News Republicans no longer a viable party?

[mege]

SixNein and mheslep I think are debating a moot point regarding how things get budgeted (wrt to the deficit graph). Since the numbers there are total debt owed by the government, how the money is allocated/budgeted doesn't really matter. That is showing how our spending has increased passed our revenues and the last few years that difference has spiked significantly. No matter how the money comes in or goes out - that difference is too great, and that's the point which is being lost in the discussion about budgetary spending.

@ParticleGrl - How much of the 'crumbling infrastructure' is actually federal property? Interstates are mostly funded by fuel tax from various levels (shared local/federal) and water/utility systems are managed locally. Unless you want to allow state/county/city governments to start 'charging' to the treasury - how is this going to happen? Another stimulus? How's that high-speed railway coming along? I think more people need to be looking towards their local governments for these issues. Far too many put all issues on the federal government's shoulders without regard for whom the bill really should be going to (including local politicians).

 

[edward]

mheslep

The banks aren't loaning to small businesses.

http://www.heraldnet.com/article/20100325/BIZ/703259908/1005



mege stated,

I think more people need to be looking towards their local governments for these issues. Far too many put all issues on the federal government's shoulders without regard for whom the bill really should be going to (including local politicians).

Right now it is difficult to find a state or local government that isn't in the dumper financially.

 

[ParticleGrl]

Not if you are a major bank and can borrow from the Fed at 0.00000000001%, and can then turn around and buy T Bills at 3%.

But literally ANY other investment the bank could make is BETTER. Are you really arguing that treasuries (with their negative real rate) are a good buy? In fact, SUCH a good buy that they are being chosen over other investments?

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.

In the article, Greenspan reference no data. He actually says things like "I can't prove it", "I suspect", etc. He doesn't actually reference any data. Here is a nobel laureate in economics addressing just this crowding out issue in May (http://krugman.blogs.nytimes.com/2011/05/11/the-doctrine-of-immaculate-crowding-out/). The blog post has a chart of corporate AAA and BBBs. Rates are low.

He is making my exact point (and the point anyone who actually passed econ 101 should also be making) government distorts the market BY CHANGING INCENTIVES. It distorts pricing. Crowding out is specifically distortions of the interest rate from excessive borrowing. If the interest rate is very low, then what is the mechanism for crowding out?

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?

Because rates are low, across the board. See AAA and BBB yields above. Every piece of data that exists suggests rates are very, very low.

If companies are having trouble getting loans its not because the banks money is tied up in treasuries, lots of banks haves excess reserves right now. Maybe its the passage of Dodd-Frank (so called "regime uncertainty"), or maybe they're currently very risk-averse, or maybe the bank's long term outlook on various small business is grim (and so they judge the loan very risky). However, its not because treasuries are an attractive investment, because they aren't.

Banks Choosing Treasury Bonds Over Lending...

This article is from 2009. It is now 2011. Things change. In particularly, treasury rates were MUCH, MUCH higher due to "the flight to quality" that happened after the panic. The banking system more or less froze up temporarily.

How much of the 'crumbling infrastructure' is actually federal property? Interstates are mostly funded by fuel tax from various levels (shared local/federal) and water/utility systems are managed locally. Unless you want to allow state/county/city governments to start 'charging' to the treasury - how is this going to happen? Another stimulus?

Why not another stimulus? Maybe one specifically focused on upgrading parts of the power grid, US airports, etc. There are certainly parts of the country where high-speed rail would actually be useful once built, why not build it? Right now, the government can borrow money essentially for better than free, why not use that ability? Also, I wouldn't put crumbling infrastructure in quotes- ever look at the report card on America's infrastructure?

 

[mheslep]

... However, its not because treasuries are an attractive investment, because they aren't.



This article is from 2009. It is now 2011. Things change. In particularly, treasury rates were MUCH, MUCH higher due to "the flight to quality" that happened after the panic. The banking system more or less froze up temporarily.

In 2009? What are you talking about? Look, http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/Historic-LongTerm-Rate-Data-Visualization.aspx" , while the Fed funds rate and interbank rates are ~0.nothing.

 

[mheslep]

... If the interest rate is very low, then what is the mechanism for crowding out?
...
Because rates are low, across the board. See AAA and BBB yields above. Every piece of data that exists suggests rates are very, very low.

Across the board? No. Those are low ratings for commercial paper to corporations, likely still huge, not small businesses.
"[URL
As to why there's crowding out:[/URL]

...In mid-2011, the supply of ordinary bank credit to firms and households continues to fall from what it had been in mid-2008. Although large corporate enterprises again have access to bond and equity financing, bank credit is the principal source of finance for working capital for small and medium-sized enterprises (SMEs) enabling them to purchase labor and other supplies.
...
Why should zero interest rates be causing a credit constraint? After all, conventional thinking has it that the lower the interest rate the better credit can expand. But this is only true when interest rates—particularly interbank interest rates—are comfortably above zero. Banks with good retail lending opportunities typically lend by opening credit lines to nonbank customers. But these credit lines are open-ended in the sense that the commercial borrower can choose when—and by how much—he will actually draw on his credit line. This creates uncertainty for the bank in not knowing what its future cash positions will be. An illiquid bank could be in trouble if its customers simultaneously decided to draw down their credit lines

If the retail bank has easy access to the wholesale interbank market, its liquidity is much improved. To cover unexpected liquidity shortfalls, it can borrow from banks with excess reserves with little or no credit checks. But if the prevailing interbank lending rate is close to zero (as it is now), then large banks with surplus reserves become loath to part with them for a derisory yield. And smaller banks, which collectively are the biggest lenders to SMEs, cannot easily bid for funds at an interest rate significantly above the prevailing interbank rate without inadvertently signaling that they might be in trouble. Indeed, counterparty risk in smaller banks remains substantial as almost 50 have failed so far this year.
...

 

[mheslep]

mheslep

The banks aren't loaning to small businesses.

http://www.heraldnet.com/article/20100325/BIZ/703259908/1005

Thanks, yes I know.

 

[ParticleGrl]

In 2009? What are you talking about? Look, ten year T's were 4%, now they are 3%, while the Fed funds rate and interbank rates are ~0.nothing.

5 year treasuries dropped from near 3% to around 1%, and 5 years is what I've been consistently discussing.

The fed funds rate and interbank rates don't have much to do with the deficit, so why even bring them up?

As to why there's crowding out..

Your article is NOT about crowding out. You are confusing different things. The argument that the article is making is that a low interbank rate makes it hard for small banks to get money from larger banks. This is related to the fed funds rate, but doesn't have much to do with the deficit. The US could have no deficit, but (if the argument is correct), the low interbank rate would still be squeezing small banks.

