News Republicans no longer a viable party?

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AI Thread Summary
The discussion highlights concerns that the Republican Party is being defined by tea party extremists, potentially leading to a government default and damaging the party's viability. Conservative columnist David Brooks argues that Republicans are resisting necessary compromises, which could alienate independent voters who may view them as unfit to govern. The conversation also touches on the need for spending reform and the perception that Democrats are unwilling to cut entitlements, while Republicans are seen as inflexible on tax increases. Participants express frustration with both parties, suggesting that extremism is hindering effective governance and reform. The overall sentiment is that the current political climate could lead to a painful restructuring for the Republican Party.
  • #201
daveb said:
While it's true that the information shows downward trends during democratic presidents (except Obama), WhoWee's point is that it is democratic Congresses that increase the debt (well, specifically, the last two years - he made no claims about prior Congresses).

The republican party commanded majorities during most of Bush's term.
 
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  • #202
WhoWee said:
Wikipedia - really?:rolleyes:

If you distrust the information, run the numbers yourself from government data.
 
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  • #203
SixNein said:
Playing chicken with America's credit rating is not a reasonable way to deal with budget problems. If the debt limit does not get raised, America will spend more money through economic decline and higher costs of borrowing than would be spent by simply raising the limit. Even the cost of loans for individuals will increase. Playing chicken with the bond market is very dangerous even during a healthy economy.

Again, when do you expect interest rates to rise?
 
  • #204
SixNein said:
The republican party commanded majorities during most of Bush's term.

I think we need to once again re-visit Senator Obama's famous speech:
http://geekpolitics.com/obama-on-raising-the-debt-ceiling/

"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.

Over the past 5 years, our federal debt has increased by $3.5 trillion to $8.6 trillion.That is “trillion” with a “T.” That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers. And over the next 5 years, between now and 2011, the President’s budget will increase the debt by almost another $3.5 trillion."

Once again I need to remind everyone the President Obama has taken the Bush worst case scenario of a $12Trillion (with a "T") in 2011 and turned it into $14Trillion (with a "T") - what say you?
 
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  • #205
WhoWee said:
It's doubtful she believes default would be "no problem".

I also remember this:
http://www.thepoliticalguide.com/rep_bios.php?rep_id=54464227&category=views&id=20110425205730

"Moreover, I am concerned that a second round of quantitative easing will further aggravate market participants’ uncertainty about near-term economic conditions. There can be little doubt that a second round of quantitative easing would represent a near-emergency intervention by the Federal Reserve and a signal of duress about the future of our economy. In addition, quantitative easing and the concomitant ex nihilo creation of money will undoubtedly impact the inflation rate. Unsettlingly, it remains to be seen where inflation would settle after the proposed implementation of a second quantitative easing."

I don't think the printing of money can be separated from the discussion of the national debt.

yeah, we need to really think about not only what we're doing now, but what we've been doing. it's not as if the Fed hasn't been creating money ex-nihilo all along. only, the way money is usually created also creates debt that adds an additional "tax" that goes directly to bankers as interest.

this is before the bubble burst:

https://www.youtube.com/watch?v=8pEiLHnjAiw
 
  • #206
WhoWee said:
Again, when do you expect interest rates to rise?

Probably as late as next year unless default occurs.
 
  • #207
Proton Soup said:
yeah, we need to really think about not only what we're doing now, but what we've been doing. it's not as if the Fed hasn't been creating money ex-nihilo all along. only, the way money is usually created also creates debt that adds an additional "tax" that goes directly to bankers as interest.

this is before the bubble burst:

https://www.youtube.com/watch?v=8pEiLHnjAiw

Unfortunately, Ron Paul strays from topics like this and becomes a target of ridicule - IMO. Listen to Bernanke's response at 4:18 to 4:30 (and beyond). It angers me to hear him talking about money being chased out of bad investments into the banks - when previously downward pressure on interest rates chased a great many dollars out of the banks and into the market.
 
  • #208
WhoWee said:
Unfortunately, Ron Paul strays from topics like this and becomes a target of ridicule - IMO. Listen to Bernanke's response at 4:18 to 4:30 (and beyond). It angers me to hear him talking about money being chased out of bad investments into the banks - when previously downward pressure on interest rates chased a great many dollars out of the banks and into the market.

it angers me to hear bernanke with ridicule in his voice talking about the typical american keeping their wealth in dollars. those typical americans are bleeping idiots for believing that's a good investment, eh?
 
  • #209
WhoWee said:
I think we need to once again re-visit Senator Obama's famous speech:
http://geekpolitics.com/obama-on-raising-the-debt-ceiling/

"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.

Over the past 5 years, our federal debt has increased by $3.5 trillion to $8.6 trillion.That is “trillion” with a “T.” That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers. And over the next 5 years, between now and 2011, the President’s budget will increase the debt by almost another $3.5 trillion."

