same banks that didn't originally want to give them loans, but were forced to consider them for loans.

I knew this was all the minorities' fault!

[Harry Tic]

Actually, they were Utes.

You keep using that word. I do not think it means what you think it means.

[byu71]

I knew this was all the minorities' fault!

No, it is the fault of those who think they will help the financially less well off and don't think of the consequences of how they plan on doing it. Their well intentioned goals are not well thought through when it comes to reality.

Instead of laying on a guilt trip, what would be a good solution?

[il Padrino Ute]

Look at Europe for proof that austerity doesn't work?

How about instead we look at Europe for proof that European socialism is the root cause of austerity?

[LA Ute]

Here are some of the ideas.

Congressman Nadal:

Raise taxes on the rich, income over $250, do not eliminate state tax deductions because it hurts the states that have high tax rates. NY, Cal., Illiniois. In other words the run away spending states.

Do not cut one dime from medicare, medicaid or social security. Do not cut any descretionary spending, no additional increase for the military

Austerity doesn't work, look at the Europeans. Didn't mention their high tax rates historically and yet they are in trouble now.

A group made up of liberal journalists from entities I have never heard of. Also occupy Wall St. folks from something called RollingJubilee.

From RollingJubilee they are pushing forgiving debt for the non rich. They are raising money to pay off people's debt. OK if people want to contribute to that on their own that is OK. What keeps these people from going out and loading up on debt again. Oh they can't get credit, but in another segment they talk about how it is unfair that non rich do not have access to debt. Then they flip back to these folks should be subsidized so they don't go back into debt for necessities. Food, healthcare, drugs, housing. I imagine cars and TV's would be there but they didn't say that.

They quoted Christ when he said forgive debt? I never thought of that in terms of money, but there are times I have forgiven debt family and friends owed me. When it comes to those friends, I have never loaned to them again though.

Lastly one of the journalists from the obscure place bemoaned she had $120,000 in student debt. This is terribly unfair to her and others in the same place. There are those who go into fields where it is easier to pay down their debt. Something should be done about this unfair situation.

Someone else pipes in and said, yes our current system forces a lot of people to have careers they choose and stay in them, in order to have money to put kids through college vs quitting and doing something they would like to do.

People who believe those things voted for President Obama. I think there are a lot of them. Like millions. Be afraid. Be very afraid.

[pellegrino]

I don't see how intelligent people can say that austerity doesn't work and then cite Europe as evidence. The Europeans have discussed austerity measures, but they haven't implemented anything across the board. I don't think we have enough data to say one way or the other that it does or doesn't. Common sense tells us that the way to get out of a debt crisis is to pay it off and not incur further debt. I realize it may not be as simple as that when discussing sovereign debt, but I definitely don't think we have enough data to say that it doesn't.

[New Mexican Disaster]

I don't see how intelligent people can say that austerity doesn't work and then cite Europe as evidence. The Europeans have discussed austerity measures, but they haven't implemented anything across the board. I don't think we have enough data to say one way or the other that it does or doesn't. Common sense tells us that the way to get out of a debt crisis is to pay it off and not incur further debt. I realize it may not be as simple as that when discussing sovereign debt, but I definitely don't think we have enough data to say that it doesn't.

Except that it is also a growth crisis as much as it is a debt crisis, and you are not getting growth by cutting spending. If we implement austerity here in the U.S. through budget cuts, it will undoubtedly cut consumer spending, and since that is the bulk of the economy, it will hurt growth in the short term.

But the current situation cannot go on forever or even much longer. So there has to be some reform on the spending side and on the revenue side. Luckily we are in much better shape than many European countries, and can possibly begin to grow our way out of the problem, but I think there will be pain no matter who is in charge.

[All-American]

Except that it is also a growth crisis as much as it is a debt crisis, and you are not getting growth by cutting spending. If we implement austerity here in the U.S. through budget cuts, it will undoubtedly cut consumer spending, and since that is the bulk of the economy, it will hurt growth in the short term.

But the current situation cannot go on forever or even much longer. So there has to be some reform on the spending side and on the revenue side. Luckily we are in much better shape than many European countries, and can possibly begin to grow our way out of the problem, but I think there will be pain no matter who is in charge.

We already handled the growth side by passing Obamacare.

[U-Ute]

I don't see how intelligent people can say that austerity doesn't work and then cite Europe as evidence. The Europeans have discussed austerity measures, but they haven't implemented anything across the board. I don't think we have enough data to say one way or the other that it does or doesn't. Common sense tells us that the way to get out of a debt crisis is to pay it off and not incur further debt. I realize it may not be as simple as that when discussing sovereign debt, but I definitely don't think we have enough data to say that it doesn't.