I'm not sure I buy the argument, I'll have to think about it more, but it is at least lucid. However, it isn't really related to the deficit, so its sort of tangential to what we've been discussing.

 

[mheslep]

5 year treasuries dropped from near 3% to around 1%, and 5 years is what I've been consistently discussing.

The fed funds rate and interbank rates don't have much to do with the deficit, so why even bring them up?

In answer to your question about why banks would be holding treasuries, and why they are not loosing money on them as you stated in 248.

Your article is NOT about crowding out. You are confusing different things. The argument that the article is making is that a low interbank rate makes it hard for small banks to get money from larger banks. This is related to the fed funds rate, but doesn't have much to do with the deficit. The US could have no deficit, but (if the argument is correct), the low interbank rate would still be squeezing small banks.

McKinnon demonstrates how small investment/borrowing is failing despite low prime rates, which normally should not happen. The low Fed/interbank rates makes the purchase of T bills possible, especially in a risky environment, i.e. federal borrowing is indeed crowding out retail borrowing. If the large borrowing for the deficit did not exist, the small banks would have no choice but to lend retail again to generate income.

 

[SixNein]

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.

He put entitlement programs on the table. Let's be honest, a deal could have been reached with trillions in spending cuts plus additional revenue from taxes. Ideologically, one party doesn't want tax increases, so the entire thing is being stalled. In addition to the above, presidents have been kicking the problem down the road for decades. So let's not pretend this problem has emerged with the election of Obama.

As far as the bad economy, did you expect the economy to recover from such a deep recession overnight with some of our global economic partners still in disarray?

 

[ParticleGrl]

In answer to your question about why banks would be holding treasuries, and why they are not loosing money on them as you stated in 248.

It was rhetorical, I was making the point that treasuries are a terrible investment right now, which goes against the general story of crowding out.

McKinnon demonstrates how small investment/borrowing is failing despite low prime rates, which normally should not happen. The low Fed/interbank rates makes the purchase of T bills possible, especially in a risky environment, i.e. federal borrowing is indeed crowding out retail borrowing. If the large borrowing for the deficit did not exist, the small banks would have no choice but to lend retail again to generate income.

McKinnon's argument has nothing to do with treasuries. You haven't read correctly. The argument is that small banks are illiquid because large banks aren't providing liquidity. McKinnon's argument only works if small banks don't have the money to loan anybody. I'm not entirely sure I buy it, but if debt overhang has hurt the liquidity of small banks, its plausible. But this story has NOTHING to do with crowding out. Its more about liquidity constraints in small banks. I'm not sure I buy McKinnon's story, but given the large debt overhang that could be hurting them, it seems plausible.

You want to turn it into a crowding out argument by insisting that the large banks are buying treasuries with their money, and implying that the TED spread is creating an incentive to buy treasuries. This doesn't hold up- the spread is a bit smaller than its historical norm. While LIBOR is certainly low, so are the treasury rates. Borrowing interbank to buy treasuries isn't any more profitable than normal.

 

[WhoWee]

http://online.wsj.com/article/SB10001424052702304223804576446493806299046.html?mod=googlenews_wsj

From your link:
"Why Buying Treasurys Isn't As Crazy as It Might Seem"

I don't think your link supports your original post: my bold

"however, investors have been willing to gobble up US debt."

 

[WhoWee]

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?

Do you mean the "shovel ready" projects - didn't the stimulus address those?

 

[WhoWee]

Why were the Repubicans so afraid of a budget surplus in 2001??


http://investmentwatchblog.com/how-the-republican%C2%ADs-are-conning-america/

Have we forgotten what happened to the economy after September 11, 2001?
http://www.gao.gov/new.items/d02700r.pdf

 

[OmCheeto]

Why were the Repubicans so afraid of a budget surplus in 2001??

I asked the same thing a while back and got the following answer:

...

Once there was concern that there would not be enough low-risk paper around if the US government paid down its debt. I don't think that's a problem at present.

So assuming it is not (a proposition I would be glad to hear arguments on, either way), why would it be beneficial except in the short term for the US government to run large debts? I understand the "we must stop the Axis powers"-type emergency spending, as well as the Keynesian "we must pump money into the sagging economy"-type spending. But supposing that neither applies (surely not the former, and with good fortune not the latter, at least soon enough), I don't see why debt would be preferred.

Unfortunately, I don't know what "low-risk paper" is, nor why it's shortage would be bad.

Trying to figure out what it is from it's use in context is a bit difficult, as what some people called "low-risk paper", turned out to be a bit of a misnomer:

http://247wallst.com/2008/03/27/quants-gone-wil/"
Posted: March 27, 2008 at 7:51 pm

As the meltdown began, holders of CMOs/CDOs/SIVs realized they couldn’t measure the true value of this supposedly low-risk paper and quickly found their assets and liabilities mismatched with billions lost in the squeeze.

My guess is that it is similar to a low risk investment.


Having these acronyms spelled out doesn't help me any, but their initial popularity and current lack of popularity seems to say something:
CMO = Collateralized mortgage obligation (first created in 1983 by the investment banks Salomon Brothers and First Boston)
CDO = Collateralized debt obligation (The first CDO was issued in 1987 by bankers at now-defunct Drexel Burnham Lambert Inc. ... Global investors began to stop funding CDOs in 2007, contributing to the collapse of certain structured investments held by major investment banks and the bankruptcy of several subprime lenders.)
SIV = Structured Investment Vehicles (Invented by Citigroup in 1988, SIV's were popular until the market crash of 2008.)
ref = wiki

ps. all bolding mine

pps. I know this doesn't seem to tie into why the Republicans may or may not be a viable party anymore, but I think it is a piece of the systemic puzzle of "what's destroying America?".

 

[Proton Soup]

it looks like the place to be now is investing in the federal reserve. member banks receive 6% on capital invested, and dividend payments are up significantly in the past few years. from table 11, dividend payments have nearly quadrupled in the past decade.

http://www.federalreserve.gov/publications/annual-report/files/2010-annual-report.pdf

 

[SixNein]

From your link:
"Why Buying Treasurys Isn't As Crazy as It Might Seem"

I don't think your link supports your original post: my bold

"however, investors have been willing to gobble up US debt."

Did you bother reading the article or did you simply stop at its title?

 

[CAC1001]

Why not another stimulus? Maybe one specifically focused on upgrading parts of the power grid, US airports, etc. There are certainly parts of the country where high-speed rail would actually be useful once built, why not build it? Right now, the government can borrow money essentially for better than free, why not use that ability? Also, I wouldn't put crumbling infrastructure in quotes- ever look at the report card on America's infrastructure?