Once again I need to remind everyone the President Obama has taken the Bush worst case scenario of a $12Trillion (with a "T") in 2011 and turned it into $14Trillion (with a "T") - what say you?

The reason the deficit has grown so much over the last 2 years is because of the recession. Government revenues are much lower while unemployment has put pressure on safety nets. As a result, the government is taking in less money and spending more money. This has happened even in state governments: http://www.census.gov/newsroom/releases/archives/governments/cb11-03.html

A great majority of government spending is mandated spending from previous administrations.
 
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  • #212
Greg Bernhardt said:
Doesn't that mean he is raising less money and still spending more? How does that help!?

http://www.npr.org/2010/12/07/131879993/obama-s-tax-cut-deal-so-much-for-deficit-reduction

At the end of the day, the economy did need stimulus spending, and it may still need some more. The economy is very fragile right now. And people for some reason or another seem to be over looking this fact.

But again, its not fair to say that obama is spending trillions. Most of the spending comes from mandatory programs.

On a side note, the tax cuts largely backfired politically...
http://www.nytimes.com/2010/10/19/us/politics/19taxes.html
 
  • #213
SixNein said:
http://www.npr.org/2010/12/07/131879993/obama-s-tax-cut-deal-so-much-for-deficit-reduction

At the end of the day, the economy did need stimulus spending, and it may still need some more. The economy is very fragile right now. And people for some reason or another seem to be over looking this fact.

But again, its not fair to say that obama is spending trillions. Most of the spending comes from mandatory programs.

On a side note, the tax cuts largely backfired politically...
http://www.nytimes.com/2010/10/19/us/politics/19taxes.html

Please support your statement: "At the end of the day, the economy did need stimulus spending, and it may still need some more." Was stimulus spending the only option? Maybe the economy just needed Government to stop meddling and restore certainty? Maybe the economy needs global stability - not a speaking tour to the Mideast that apologizes for America and (possibly) encouraged young people to protest? Maybe we need a clear energy policy? Maybe the President shouldn't hire the CEO of GE (they didn't pay any taxes last year and sent thousands of jobs offshore) to work on his jobs project? Maybe the President should not interfere with the Federal Bankruptcy courts to protect his union supporters and at the same time create uncertainty in the bond markets?

Again - http://geekpolitics.com/obama-on-raising-the-debt-ceiling/
President Obama has exceeded the doom and gloom number he spoke about to criticize Bush - by $2Trillion (with a "T") - of course it's fair to blame him (and not Bush).

Last, the "tax cut for 95%" was political theater at best - what have you done with your extra money? btw - I didn't know it cost over $100Billion - what a waste!
 
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  • #214
Fiscal stimulus hasn't been considered a viable form of economic policy for over thirty years now. The only people who still adhere to it are politicians because they don't like to have to admit that there is really nothing they can do to "fix" the economy and ideologues who never really got over the fact that socialism doesn't work.

And not raising the debt ceiling will not create a default. The U.S. government doesn't take on additional debt to service the existing debt. One of the key things looked at when measuring the country's creditworthiness is what percentage of the federal revenues go towards servicing the debt. What would cause major damage if the debt ceiling is not raised is the $1.6 trillion worth of government spending that suddenly would have to stop, which would shut down whole industries as their government agencies would stop functioning. Social Security and so forth would stop getting paid. And such.

As for the thread's premise, that all this is on the Republicans, I find rather silly. President Obama himself said he will not sign a deal for a short-term debt limit. So in other words, if the House and Senate approve a bill that increases the debt limit again for the short-term, then he will refuse to sign it. In other words, he is either playing politics or willing to sink the country for his own political purposes. The only reason he doesn't want a short-term debt limit increase is because he doesn't want this as an issue he has to deal with going into the 2012 election. He wants people to forget about the issues of debt and deficit. The Republicans want it to remain (and rightfully so) an issue going into the 2012 election.

People like Bachmann however, who says that not raising the debt limit wouldn't be a problem, that is nonsense. Not raising it would be catostrophic, so it needs to be raised.
 
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  • #215
SixNein said:
This article sums up Obama's spending...
No it does not.
 
  • #216
CAC1001 said:
And not raising the debt ceiling will not create a default.
It will force nearly 40% of current spending to either cease or be paid for from additional revenue such as selling off assets. The President may or may not choose to pay interest on the US debt, causing a 'technical' default for a short time. That's far preferable to a forced default, such as in Greece, where all current revenues combined are insufficient to pay the debt interest alone.
 
  • #217
mheslep said:
It will force nearly 40% of current spending to either cease or be paid for from additional revenue such as selling off assets. The President may or may not choose to pay interest on the US debt, causing a 'technical' default for a short time. That's far preferable to a forced default, such as in Greece, where all current revenues combined are insufficient to pay the debt interest alone.