I believe the UK is.

I have been reading this guy for a couple of years now, and he has had a couple of articles on the matter.

Forget Greece and Spain; ask the United Kingdom how well their austerity efforts are doing. This is a country making a serious and credible attempt to reduce their deficits, and sadly, they have fallen back into recession.

http://news.goldseek.com/MillenniumWaveAdvisors/1351014197.php

[Goatnapper'96]

I believe the UK is.

I have been reading this guy for a couple of years now, and he has had a couple of articles on the matter.



http://news.goldseek.com/MillenniumW...1351014197.php

Is there honestly any credible way to reduce deficits without the chance, er uh likelihood, of slipping into recession?

[byu71]

Is there honestly any credible way to reduce deficits without the chance, er uh likelihood, of slipping into recession?

Economics is an art, not a science. All this stuff is theory and depends on how the consumer and business reacts.

The problem with "governmentalists" is they believe the government can guarantee the outcome.

I remember Econ 101 at BYU and the professor explaining the "liquidity trap". I asked if it was possible the consumer wouldn't react as the theory indicated. He said yes. I asked then what happens and he looked at me like I was an idiot. His reply, "then the theory doesn't work in that case". I only got a B in that class.

[Goatnapper'96]

Economics is an art, not a science. All this stuff is theory and depends on how the consumer and business reacts.

The problem with "governmentalists" is they believe the government can guarantee the outcome.

I remember Econ 101 at BYU and the professor explaining the "liquidity trap". I asked if it was possible the consumer wouldn't react as the theory indicated. He said yes. I asked then what happens and he looked at me like I was an idiot. His reply, "then the theory doesn't work in that case". I only got a B in that class.

But mathematically speaking the government is spending money it doesn't have and even with increased tax rates still will not have. I favor a private civil society that provides as many good and services as it can governed mostly by market dynamics. I read on occassion conservative economists arguing that if we stop government spending that the private market will then have more money to invest and grow the economy, but I disagree. I don't disagree with the theory, I actually agree with it, but its assumptions assume that government spending is equal to government revenues. I agree that if the government was spending with money that it was taxing from the people and if the government stopped taxing and spending then that capital would flow from the private sector to many aspects of a vibrant civil society. However, our government spends money it borrows and that inflates GDP. If the government stops doing that it seems to me that there is no credible way to avoid a recession. The private sector cannot take up the slack the government leaves because the decreased government spending will not result in a decreased government collecting and thus leave the private sector with more capital. However, I think the recession would be relatively short lived and when we recover we will do so on sounder economic footings and it will be well with us.

[U-Ute]

Is there honestly any credible way to reduce deficits without the chance, er uh likelihood, of slipping into recession?

When it comes to economics, that is way above my pay grade. But this seems like a reasonable approach:

http://news.goldseek.com/MillenniumWaveAdvisors/1350396180.php

The US still has the chance to pursue what I call the "glide path" option. We can reduce the deficit slowly, by say 1% a year, while aggressively pursuing organic growth policies such as unleashing the energy and biotechnology sectors, providing certainty to small businesses about government healthcare policies, reducing the regulatory burden on small businesses and encouraging new business startups, creating a competitive corporate tax environment (a much lower corporate tax with no deductions for anything, including oil-depletion allowances), implementing a pro-growth tax policy, etc.

We can balance the budget within five years. If the bond market perceived that the US was clearly committed to a balanced budget, rates would remain low, the dollar would be stronger, and we would steam away from the black hole. I would like to see something like Simpson-Bowles, with an even more radically restructured tax policy. Healthcare is clearly the challenge, but a compromise can be crafted, as has been demonstrated by the several bipartisan proposals that have been sponsored by conservative Republicans and liberal Democrats. The key word is compromise.

[byu71]

But mathematically speaking the government is spending money it doesn't have and even with increased tax rates still will not have.

However, I think the recession would be relatively short lived and when we recover we will do so on sounder economic footings and it will be well with us.

I wholeheartedly agree with both of these statements. I don't know how long the government can keep borrowing and printing money, but I don't buy the theory we can do it until we grow our way out of the problem.

Let's say the growth eventually does come. It seems no one is considering what happens when growth comes, especially above average growth. Inflation and rising interest rates come. I lived and was in real estate and construction when the last massive rise in rates and inflation occured. It wasn't pretty for those who had variable mortgage rates. Sure they had lower payments before the hikes, but a lot of them couldn't keep up with the rise in mortgage payments kept climbing. Anyone ever heard of the S&L collapse?

Our government debt is at essentially a variable rate. If we are at 20 trillion or above when rates starts shooting up, we will be calling what happened in '08 a blip.

Sadly I will bet 80% of Americans can't grasp this concept.