Because it likely wouldn't stimulate and would only drive the country deeper into debt. Every dollar of increased government spending must correspond to one less dollar of private-sector spending. Probably the most nortorious example is Japan which spent half their GDP trying stimulus and lots of infrastructure projects, with very anemic economic growth. Today they have the highest level of debt-to-GDP in the Western world (about 230%) and a AA bond rating. As for high-speed rail, that would take years. America isn't like China where they can just build it. There are much more stringent construction and materials standards here, issues of property and eminent domain, and also the environmental impact for either every acre or mile (I forget which) of the railroad would have to be assessed. It also likely would cost the state governments more as it would have to be subsidized. Even in the European countries where it is used, it is subsidized, with the lines that lose large amounts of money being closed down. Infrastructure itself also takes time, as one cannot just suddenly start spending a bunch of money on infrastructure.

That said, if fiscal stimulus was/is workable, in addition to infrastructure, I'd say one major area to gun up spending is on the national defense, as the military needs a lot of vehicles, equipment, and weapons replaced and upgraded, and also a lot of newer equipment might be simpler and thus cheaper to maintain, allowing a reduction in the defense budget in the future opposed to what it otherwise would need to be.

There's also the corruption issues. If one decided to gun up defense or infrastructure spending, there would probably be a major lack of accountability regarding how a lot of the money is spent and thus a lot spent on stuff it shouldn't be.

 

[CAC1001]

On the Republicans and spending during the Bush years, well President Bush and the Republicans decided to govern as big-government conservatives. They made no attempt whatsoever at being limited government conservatives.

 

[WhoWee]

Did you bother reading the article or did you simply stop at its title?

Your statement was not supported by your link.

 

[htf]

Outsider's View

I am German and when watching this spectacle I have to rub my eyes in disbelief. This completely destroys my picture of America! My picture of America was that the US politicians are all patriots and at the end of the day the do what is best for the country - at least they try to do so.

But now I have the feeling there are irrational fundamentalists at work. They have already caused great damage to America's renown. They pretend to be patriots but they are scarifying the nation's future for their goals and are trying to turn back the clock. Can people be so stupid to ignore the consequences of their actions?

America is in deep trouble and running into dept at that frighting speed can't go on forever. But is also seems clear to me that low taxes for the super-rich and cutting welfare spending can't be the answer. This is ruthless client politics (I hope this is the right word). So there has to be a consensus between all parties and social classes how to get out of this mees - maybe this is a typical German attitude.

I am trying to understand what caused these hardened fronts. The only explanation I found is, that America is afraid of loosing their role as the last remaining superpower and that the Chinese will eventually become number one (an idea I don't like at all). Maybe you insiders can comment on this!

I hope, thing will take a turn to the better for America!

 

[OmCheeto]

The ultimate problem with this, and something Republicans worry about with any tax increase, is that it won't fix anything because spending will just increase as well.

Yes, they worry about this. But is it justified?

The country's total revenue has stayed fairly stable as a fraction of GDP over a few decades

I assume by "country's total revenue", that you mean the government's revenue?

This will be at least the third time I've posted this image:

http://www.cbo.gov/ftpdocs/110xx/doc11014/MainText_HseVersion.28.1.3.png

Obviously, keeping our "revenue" relatively flat while spending exceeded our "revenue" only drove us into debt. The Reagan and Bush tax cuts, as far as I can tell, drove us to the debt level we are at now.

, it's our spending which has spiked in the last few years and is only projected to go up. The 'starve the beast' mantra is meant to not push the government into default, but to really find out what is necessary for the government/country to function at a globally competitive level and what is not.

I would imagine our spending has spiked for numerous reasons. As for the 'starve the beast' philosophy, I don't buy it. We left wingers view all people as family. (Not that we don't recognize that leach of a brother in law who really does deserve to live under a bridge. Lazy B******!)

Unfortunately, the politically correct thing to do for the left is to tax the wealthy because it appeals to the masses with their hands held out.

If you look at my tax rates, everyone in the upper 50% has an increase in their federal/payroll taxes. This might be where the right wing and I are in agreement; Obama should have never made the promise to that plumber...

There is no other justifiable reason to do so, other than jealousy and greed.

I disagree. But that's just me. I don't know that I've ever been jealous of rich people. I dont' know how old you are, but there used to be a show called "Lifestyles of the Rich and Famous". Most of us po' folk watched it religously, and dreamed one day of living like that. Never in my dreams did I think that we should tax them so I could have all their money. I suppose that is the Republican nightmare. "The poor people want our money!"

And as I've said many times before, I have many rich friends, and admire them, and hope to be one one day. And logically, I know that I can't become one by taxing my friends and giving me the money. I don't know anyone who has become rich in this way.

Now as for greed, well, that's a concept which I've only come to recognize in myself over the last 3 or so years. That's when I started investing in the stock market. That's when I no longer gave a percentage of my income to charities. That's when I started saying to myself; "Hey! Money! Free Money! I can make money without working for it! This is cool!"

Greed is an excessive desire to possesses wealth or goods with the intention to keep it for one's self. Greed - like lust and gluttony - is a sin of excess. Greed is inappropriate expectation. However, greed is applied to a very excessive or rapacious desire and pursuit of wealth, status, and power.

However, I am 100% in agreeance that our tax system is flawed.

Yay!

I think any tax increases need to be evaluated with a fundamental restructuring which eliminates much of the hand outs

"Hand outs"? There are many levels of "Hand outs".

There are people who get food stamps, and there is Boeing(et al).

and levels out (proportionately, of course) the amount of income taxes each pay.

This is somewhat ambiguous, so I will not comment.

I think that exceptions in our tax code are part of what cause this perception of inequality more than the actual tax structure. The top marginal rate should top out at the 50k/100k range, not in the millions.

I see no good reason why we shouldn't go back to 10 or 20 tax brackets, other than billionaires might claim it's "too complicated". sarcasm mine.

 

[Ivan Seeking]

I am German and when watching this spectacle I have to rub my eyes in disbelief. This completely destroys my picture of America! My picture of America was that the US politicians are all patriots and at the end of the day the do what is best for the country - at least they try to do so.

But now I have the feeling there are irrational fundamentalists at work. They have already caused great damage to America's renown. They pretend to be patriots but they are scarifying the nation's future for their goals and are trying to turn back the clock. Can people be so stupid to ignore the consequences of their actions?

America is in deep trouble and running into dept at that frighting speed can't go on forever. But is also seems clear to me that low taxes for the super-rich and cutting welfare spending can't be the answer. This is ruthless client politics (I hope this is the right word). So there has to be a consensus between all parties and social classes how to get out of this mees - maybe this is a typical German attitude.