However, as we have seen in the last two days with threats to downgrade the US credit rating [S&P, Moody's], it will still be viewed as a default as the good faith and credit of the country will be marginalized. We still won't pay all the bills. Now I realize that popular tea position is that we can pay the Chinese their interest instead of Americans what they need to live, but even not paying Americans is a failure to pay. And not paying any principle on our debt is also seen as a failure to pay. IF our credit rating is downgraded, it will cost more to sustain the debt that we already have, and we gain nothing. So the default or failure to pay the poor plans are great plans if you want to pay more interest to China and get nothing in return.

The REAL irony is that if this happens, some of the people that will be screaming the loudest will be the tea partiers. Recall for example the heated town halls regarding health care reform. In one random sample taken by a Congressman under pressure, at least half of those in the audience protesting the reforms were dependent on government money and apparently didn't even know it.
 
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  • #218
CAC1001 said:
Fiscal stimulus hasn't been considered a viable form of economic policy for over thirty years now.

So you just make things up as you go? From that liberal rag, the WSJ.

Jan. 2009: Economists in the monthly Wall Street Journal forecasting survey generally agree with the size of President-elect Barack Obama's stimulus package but remain divided on where the money should be spent.

Congress released on Thursday details of the $825 billion package, including tax cuts and increase government spending. Like the political debate over the plan, economists differed on how best to trigger long-term growth—more "bang for the buck"—versus the need for more immediate relief. (See related article.)...
http://online.wsj.com/article/SB123195389790581947.html
 
  • #219
Ivan Seeking said:
So you just make things up as you go? From that liberal rag, the WSJ.

http://faculty.chicagobooth.edu/john.cochrane/research/papers/stimulus_rip.html (I doubt Cochrane is being disingenuous).

Plus there is no example of stimulus working in history. There are too many problems with it:

1) In order to inject money into the economy, the government must first take it out of the economy in another form, debt (in this sense, demand-side tax cuts will not work either if they mean the government must operate on debt)

2) What exactly is the multiplier effect? No one knows, and it may even be negative. If no one knows the actual multiplier (if there even is one), then no one knows how much to spend. How does one measure how much demand has dropped? All of it is using estimates and guesstimates essentially.

3) It takes too much time to get the money out in order to try to stimulate the economy

4) As the money is spent, there can be a lack of accountability in the spending of it

5) People and businesses can respond very negatively to a massive deficit, and thus hold back on their spending and/or hiring, thus the stimulus ends up reducing demand more than increasing it

6) If the government does succeed in creating demand, it can essentially keep the private economy depressed permanantly and prevent it from recovering. The traditional Keynesian idea was that the private economy could not recover without fiscal stimulus from the government. We know that is not true however. If left alone, the private economy will recover on its own and private demand will come back. But if the government steps in long enough and manages to make up for a large amount of that demand, the private-sector may remain permanently depressed, as the government replacing a lot of the lost demand can prevent the private demand from coming back.

This is what some believe happened with Japan. They spent half their GDP in fiscal stimulus, but the net result is that it likely made much of Japanese business dependent on Tokyo

7) The government trying to spend money to stimulate can crowd out private-sector investment, thus hamstringing the economy

8) One of the experiences some European nations have had with attempts at stimulus is inflation. If inflation occurs and drives up the prices of basic goods and services, this can cause consumers to cut back on their spending, thus reducing demand and undermining the very purpose of the stimulus

And so forth.
 
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  • #220
Ivan Seeking said:
However, as we have seen in the last two days with threats to downgrade the US credit rating [S&P, Moody's]

Here is a good interview with Jim Rogers

https://www.youtube.com/watch?v=hLzP86UZwwM
 
  • #221
The reason the deficit has grown so much over the last 2 years is because of the recession. Government revenues are much lower while unemployment has put pressure on safety nets. As a result, the government is taking in less money and spending more money. This has happened even in state governments: http://www.census.gov/newsroom/relea...s/cb11-03.html

A great majority of government spending is mandated spending from previous administrations.

Absolute nonsense. The recession certainly hasn't helped, but the problem is spending, not revenues. The Democrats in Congress have authorized over a trillion dollars in new federal spending, created a massive new entitlement, expanded the regulatory role of government, and increased dramatically the size and pay of the federal work force. These are all new expenditures instituted since 2006. Healthcare reform alone is estimated by the CBO to cost the federal government an average of $300+ billion per year over its first 10 years.

[PLAIN]http://www.federalbudget.com/chart.gif

See there for the change in outlays since 2006, by department.

So you just make things up as you go? From that liberal rag, the WSJ.

You really want to bring the stimulus into this? Whatever articles the Journal ran in the run up to its passage, every academic study of the stimulus' effects since passage (that I am aware of) suggests the stimulus was a complete failure - at best not helpful, at worst harmful.

If you look at the chart below, it’s quite easy to see a clear trend, that after WWII every "Blue President" has lowered the debt and 4 "Red Presidents" has increased the debt.

As you have been told several times now, presidents - regardless of color - do not increase or decrease the debt. I believe others have already directly quoted the relevant text from Wikipedia, the Constitution, and federal law. You'd have to be extremely confused about the relative habits of the two parties to ever conceive of a world in which Republicans outspend Democrats; it just doesn't make sense on its face. And the data supports the common sense conclusion. Spending by party in control of the Congress:

[URL]http://i3.photobucket.com/albums/y94/nmleon/US_Federal_Debt_as_Percent_of_GDP_Color_Coded_Congress_Control_and_Presidents_Highlighted.jpg[/URL]
 
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  • #222
CAC1001 said:
http://faculty.chicagobooth.edu/john.cochrane/research/papers/stimulus_rip.html (I doubt Cochrane is being disingenuous).

Plus there is no example of stimulus working in history. There are too many problems with it:

1) In order to inject money into the economy, the government must first take it out of the economy in another form, debt (in this sense, demand-side tax cuts will not work either if they mean the government must operate on debt)

2) What exactly is the multiplier effect? No one knows, and it may even be negative. If no one knows the actual multiplier (if there even is one), then no one knows how much to spend. How does one measure how much demand has dropped? All of it is using estimates and guesstimates essentially.

3) It takes too much time to get the money out in order to try to stimulate the economy

4) As the money is spent, there can be a lack of accountability in the spending of it

5) People and businesses can respond very negatively to a massive deficit, and thus hold back on their spending and/or hiring, thus the stimulus ends up reducing demand more than increasing it

6) If the government does succeed in creating demand, it can essentially keep the private economy depressed permanantly and prevent it from recovering. The traditional Keynesian idea was that the private economy could not recover without fiscal stimulus from the government. We know that is not true however. If left alone, the private economy will recover on its own and private demand will come back. But if the government steps in long enough and manages to make up for a large amount of that demand, the private-sector may remain permanently depressed, as the government replacing a lot of the lost demand can prevent the private demand from coming back.

This is what some believe happened with Japan. They spent half their GDP in fiscal stimulus, but the net result is that it likely made much of Japanese business dependent on Tokyo

7) The government trying to spend money to stimulate can crowd out private-sector investment, thus hamstringing the economy

8) One of the experiences some European nations have had with attempts at stimulus is inflation. If inflation occurs and drives up the prices of basic goods and services, this can cause consumers to cut back on their spending, thus reducing demand and undermining the very purpose of the stimulus

And so forth.


First and foremost, you make the assumption that the government must take from the private sector at the same time it offers stimulus spending; however, credit allows the government to take from the private market at a future date. In addition, most of the actual spending was on infrastructure and saving the automotive industry. The largest part of stimulus was in the form of tax cuts. You go on to affirm the consequent with talk of how businesses can respond to debt, wasteful spending, and so forth; however, investors have been willing to gobble up US debt.
 
  • #223
SixNein said:
First and foremost, you make the assumption that the government must take from the private sector at the same time it offers stimulus spending; however, credit allows the government to take from the private market at a future date.

Yes, it takes from the private economy in one form to inject money into it in another form, though I get your argument, but that is one of the problems with attempts at stimulus.

In addition, most of the actual spending was on infrastructure and saving the automotive industry.

Only a small portion of the stimulus was on infrastructure.

The largest part of stimulus was in the form of tax cuts

Around $260 billion over two years of it was tax cuts, but temporary tax cuts that aren't structural are not necessarilly stimulative.

You go on to affirm the consequent with talk of how businesses can respond to debt, wasteful spending, and so forth; however, investors have been willing to gobble up US debt.

Investors are gobbling up U.S. debt because as bad as things are for the U.S., the U.S. is still the safest haven. The U.S. can service its debt even if the debt ceiling wasn't raised, and if worse came to worse, the U.S. could implement something like a VAT tax which it does not yet have, so U.S. bonds are a pretty safe investment. What I was talking about was that a lot of businesses and consumers could be spooked by the rising deficit and decide to hold off on hiring and spending, which is going to hamstring the economy. If the government runs a huge deficit and no one cares, behavior would be different, but if people care to an excesive amount, it can undercut the stimulus.
 
  • #224
CAC1001 said:
Investors are gobbling up U.S. debt because as bad as things are for the U.S., the U.S. is still the safest haven. The U.S. can service its debt even if the debt ceiling wasn't raised, and if worse came to worse, the U.S. could implement something like a VAT tax which it does not yet have, so U.S. bonds are a pretty safe investment. What I was talking about was that a lot of businesses and consumers could be spooked by the rising deficit and decide to hold off on hiring and spending, which is going to hamstring the economy. If the government runs a huge deficit and no one cares, behavior would be different, but if people care to an excesive amount, it can undercut the stimulus.