I am trying to understand what caused these hardened fronts. The only explanation I found is, that America is afraid of loosing their role as the last remaining superpower and that the Chinese will eventually become number one (an idea I don't like at all). Maybe you insiders can comment on this!

I hope, thing will take a turn to the better for America!

As an American and former Republican, I agree 100% less the fear of losing #1 part. This is mostly about economic philosophy and, as David Brooks says in the article linked in the op, this is about ideological fanaticism:

But to members of this movement, tax levels are everything. Members of this tendency have taken a small piece of economic policy and turned it into a sacred fixation. They are willing to cut education and research to preserve tax expenditures. Manufacturing employment is cratering even as output rises, but members of this movement somehow believe such problems can be addressed so long as they continue to worship their idol.

It is an economic philosophy [my own!] run amok and turned into a religion. In fact, in spite of popular opinion, many of our politicians are patriots. But patriotism can be taken to the point of insanity, which I think is now the case. And we see this in the logic. Many would destroy our good faith and credit, something that has never happened before, in order to serve the country. On its face the philosophy is nuts. But this is because many tea partiers and Republicans have rejected academics for ideology. They then appeal to fear, bias, and anger.

As one analyst said this week, "Who are you going to believe; Michelle Bachman, or Ken Bernanke?"

 

[OmCheeto]

I am German

Willkommen! Hans, oder Heidi, oder Helmut, oder Hilde, oder...

and when watching this spectacle I have to rub my eyes in disbelief.

As do we from the inside.

This completely destroys my picture of America! My picture of America was that the US politicians are all patriots and at the end of the day the do what is best for the country - at least they try to do so.

No. American's, whether poor, rich, or politicians, are the same as everywhere else.

But now I have the feeling there are irrational fundamentalists at work.

We had a https://www.physicsforums.com/showthread.php?t=330574" a while back. I can only imagine that things have gotten worse.

Ha! I knew there was a reason I loved foreigners:

I've got to say that I've never seen it spelled that way before, but agreed.

The truth is that while Braindead Bush was in power, we both ridiculed and feared the US. There's nothing like having someone with the IQ of an eggplant in charge of the world's largest nuclear arsenal to disturb one's sleep.
Obama has been rapidly changing that ever since his election. The right-wing extremists are still good for a laugh now and then, but the nation as a whole is beginning to gain some respect.

They have already caused great damage to America's renown. They pretend to be patriots but they are scarifying the nation's future for their goals and are trying to turn back the clock. Can people be so stupid to ignore the consequences of their actions?

um. To quote America's favorite philosopher:

Momma says stupid is as stupid does.

America is in deep trouble and running into dept at that frighting speed can't go on forever. But is also seems clear to me that low taxes for the super-rich and cutting welfare spending can't be the answer. This is ruthless client politics (I hope this is the right word). So there has to be a consensus between all parties and social classes how to get out of this mees - maybe this is a typical German attitude.

hmmm... Welcome to the United States of Germany.

http://en.wikipedia.org/wiki/File:Census-2000-Data-Top-US-Ancestries-by-County.svg

Wie sagt man; "We are you." auf Deutsche?

I am trying to understand what caused these hardened fronts. The only explanation I found is, that America is afraid of loosing their role as the last remaining superpower and that the Chinese will eventually become number one (an idea I don't like at all). Maybe you insiders can comment on this!

Fear! Yes. I am sure you are correct.
People are afraid of being wrong.

Do you watch the TED video's? I watched http://www.ted.com/talks/tim_harford.html" yesterday. It was very interesting.



Please don't take the opening intro to this TED video personally, my mother was in the German Luftwaffe during WWII.

BTW, She hated it when we sat around and watched "Hogan's Hero's".

Anyways, the complexity of our planet is such that no one can understand or accumulate all of the information needed to run it perfectly, as there are around 7 billion different opinions on how it should be run.

I hope, thing will take a turn to the better for America!

And we hope, that the rest of world also takes a turn for the better.
(That's strictly a democratic view by the way...)

ps. Send my thanks to Solarworld for investing 1/2 billion dollars in my neck of the woods.


German to English translations (Shut up Andre! ;) ):
willkommen = welcome
oder = or
Wie sagt man; "whatever" auf Deutsche? = How do you say; "whatever" in the German Lanuguage.
Luftwaffe = Air Force

 

[turbo]

Mitch McConnell wants Congress to abrogate its responsibility and cede the authority to raise the debt limit to Obama. That way, the GOP can use that tar-baby plan to point to Obama when they rail about the debt, without having their fingerprints on it. Normally, the debt-limit is raised quietly and without fuss whenever necessary, but the GOP has picked this fight and wants to use it against Obama in 2012. Where are the responsible adults in the GOP?

It is sad to see elected officials willing to drive our economy right back into the ditch in order to score political points. Hopefully, Obama (constitutional scholar) will insist that Congress pass the resolution and hand it to him for his signature. It is unconstitutional for him to assume that responsibility as President.

http://www.huffingtonpost.com/2011/07/17/washington-insiders-say-m_n_900940.html

 

[russ_watters]

Obviously, keeping our "revenue" relatively flat while spending exceeded our "revenue" only drove us into debt. The Reagan and Bush tax cuts, as far as I can tell, drove us to the debt level we are at now.

Where, on that graph do you think we are "now" and when does Obama's influence begin? It looks to me like things got much worse in the past two years and are projected to be much worse over the next 10 years than the previous 20. Are you saying you think all 30 of those years are Bush's/Reagan's faults and none is Obama's?

Also, are you blaming Reagan for the debt that was accumulated before he took office?

I would imagine our spending has spiked for numerous reasons.

Agreed - do you think those reasons add up to a position that we shouldn't try to substantially reduce spending? Ie, it looks to me like we should reduce spending by about 25%, to roughly where it was in 2000. Does that seem reasonable?

[an important caveat about that graph: it's a couple of years out of date. It's my understanding that the past two years have unfolded to be much worse than people's projections]

 

[OmCheeto]

Where, on that graph do you think we are "now"

We are where we are on the graph. Though as you say below, the graph is now in the past.

and when does Obama's influence begin?

Obama's influence, I would say, begins quite a while before I had ever heard of him. I hear he made a very nice speech during some Democratic convention, back when I thought I had lost all hope in the American political process.

It looks to me like things got much worse in the past two years

Much, much, worse. I concur.

and are projected to be much worse over the next 10 years than the previous 20.

As an armchair quarterback, I can tell you that the last tweny years are much easier to analyze than the next 10. But I have faith in our youth.

Are you saying you think all 30 of those years are Bush's/Reagan's faults and none is Obama's?

10 of those years have yet to happen, so those are just fantasy. 20 of those years are now history. They are the Reagan/Bush/Clinton/Bush history.

I analyzed why Clinton cut the capitol gains tax from 30 some odd percent down to 15 percent the other day. In hindsight it looked like a stupid move. But the gains in the market at the time, over the preceding years meant that if everyone had cashed out their earnings, and were taxed at that rate, the entire national debt would have been paid for.

Also, are you blaming Reagan for the debt that was accumulated before he took office?

No, and if I've spouted out some schizophrenic blather in the past, that would make you think that my mind works that way, please point out my previous posts.

Our debt to GDP was ~31% when Reagan took office, and it was ~65% when G.H.W.Bush left. If we'd kept the same spend and don't tax ideology over the next umpteen years, where would we be now. hmmm... Care to follow the graph, without that Clinton glitch in the middle?*@*

I would imagine our spending has spiked for numerous reasons.

Agreed - do you think those reasons add up to a position that we shouldn't try to substantially reduce spending? Ie, it looks to me like we should reduce spending by about 25%, to roughly where it was in 2000. Does that seem reasonable?

No, as I've said before, when your wife is sick in the hospital with cancer, you mortgage the house to save her.
If you don't, then you didn't really care about her.

This might strike you as some type of sick Gingrich type of Democratic slam.

And I suppose, it really is.

[an important caveat about that graph: it's a couple of years out of date. It's my understanding that the past two years have unfolded to be much worse than people's projections]

I'm tired of doing graphs. Do you know how many freaking graphs I've researched for this stinking forum!?

A lot.

That's how many.

A lot.

*@*ans: 16.38 Trillion would be our current debt, vs our current 14.5 Trillion.

simple point slope intercept:

31% 1981
65% 1993

y=mx+b
m=y1-y2/x1-x2

31 y1
65 y2
1981 x1
1993 x2

2.83 m

-5581.83 b=y-mx


2011 x
116 y

hmmm...

not that bad a percentage difference.

What are we argueing about again?

Oh!

I hate Republicrats!

 

[skeptic2]

Since the above graph is debt in terms of percent of GDP, it is as much affected by GDP as it is by accumulated debt. Below is a graph of GDP growth in percent. Source: http://www.tradingeconomics.com/united-states/gdp-growth

 

[CAC1001]

I am German and when watching this spectacle I have to rub my eyes in disbelief. This completely destroys my picture of America! My picture of America was that the US politicians are all patriots and at the end of the day the do what is best for the country - at least they try to do so.

They are. The debt and deficit are very serious issues, so the GOP is doing its best to keep it as an issue going into the 2012 election. I am amazed by how the view right now so much seems to be that for anyone who disagrees with the Democrats/President Obama, that they should all just do the "patriotic thing" and go along, with no resistance. Yet during the Bush years, if anyone suggested that with regards to the Republicans and President Bush, they were called a sheep.

The Democrats were right, dissent is a form of patriotism, but it applies with regards to both parties. Also, "doing the right thing" is a little difficult when both parties have differing views on exactly what the right thing is.

America is in deep trouble and running into dept at that frighting speed can't go on forever. But is also seems clear to me that low taxes for the super-rich and cutting welfare spending can't be the answer.

High taxes for the wealthy aren't the answer either. What is probably really needed is something like a VAT tax, which taxes primarily the poor and middle-income, that's how the European nations do it, along with a lot of controls on spending, but good luck getting either of those passed (if the government got ahold of loads more revenue, they'd manage to spend it). Another solution could be to simplify the tax code and close all loopholes up (but I highly doubt the Democrats would allow things like the Make Work Pay tax credit, the Child Tax Credit, the Earned Income Tax Credit (ironically a Republican creation), etc...to be done away with. And businesses would probably lobby to preserve certain loopholes they exploit.

This is ruthless client politics (I hope this is the right word). So there has to be a consensus between all parties and social classes how to get out of this mees - maybe this is a typical German attitude.

Germany has different political parties with differing views as well.

I am trying to understand what caused these hardened fronts. The only explanation I found is, that America is afraid of loosing their role as the last remaining superpower and that the Chinese will eventually become number one (an idea I don't like at all). Maybe you insiders can comment on this!

I hope, thing will take a turn to the better for America!

The politics are because one party wants big government while the other party wants limited government. As for China, I do not think China will overtake the U.S. anytime soon and I really think their economy is in a bubble right now that is going to blow up soon.

 

[turbo]

The politics are because one party wants big government while the other party wants limited government. As for China, I do not think China will overtake the U.S. anytime soon and I really think their economy is in a bubble right now that is going to blow up soon.

I take issue with the notion that one party wants limited government. The GOP has never found any fault with military spending (erroneously called "defense spending", IMO). We have the largest military budget in the world, the largest navy in the world, and foreign military bases that probably number well over a thousand if the covert bases were revealed. I find it incomprehensible that our elected representatives can't find any way to cut spending except to roll back SS, Medicare, and Medicaid. Drop 2-3 carrier groups, close 600+ foreign military bases, and stop buying and building planes that the Pentagon doesn't even want. Is that so hard?

 

[SixNein]

I am German and when watching this spectacle I have to rub my eyes in disbelief. This completely destroys my picture of America! My picture of America was that the US politicians are all patriots and at the end of the day the do what is best for the country - at least they try to do so.

But now I have the feeling there are irrational fundamentalists at work. They have already caused great damage to America's renown. They pretend to be patriots but they are scarifying the nation's future for their goals and are trying to turn back the clock. Can people be so stupid to ignore the consequences of their actions?

America is in deep trouble and running into dept at that frighting speed can't go on forever. But is also seems clear to me that low taxes for the super-rich and cutting welfare spending can't be the answer. This is ruthless client politics (I hope this is the right word). So there has to be a consensus between all parties and social classes how to get out of this mees - maybe this is a typical German attitude.

I am trying to understand what caused these hardened fronts. The only explanation I found is, that America is afraid of loosing their role as the last remaining superpower and that the Chinese will eventually become number one (an idea I don't like at all). Maybe you insiders can comment on this!

I hope, thing will take a turn to the better for America!

Extremist views can take hold when people are uncertain about their future because these views provide a simple narrative for people to follow with an illusion of certainty. And once people bite into those narratives, they are almost impossible to reason with because they would be forced to leave a certain world view. To make matters worse, there is a great deal of unfiltered information available to people today. But none of these problems are limited to the United States; instead, they occur throughout the world.

At any rate, you are correct in that many Americans are afraid of losing the super-power status. So they are buying into various narratives.

 

[SixNein]

Mitch McConnell wants Congress to abrogate its responsibility and cede the authority to raise the debt limit to Obama. That way, the GOP can use that tar-baby plan to point to Obama when they rail about the debt, without having their fingerprints on it. Normally, the debt-limit is raised quietly and without fuss whenever necessary, but the GOP has picked this fight and wants to use it against Obama in 2012. Where are the responsible adults in the GOP?