The largest reason the US is the safe haven is because its relatively stable politically. If the government defaults for just one second, it is not going to be viewed as politically stable because it is a self inflected economic crisis. I think you are confusing the budget stand-off with the debt limit stand-off. They are very different situations. Right now, investors are betting that the debt limit will be raised because the consequences of not raising the debt limit are so high that it's unthinkable for the government not to do it.

http://online.wsj.com/article/SB10001424052702304203304576446234221437942.html
 
  • #225
SixNein said:
First and foremost, you make the assumption that the government must take from the private sector at the same time it offers stimulus spending; however, credit allows the government to take from the private market at a future date. In addition, most of the actual spending was on infrastructure and saving the automotive industry. The largest part of stimulus was in the form of tax cuts. You go on to affirm the consequent with talk of how businesses can respond to debt, wasteful spending, and so forth; however, investors have been willing to gobble up US debt.

Please support your post.

Is credit not a limited supply - if the Government uses it today - it takes away from someone else using it - correct?

Your comment about "most of the actual spending was on infrastructure and saving the automotive industry" needs to be supported with actual numbers - how much was spent propping up the states - or are you calling that "infrastructure"?

And my favorite "largest part of stimulus was in the form of tax cuts" please expand - a post yesterday claimed about $116Billion (if I recall?) was allocated to the 95% of working families tax cut - there seems to be a conflict in your information. Now, is most (infrastructure and union bailout) more than the largest (tax cuts) - please clarify?

Then you state "however, investors have been willing to gobble up US debt" :smile:- please explain - who is "gobbling" - or do you mean printing?
 
  • #226
talk2glenn said:
Spending by party in control of the Congress:

US_Federal_Debt_as_Percent_of_GDP_Color_Coded_Congress_Control_and_Presidents_Highlighted.jpg
The case is even more lopsided if one looks only at which party controls the House in particular, as that's where the appropriation bills originate. The Democrats and Speakers O'neil/Wright controlled the House during all of the split control period in the 80's, during which O'neil began the giant 'omnibus', take-or-leave-it budgets, prompting Reagan's campaign for the line item veto.
 
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  • #227
WhoWee said:
Please support your post.

Is credit not a limited supply - if the Government uses it today - it takes away from someone else using it - correct?

Your comment about "most of the actual spending was on infrastructure and saving the automotive industry" needs to be supported with actual numbers - how much was spent propping up the states - or are you calling that "infrastructure"?

And my favorite "largest part of stimulus was in the form of tax cuts" please expand - a post yesterday claimed about $116Billion (if I recall?) was allocated to the 95% of working families tax cut - there seems to be a conflict in your information. Now, is most (infrastructure and union bailout) more than the largest (tax cuts) - please clarify?

Then you state "however, investors have been willing to gobble up US debt" :smile:- please explain - who is "gobbling" - or do you mean printing?

On credit, no because we have a fiat money system. If we were on a money system like gold, you would be correct.

Yes, I would call states infrastructure.

The tax cuts passed in 2009 were worth 282 billion over two years:
http://online.wsj.com/article/SB123436825805373367.html
The tax cuts passed in 2010 were worth 858 billion over two years:
http://www.bloomberg.com/news/2010-12-17/house-votes-to-debate-obama-s-858-billion-tax-cut-deal-with-republicans.html

Total amount in tax cuts: 1140 billion dollars.

Treasury has had no problem in selling debt to investors. You yourself called America the great safe Haven for investors.
 
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  • #228
talk2glenn said:
Absolute nonsense. The recession certainly hasn't helped, but the problem is spending, not revenues. The Democrats in Congress have authorized over a trillion dollars in new federal spending, created a massive new entitlement, expanded the regulatory role of government, and increased dramatically the size and pay of the federal work force. These are all new expenditures instituted since 2006. Healthcare reform alone is estimated by the CBO to cost the federal government an average of $300+ billion per year over its first 10 years.

What spending programs created by Obama are in effect right now exactly? See,
http://krugman.blogs.nytimes.com/2011/04/25/john-taylor-and-the-zombies/

Also, care needs to be taken when comparing federal budgets. Obama included things in his budget that the bush administration kept off the budget.

http://articles.latimes.com/2009/feb/24/nation/na-obama-budget24A side note, spending also increases when a recession takes places because of safety net programs.
 
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  • #229
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  • #230
mheslep said:
http://johnbtaylorsblog.blogspot.com/2011/04/paul-krugman-versus-budget-facts.html

Taylor is misleading and the following shows why:

For years, the White House and Congress have engaged in a kind of Kabuki theater around the federal deficit. The president would release a budget in February that would show declining deficits into the future. But that budget would exclude most war costs and use several unrealistic assumptions, including over-optimistic predictions of economic growth and rising federal revenue.

"There were significant costs that were excluded from the budget because the Bush administration pretended that certain policies that everyone knew would continue wouldn't continue," said Jim Horney, a budget expert with the nonpartisan Center on Budget and Policy Priorities.

One practice was including revenues from the alternative minimum tax in the projections. Congress passed the AMT four decades ago to prevent millionaires from escaping taxes. But because lawmakers neglected to index the income levels for inflation, the higher tax rate would now hit a large swath of middle-income taxpayers unless lawmakers pass AMT relief -- which they do every year.

But for budget reasons, the Bush administration continued to assume that the AMT would take effect in future years, raising tax revenue assumptions by nearly $1 trillion over 10 years.

Similarly, every year the Bush administration would issue an initial deficit projection that was much higher than other economists' projections. That way, when the final deficit count was released, the administration could claim it had brought the deficit down.

Deficits accumulated each year that President Bush was in office, from $158 billion in fiscal 2002 to $455 billion last year, totaling roughly $2.5 trillion altogether.

http://articles.latimes.com/2009/feb/24/nation/na-obama-budget24

Where as Taylor says this:
For all of 2007, spending was 19.6 percent of GDP. For all of 2021—after the impacts of the recession and the final year of the budget window—the budget submitted in February proposed spending equal to 24.2 percent of GDP.
 
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  • #231
Also, care needs to be taken when comparing federal budgets. Obama included things in his budget that the bush administration kept off the budget.

This flat out false. The only thing the Obama administration requests as discretionary spending in its budgets that the Bush administration did not is some portion of the operating costs in Iraq and Afghanistan. Indeed, the president has actually shifted significant portions of classically discretionary spending into the "mandatory" categories in its budgetary requests, in order to conceal the true cost of new policies. And, cleverly, the President only moved some of the costs of the operations in Afghanistan and Iraq onto the regular budgets, then proposes reducing that "book" cost over the course of the year, producing a "discretionary savings reduction". See the gimmickery there?

Specifically, the president proposed and congress agreed to move spending on student loans and the stimulus and bailouts from discretionary to mandatory spending in 2009. This enables guys like Krugman to come along and claim the president is "reducing" discretionary spending, when all they've done is move expenses from one column to another. This produced a phantom savings of approximately $70B per year.

Even allowing for the presidents budgetary absurdities, by my estimate discretionary spending has increased by 20% since the President took office, versus a 4% increase in mandatory expenditures and a roughly 2% growth in GDP. The presidents 2010 budget proposal - rejected by congress - proposed a further increase to 23% of the FY2008 level, after moving the items listed above off the discretionary budget.
 
  • #232
talk2glenn said:
This flat out false. The only thing the Obama administration requests as discretionary spending in its budgets that the Bush administration did not is some portion of the operating costs in Iraq and Afghanistan. Indeed, the president has actually shifted significant portions of classically discretionary spending into the "mandatory" categories in its budgetary requests, in order to conceal the true cost of new policies. And, cleverly, the President only moved some of the costs of the operations in Afghanistan and Iraq onto the regular budgets, then proposes reducing that "book" cost over the course of the year, producing a "discretionary savings reduction". See the gimmickery there?

Specifically, the president proposed and congress agreed to move spending on student loans and the stimulus and bailouts from discretionary to mandatory spending in 2009. This enables guys like Krugman to come along and claim the president is "reducing" discretionary spending, when all they've done is move expenses from one column to another. This produced a phantom savings of approximately $70B per year.

Even allowing for the presidents budgetary absurdities, by my estimate discretionary spending has increased by 20% since the President took office, versus a 4% increase in mandatory expenditures and a roughly 2% growth in GDP. The presidents 2010 budget proposal - rejected by congress - proposed a further increase to 23% of the FY2008 level, after moving the items listed above off the discretionary budget.

Moving an item from discretionary to mandatory does not change the overall figure for the budget; however, adding an item to the budget that was done in appropriations off the budget does increase the size of the budget.

But at the end of the day, your making my point for me. The comparison of the budget from 2007 to 2011 is meaningless. And even more meaningless is a comparison between projections.
 
  • #233
Moving an item from discretionary to mandatory does not change the overall figure for the budget; however, adding an item to the budget that was done in appropriations off the budget does increase the size of the budget.

Your point, and Krugmans in the linked article, was that discretionary spending was falling and mandatory spending rising. My point, in pointing out the budgetary gimmicks employed by Obama and the Democrats, was to show that to the extent that discretionary spending has "fallen" and mandatory spending "risen", it has not been due to any real reductions in expenditures or due to countercyclical government policies, but the shifting of traditionally discretionary spending items (like student loan payments and stimulus funds) into the mandatory column.

Further, the 20% increase is over FY2007 levels in FY2010 - discretionary only, from 1.1T to 1.34T. This is real spending, authorized by the Democratic congress and signed into law by the president. The only reason the FY2011 budget, which would have further increased discretionary spending to $1.386T, didn't pass was the 2010 election cycle, which decimated the progressive majority.

The comparison of the budget from 2007 to 2011 is meaningless.

What is that supposed to mean, exactly?
 