It is sad to see elected officials willing to drive our economy right back into the ditch in order to score political points. Hopefully, Obama (constitutional scholar) will insist that Congress pass the resolution and hand it to him for his signature. It is unconstitutional for him to assume that responsibility as President.

http://www.huffingtonpost.com/2011/07/17/washington-insiders-say-m_n_900940.html

I wonder if damage is not already occurring from pushing it so close to the deadline. Our government looks very dysfunctional, and it could create a situation where enough confidence is lost that we end up losing our ratings anyway.

At any rate, I agree about the constitutionality of the plan. One of the dangesr is if it is challenged, the courts could make a decision that puts America in immediate default. And I think the courts would likely rule it unconstitutional.

 

[turbo]

I wonder if damage is not already occurring from pushing it so close to the deadline. Our government looks very dysfunctional, and it could create a situation where enough confidence is lost that we end up losing our ratings anyway.

It could well happen. Unfortunately there are enough morons in the US to ensure that the GOP message of "Obama caused it" will stick with them. Very few people have the intelligence or the resources to research the history of raising debt limits in Congress, so the right-wing will probably be able to smear Obama with this, as if it is his fault that Congress abrogated their responsibilities.

 

[CAC1001]

I take issue with the notion that one party wants limited government. The GOP has never found any fault with military spending (erroneously called "defense spending", IMO). We have the largest military budget in the world, the largest navy in the world, and foreign military bases that probably number well over a thousand if the covert bases were revealed. I find it incomprehensible that our elected representatives can't find any way to cut spending except to roll back SS, Medicare, and Medicaid. Drop 2-3 carrier groups, close 600+ foreign military bases, and stop buying and building planes that the Pentagon doesn't even want. Is that so hard?

Defense spending isn't something that kills the budget, it's the entitlements that kill the budget. I also don't see how our having the largest military budget or the largest navy is a reason to reduce the size of them. It isn't so much that the U.S. overspends as everyone else spends very little. Remember too that the U.S. already halved the size of the Navy after the Soviet Union broke up, and significantly reduced the size of the Army and Air Force as well. The Navy as it currently is is really too small, and likely should be increased in size, not decreased. Same with the Army. But the money isn't there. Also, what planes are they building that the Pentagon doesn't want? The Air Force very much wanted the F-22, what blew that was the cost.

 

[turbo]

Defense spending isn't something that kills the budget, it's the entitlements that kill the budget.

SS and Medicare are self-funded by payroll taxes. Those "entitlements" are not sinking us. Untrammeled spending is.

 

[CAC1001]

I wonder if damage is not already occurring from pushing it so close to the deadline. Our government looks very dysfunctional, and it could create a situation where enough confidence is lost that we end up losing our ratings anyway.

At any rate, I agree about the constitutionality of the plan. One of the dangesr is if it is challenged, the courts could make a decision that puts America in immediate default. And I think the courts would likely rule it unconstitutional.

The country would not go into default if the debt ceiling was not raised. The problem would be all the other areas of government that get their funding cut, which could mess up the economy, and also things like SS possibly not being paid out (which if a legitimate problem shows that the whole claim many have made for years that the SS trust fund is solvent and self-funding is utter nonsense; if SS is paid from taking on debt, it is not self-funding).

 

[CAC1001]

SS and Medicare are self-funded by payroll taxes. Those "entitlements" are not sinking us. Untrammeled spending is.

That's a claim often made, but if the debt ceiling is not raised, many are saying it means SS and I supposed Medicare might not be paid out, which would mean that they are not self-funding.

 

[turbo]

The country would not go into default if the debt ceiling was not raised. The problem would be all the other areas of government that get their funding cut, which could mess up the economy, and also things like SS possibly not being paid out (which if a legitimate problem shows that the whole claim many have made for years that the SS trust fund is solvent and self-funding is utter nonsense; if SS is paid from taking on debt, it is not self-funding).

SS is solvent, and can be made so for many decades by lifting the maximum cap. The general treasury borrows money from the SS surplus and pays it back in the form of interest from government bonds. None of this is a secret. Can you provide any support for your claim that SS is not solvent?

 

[SixNein]

I take issue with the notion that one party wants limited government. The GOP has never found any fault with military spending (erroneously called "defense spending", IMO). We have the largest military budget in the world, the largest navy in the world, and foreign military bases that probably number well over a thousand if the covert bases were revealed. I find it incomprehensible that our elected representatives can't find any way to cut spending except to roll back SS, Medicare, and Medicaid. Drop 2-3 carrier groups, close 600+ foreign military bases, and stop buying and building planes that the Pentagon doesn't even want. Is that so hard?

The big government, small government slogan is meaningless. Just because a government is small does not imply that the government is efficient, nor does it imply its useful. If a smaller government is always more efficient then Somalia should be the most efficient nation on earth.

 

[SixNein]

The country would not go into default if the debt ceiling was not raised. The problem would be all the other areas of government that get their funding cut, which could mess up the economy, and also things like SS possibly not being paid out (which if a legitimate problem shows that the whole claim many have made for years that the SS trust fund is solvent and self-funding is utter nonsense; if SS is paid from taking on debt, it is not self-funding).

The country would be making the choice to default, but it's still a default. In addition, the real problem is loss of confidence in the American system by members around the world. If the US is so dysfunctional that it can't agree to pay its bills, how can anyone expect it to do other needed actions? Right now America is playing a political game with something extremely dangerous with very real and long term consequences. This situation is a economic black hole, and if America strays too close, it may never escape the pull.

I pray that people don't have to learn this the hard way. Especially since I have to suffer the consequences too.

 

[CAC1001]

SS is solvent, and can be made so for many decades by lifting the maximum cap. The general treasury borrows money from the SS surplus and pays it back in the form of interest from government bonds. None of this is a secret. Can you provide any support for your claim that SS is not solvent?

I'm not claiming it isn't solvent (as I don't know what the full truth is because I've seen multiple claims made), but that if the debt ceiling not being raised meant that SS wouldn't get paid out, it means it isn't self-funding. I was referring to two articles I had read:

http://www.washingtonpost.com/wp-dyn/content/article/2011/03/10/AR2011031005932.html

http://blogs.forbes.com/merrillmatt...-the-2-6-trillion-social-security-trust-fund/

 

[CAC1001]

The big government, small government slogan is meaningless. Just because a government is small does not imply that the government is efficient, nor does it imply its useful. If a smaller government is always more efficient then Somalia should be the most efficient nation on earth.