  • #234
talk2glenn said:
Your point, and Krugmans in the linked article, was that discretionary spending was falling and mandatory spending rising. My point, in pointing out the budgetary gimmicks employed by Obama and the Democrats, was to show that to the extent that discretionary spending has "fallen" and mandatory spending "risen", it has not been due to any real reductions in expenditures or due to countercyclical government policies, but the shifting of traditionally discretionary spending items (like student loan payments and stimulus funds) into the mandatory column.

Further, the 20% increase is over FY2007 levels in FY2010 - discretionary only, from 1.1T to 1.34T. This is real spending, authorized by the Democratic congress and signed into law by the president. The only reason the FY2011 budget, which would have further increased discretionary spending to $1.386T, didn't pass was the 2010 election cycle, which decimated the progressive majority.

What is that supposed to mean, exactly?

Discretionary spending on budget for the department of defence was 430 billion in 2007 and 663 billion in 2010. That's 233 billion right there.
 
  • #235
The following has nothing to do with gimmicks for predictions, but is now documented, historical fact totaling up *all* government spending, on wars or otherwise:
Taylor said:
For all of 2007, spending was 19.6 percent of GDP.
Krugman also concedes the figure "is true".
Taylor said:
For all of 2021—after the impacts of the recession and the final year of the budget window—the budget submitted in February proposed spending equal to 24.2 percent of GDP.
This is the figure from the Obama budget.
 
  • #236
SixNein said:
On credit, no because we have a fiat money system. If we were on a money system like gold, you would be correct.

Yes, I would call states infrastructure.

The tax cuts passed in 2009 were worth 282 billion over two years:
http://online.wsj.com/article/SB123436825805373367.html
The tax cuts passed in 2010 were worth 858 billion over two years:
http://www.bloomberg.com/news/2010-12-17/house-votes-to-debate-obama-s-858-billion-tax-cut-deal-with-republicans.html

Total amount in tax cuts: 1140 billion dollars.

Treasury has had no problem in selling debt to investors. You yourself called America the great safe Haven for investors.

I disagree with regards to the supply of credit - it is limited as someone must be willing to extend terms.
 
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  • #237
mheslep said:
The following has nothing to do with gimmicks for predictions, but is now documented, historical fact totaling up *all* government spending, on wars or otherwise: Krugman also concedes the figure "is true".
This is the figure from the Obama budget.

He was looking at projections of the obama budget.

My dispute is the method of argumentation used here. If the bush budget was projected to run to 2021 under the same assumptions, would the figure be higher or lower than Obama budget projections?
 
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  • #238
SixNein said:
Treasury has had no problem in selling debt to investors.

Are you certain about this?
 
  • #240
SixNein said:
... If the bush budget was projected to run to 2021 under the same assumptions, would the figure be higher or lower than Obama budget projections?
Did you see the spending 2009-2011 increases via federalbudget.com shown graphically in post #221 by T2Glenn?
https://www.physicsforums.com/showpost.php?p=3404244&postcount=221
 
  • #242
WhoWee said:
Are you certain about this?

The real rate for 5 year treasuries is NEGATIVE. Think about that- its CHEAPER to borrow money than to pay cash upfront. My question is- why aren't we exploiting this to rebuild some of our crumbling infrastructure?
 
  • #243
Because there is no free lunch. There is only so much money to borrow, and that which the government borrows, even if cheaply done, can not be borrowed to fund the private sector, that is, the government is crowding out the private sector.
 
  • #244
mheslep said:
Because there is no free lunch. There is only so much money to borrow, and that which the government borrows, even if cheaply done, can not be borrowed to fund the private sector, that is, the government is crowding out the private sector.

We don't have a dearth of available cash-on-hand. Companies are sitting on billions in cash right now that they aren't investing in anything. How exactly is this crowding out supposed to be happening? The normal story with crowding out involves higher interest rates- which is an important part of the story. Right now, any investment with a positive real rate is BETTER than a 5 year treasury. What is getting crowded out?

Again, the demand for treasuries is so high that the real interest rates on five years are actually negative- this is not exactly a sweet deal for the lender. Also, rebuilding crumbling infrastructure can't help but be an obvious boon to the economy- putting idle construction resources to work, while lowering the cost of doing business for private firms.

And finally, much of the purchase of treasuries are foreign governments (in particular China, which has been using treasuries to control the renminbi)- IF China doubled its holdings of US treasuries, how does US competitiveness suffer?

EDIT: Bear in mind, crowding out is generally important in economies at or near full capacity. The US has above 9% unemployment.
 
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  • #245
ParticleGrl said:
We don't have a dearth of available cash-on-hand. Companies are sitting on billions in cash right now that they aren't investing in anything. How exactly is this crowding out supposed to be happening? The normal story with crowding out involves higher interest rates- which is an important part of the story. Right now, any investment with a positive real rate is BETTER than a 5 year treasury. What is getting crowded out? ...
Right, Microsoft, GM, etc are not being crowded out, the smaller businesses and private investors are. They are not sitting on large sums of cash and can't get it from the banks, who have it invested largely in T Bills.
Greenspan said:
“Approximately a third of the decline in capital investment as a share of cash flow is directly attributable to the crowding out by the U.S. Treasury,” borrowing the savings of Americans ahead of all other borrowers, Greenspan told CNBC in an interview.