Somalia is an anarchy with really no government. The small government or limited government argument is not arguing for no government, just a limited government. Government by its very nature tends to be inefficient, that is one reason why you want it to be limited in size and scope.

 

[turbo]

I'm not claiming it isn't solvent (as I don't know what the full truth is because I've seen multiple claims made), but that if the debt ceiling not being raised meant that SS wouldn't get paid out, it means it isn't self-funding.

SS is self-funded. The money being paid for by payroll taxes adds to the surplus, and the government borrows those funds with interest being paid back by the bonds (promise to pay). The breathless pronouncements about the collapse of SS are a shallow attempt by the right to privatize some or all of the fund, relying on private funding that is not guaranteed, and would have plunged SS into an abyss during the current economic collapse. It is time to raise the maximum income-levels that can be subjected to payroll taxes to ensure the health of the SS funds. Nothing more is needed. No increased retirement ages, no reduced benefits, and no means-testing. This isn't rocket-science, just accounting.

 

[SixNein]

Somalia is an anarchy with really no government. The small government or limited government argument is not arguing for no government, just a limited government. Government by its very nature tends to be inefficient, that is one reason why you want it to be limited in size and scope.

Tends to be inefficient at what exactly?

 

[CAC1001]

The country would be making the choice to default, but it's still a default.

Not sure what you mean here, why would they choose to default?

In addition, the real problem is loss of confidence in the American system by members around the world. If the US is so dysfunctional that it can't agree to pay its bills, how can anyone expect it to do other needed actions? Right now America is playing a political game with something extremely dangerous with very real and long term consequences. This situation is a economic black hole, and if America strays too close, it may never escape the pull.

The U.S. does agree to pay its bills, as the debt would be serviced irregardless, the only reason the politics here are being played is because one party wants the debt to remain an issue while the other one doesn't want it to and neither party will just roll over for the other one.

Regarding other actions, I think many other countries around the world already are losing the expectation of the U.S. to do other actions. The countries of Eastern Europe question whether the U.S. will provide a counter to a more beligerent Russia, the countries of Asia question whether the U.S. will provide a counter to a more beligerent China, Israel questions whether the U.S. will continue to provide it with support (with the President's recent assertion that Israel should go back to the 1967 lines), etc...

I pray that people don't have to learn this the hard way. Especially since I have to suffer the consequences too.

I think they will raise the debt ceiling because to not do so would be catostrophic. If the onus is put on President Obama, he will fold and sign a bill that raises the debt limit for the short-term, if the onus is put on the Republicans, they will pass somethng, or else they will get the blame.

 

[ParticleGrl]

Because it likely wouldn't stimulate and would only drive the country deeper into debt.

Why wouldn't it stimulate anything? Are you telling me that employing electrical engineers to rebuild our embarrassing power grid wouldn't lower the unemployment rate? Also, real rates on 5 year treasuries ARE negative. Given that maintenance work in infrastructure MUST (absolutely MUST) be done at some point, doing it now will PREVENT FUTURE DEBT. If you are really concerned about the long term deficit, you should want to minimize long term expenditures, which means borrowing now while the rates are negative, not slashing now and borrowing in the future when the costs and rates are higher.

Every dollar of increased government spending must correspond to one less dollar of private-sector spending.

Simply not true- right now lots of companies and banks are hoarding money. One more dollar of borrowing by the government is one more dollar of private sector spending THAT ISN'T BEING PUT TO USE RIGHT NOW. Banks and companies both have cash on hand that isn't being used. I know that a negative real rate on government bonds is crazy and counter-intuitive, but seriously try to think through the actual implications.

Probably the most nortorious example is Japan which spent half their GDP trying stimulus and lots of infrastructure projects, with very anemic economic growth. Today they have the highest level of debt-to-GDP in the Western world (about 230%) and a AA bond rating.

Japan has roughly half our unemployment, and one of the highest qualities of life in the world, despite anemic GDP growth. And their government bonds are still high quality! Given that our problem right now is terrible unemployment, why not follow their example?

As for high-speed rail, that would take years... Infrastructure itself also takes time, as one cannot just suddenly start spending a bunch of money on infrastructure.

But planning for infrastructure employs people, and begins the process. Who cares if it takes a few years? Right now we have idle workers whose skills are getting rusty AND our infrastructure sucks. Why not use the former to fix the latter? Further, it will literally NEVER be cheaper to do the repairs (borrowing money is CHEAPER than paying cash!), and a stich in time saves nine, as they say. Doing it now costs less then doing it in five or ten years, and borrowing now costs less then cash!

Also, many of the projects suggested by civil engineers in the nations infrastructure report card (things like replacing failing parts in the power grid) could easily begin quickly.

There's also the corruption issues.

Welcome to life- there is corruption in pretty much everything, private or public sector. You can add this caveat to anything you do with your time or money.

The politics are because one party wants big government while the other party wants limited government

That isn't true- Republicans have proven to be just as much a big government party as the democrats. The republicans explicitly want business-friendly "big" government policies and democrats want social-safety-net friendly "big" government policies. However, the definition of "big" is actually quite limited for both parties- President Obama and his policies would be considered conservative in pretty much any other country

 

[CAC1001]

Tends to be inefficient at what exactly?

Take a look at government-run enterprises. The nature of government is to grow and grow. Part of this is just the incentives. No government program or agency seeks to spend as little money as possible. The goal for the head of a government program or agency is to increase its size, scope, and budget.

 

[CAC1001]

SS is self-funded. The money being paid for by payroll taxes adds to the surplus, and the government borrows those funds with interest being paid back by the bonds (promise to pay). The breathless pronouncements about the collapse of SS are a shallow attempt by the right to privatize some or all of the fund, relying on private funding that is not guaranteed, and would have plunged SS into an abyss during the current economic collapse.

I don't think anyone wants to fully privatize SS for the reasons you said, but to add some elements of privatization to it. Regarding it being funded, well I hope you are correct, but then that would mean President Obama and Timothy Geitner are being disingenious in saying the benefits won't get paid out if the debt ceiling isn't raised, right?

It is time to raise the maximum income-levels that can be subjected to payroll taxes to ensure the health of the SS funds. Nothing more is needed. No increased retirement ages, no reduced benefits, and no means-testing. This isn't rocket-science, just accounting.

The thing is that SS is "supposed" to be a program in which you get paid out what you paid in. So if you raise the maximum income levels that can be subjected to it, you are going to have to also up the amount SS pays out to those people, which many of the masses wouldn't like. If you raise the income level subjected to payroll taxes without increasing the amount paid out, you turn SS into a de-facto entitlement program.

 

[ParticleGrl]

I'm not claiming it isn't solvent (as I don't know what the full truth is because I've seen multiple claims made), but that if the debt ceiling not being raised meant that SS wouldn't get paid out, it means it isn't self-funding.

When it is suggested that social security is not paid out, what is being suggested is that the government default on the bonds that it holds first (specifically, the treasuries held by the social security trust), before defaulting on bonds held by others.

 

[SixNein]

Not sure what you mean here, why would they choose to default?

By not raising the debt limit, the government makes the choice to default.

The U.S. does agree to pay its bills, as the debt would be serviced irregardless, the only reason the politics here are being played is because one party wants the debt to remain an issue while the other one doesn't want it to and neither party will just roll over for the other one.

The treasury does not have the ability to service its obligations without a raise in the debt limit. Past obligations are being mixed with a discussion over future obligations. This debate should occur when congress forges a budget. Congress should not agree to use a credit card then debate when the bill comes due.

Regarding other actions, I think many other countries around the world already are losing the expectation of the U.S. to do other actions. The countries of Eastern Europe question whether the U.S. will provide a counter to a more beligerent Russia, the countries of Asia question whether the U.S. will provide a counter to a more beligerent China, Israel questions whether the U.S. will continue to provide it with support (with the President's recent assertion that Israel should go back to the 1967 lines), etc...

Whether the US should become involved in these military issues is a different debate. I'm specifically referring to the status of the United States as a financial safe haven.

I think they will raise the debt ceiling because to not do so would be catostrophic. If the onus is put on President Obama, he will fold and sign a bill that raises the debt limit for the short-term, if the onus is put on the Republicans, they will pass somethng, or else they will get the blame.

The markets are betting on them doing something as well; however, this is starting to get close enough to make people nervous. This situation could become a disaster before the august 2nd deadline. The real question is when will investors decide to bail.

 

[CAC1001]

Why wouldn't it stimulate anything? Are you telling me that employing electrical engineers to rebuild our embarrassing power grid wouldn't lower the unemployment rate?

If you take on debt to try to employ electrical engineers, you can be preventing the employment of other people via private investment because the added debt absorbs savings that would otherwise go into private investment. Employing people also isn't necessarilly going to stimulate the economy. That's like saying you just spend money to hire a lot of people to dig trenches and another group of people to fill them back in. If you want to greatly increase the number of people hired to do this, give them spoons as opposed to shovels. It also would take time to figure out exactly what projects to work on.

Also, real rates on 5 year treasuries ARE negative. Given that maintenance work in infrastructure MUST (absolutely MUST) be done at some point, doing it now will PREVENT FUTURE DEBT. If you are really concerned about the long term deficit, you should want to minimize long term expenditures, which means borrowing now while the rates are negative, not slashing now and borrowing in the future when the costs and rates are higher.

I think borrowing in the future provided the deficit would be a lot smaller or a surplus would be fine, even if it costs a bit more. Future debt is not a problem so long as it would not be excessive, the problem is the massive amounts of debt currently being taken on. Spending a lot on infrastructure right now could saddle the country with a massive amount of debt that hamstrings the economy from recovering completely and could also result in a massive amount of inflation in the future. Infrastructure can stimulate if it will result in increased future tax revenues for the government by facilitating more GDP growth, but there are some big ifs there.

Simply not true- right now lots of companies and banks are hoarding money. One more dollar of borrowing by the government is one more dollar of private sector spending THAT ISN'T BEING PUT TO USE RIGHT NOW. Banks and companies both have cash on hand that isn't being used. I know that a negative real rate on government bonds is crazy and counter-intuitive, but seriously try to think through the actual implications.

Given time, they will get tired of hoarding all that cash and start releasing it.

Japan has roughly half our unemployment, and one of the highest qualities of life in the world, despite anemic GDP growth. And their government bonds are still high quality! Given that our problem right now is terrible unemployment, why not follow their example?

Because the problem of their very anemic GDP growth was likely caused by their excessive amounts of spending. Japan's bonds are rated AA now, as they lost their AAA rating some years ago. Their national debt is so large that if they were to raise their interest rate by one percentage point, it would wipe out whole sectors of the Japanese government. They are likely able to get around doing this because Japan itself holds 90% of its own debt.

The U.S. doesn't hold 90% of its own debt, and if a AA bond rating results, interest rates will go up, which would greatly increase the amount of money it takes to service the debt (which also threatens the credit rating further). In addition, I would say many of the policies of the current administration, simply via creating a lot of uncertainty, are artificially keeping the unemployment rate higher than what it really should be.

But planning for infrastructure employs people, and begins the process. Who cares if it takes a few years? Right now we have idle workers whose skills are getting rusty AND our infrastructure sucks. Why not use the former to fix the latter? Further, it will literally NEVER be cheaper to do the repairs (borrowing money is CHEAPER than paying cash!), and a stich in time saves nine, as they say. Doing it now costs less then doing it in five or ten years, and borrowing now costs less then cash!

It employs people, over time, but the idea is that the economy should not be stuck in a recession for years, which means by the time such a stimulus begins to take effect, the economy would be recovering. Also provided it does start to reduce unemployment, it can create an artificial view of recovery, because if the private-sector remains depressed due to the infrastructure spending, then essentially we have a government debt-driven economy, which when the government reaches its limit and must curtail spending, we end up back at square one, only now with a lot more debt.

Also, many of the projects suggested by civil engineers in the nations infrastructure report card (things like replacing failing parts in the power grid) could easily begin quickly.

If the debt to do such projects wouldn't be excessive, that could be a good thing to work on I think if the work could begin quickly.

Welcome to life- there is corruption in pretty much everything, private or public sector. You can add this caveat to anything you do with your time or money.

Yes, but depending on the level of corruption, how much bang does one get for the buck exactly? Are the contractors going to try to milk the government for as much as they can and drag the length of the work out much longer than it really takes so as to get more money? It's like if you tried to stimulate by gunning up the defense budget, you would have to be very careful about defense contractors trying to drag things out and milk the taxpayer.

That isn't true- Republicans have proven to be just as much a big government party as the democrats. The republicans explicitly want business-friendly "big" government policies and democrats want social-safety-net friendly "big" government policies. However, the definition of "big" is actually quite limited for both parties- President Obama and his policies would be considered conservative in pretty much any other country

The people who vote Republican do not want big government. The Republican party wrt to the politicians themselves, yes, is really just a big-government party in disguise, something the Republican voters have always lamented. The Republican party tends to be a big government party for Big Business (which benefits from big government), while the Democrats tend to be a big government party for the social welfare state and the labor unions, trial lawyers, and the environmental lobby (all of which also benefit from big government, albeit a slightly different kind of big government then Big Business; Big Business likes regulations so long as they hurt smaller competitors, and also loves welfare if it means handouts for them).