“Those numbers are significant,” Greenspan said. The same is happening in the United Kingdom, but “so far, it’s most dominant in the United States.”...
http://www.moneynews.com/StreetTalk/Greenspan-Treasury-Crowding-Out/2010/12/03/id/378841?s=al&promo_code=B3B7-1

Edit: more ...
Greenspan said:
...Greenspan noted that major corporations like Microsoft and I.B.M. are not affected by crowding out in a deficit of this size—the deficit would have to increase two-fold to affect such major entities. The ‘who is being affected’ then, said Greenspan, “are ones which are known to be B-rated corporations. Where the shortfall is in investment is very largely in small businesses and in construction.”
I can attest the commercial construction business in the US has completely crashed in many places.
 
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  • #246
mheslep said:
Did you see the spending 2009-2011 increases via federalbudget.com shown graphically in post #221 by T2Glenn?
https://www.physicsforums.com/showpost.php?p=3404244&postcount=221

Yes I seen it. The argument is about why short-term deficit (the last 2 years) is going up. My position is that its primarily due to the recession. Both loss of revenue and increase demand for safety net programs have contributed to it. Others seem to take the position that its all Obama's doing.
 
  • #247
SixNein said:
Yes I seen it. The argument is about why short-term deficit (the last 2 years) is going up. My position is that its primarily due to the recession. Both loss of revenue and increase demand for safety net programs have contributed to it. Others seem to take the position that its all Obama's doing.
The President now has the responsibility for the anemic economy in July 2011, nearly four years after the beginning of the recession. The President has the responsibility for not only doing nothing about reining in the entitlement programs, but actively blocking and mocking ideas on the table.
 
  • #248
mheslep said:
Right, Microsoft, GM, etc are not being crowded out, the smaller businesses and private investors are. They are not sitting on large sums of cash and can't get it from the banks, who have it invested largely in T Bills.

This is nonsense. Interest rates on treasuries are LOW, not high. What is the mechanism for crowding out? Read your economics text- the way crowding out works is that interest rates go up, and certain capital investments aren't profitable. Right now, rates are rock bottom.

The story of crowding out doesn't make sense right now. If you buy a treasury right now, you LOSE money. Banks should be clamoring for any investment that ISN'T a treasury.

http://www.moneynews.com/StreetTalk/Greenspan-Treasury-Crowding-Out/2010/12/03/id/378841?s=al&promo_code=B3B7-1

Greenspan flat out made-up a number. He "thinks" its high, and he "supposes" its true. The actual data is that banks have excessive reserves- their money isn't tied up in treasuries, its not tied up at all. They are sitting on loanable cash.

I can attest the commercial construction business in the US has completely crashed in many places.

Which may be true, but it isn't related to crowding out. Interest rates (again) are absolute rock bottom.

I don't have data on hand, but my guess is (with 9% unemployment) there isn't as much demand, so companies have no reason to expand.
 
  • #249
Why were the Repubicans so afraid of a budget surplus in 2001??[unacceptable source deleted]
 
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  • #250
ParticleGrl said:
This is nonsense. Interest rates on treasuries are LOW, not high. What is the mechanism for crowding out? Read your economics text- the way crowding out works is that interest rates go up, and certain capital investments aren't profitable. Right now, rates are rock bottom.

The story of crowding out doesn't make sense right now. If you buy a treasury right now, you LOSE money. Banks should be clamoring for any investment that ISN'T a treasury.
Not if you are a major bank and can borrow from the Fed at http://www.newyorkfed.org/markets/omo/dmm/fedfundsdata.cfm" , and can then turn around and buy T Bills at 3%.

Greenspan flat out made-up a number. He "thinks" its high, and he "supposes" its true.
The former federal reserve chairman say's there's crowding out, a lot of it. If you have a counter reference I'd like to see it, as I'm not interested in your opinion of Greenspan.
The actual data is that banks have excessive reserves- their money isn't tied up in treasuries, its not tied up at all. They are sitting on loanable cash.
http://blogs.wsj.com/economics/2009/11/09/banks-choosing-treasury-bonds-over-loans/"
WSJ said:
According to the Federal Reserve’s latest weekly measure of bank assets and liabilities, released every Friday, banks held 1.37 trillion of Treasury and Fannie Mae or Freddie Mac debt securities at the end of October and $1.37 trillion of commercial and industrial loans

Which may be true, but it isn't related to crowding out. Interest rates (again) are absolute rock bottom.
Really? For small businesses and investors, you know this how? Because you read the prime rate and just know that ACME Construction can borrow at prime plus one?
 
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