The Democrats have it wrong

Funny, because the empotional argument that has very little logical roots seems to be coming from the right i=on this.

The debt isn't at a critical stage right now.

Spending has to be increased for a short time to enact a proper stimulus (40% tax cuts in it hurt the effectiveness of it... Obama is too far to the right wing side of this issue).

And the right is making an emotional appeal to cut spending now even when the economics is pretty clear that we need to spend until recovery is underway. If we don't, the right wing seems to say that all sorts of clalamity will happen. It's lazy economics or stupid ideology behind the arguments. but they don;t pass the smell test.

 

401(k) plans are crap. The last couple of recessions showed that. Which is why I'll always advocate for stronger rules on defined benefit plans. Something not clear (maybe I missed it) is that no one says if the Galveston plan is in conjunction with a 401(k) plan or pension. Nor if it could be done on a large scale.

Higher payroll taxes in the Galveston plan, lower benefits for spouses/dependents and very little in info on the first link left me with more questions than answers.

And as for the Federal Reserve... we're in a recession (possibly at the start of a depression because the GOP obstructs and the Democrats are scared to push for the necessary medicine) and the QE programs and other monetary policies right now are necessary. Just like any investment, there are risks, and this is one that Galveston County employees voted for.

 

If you increase money supply you would do nothing but increase inflation. Higher inflation would hurt consumers do to rising costs of consumer goods and commodities. We dont want to repeat a similar stagflation like the 70s after we forsook the gold standard permanently.

Might I mention that until government got involved in recession recovery, we never had a depression. We never had a double dip recession. And we never were immersed in such debt.

I agree that demand must increase for jobs, but how would we increase demand if we follow in FDR's footsteps by inflicting punitive legislation on companies by forcing them to negotiate with Unions and follow price and wage controls?

 

There is some truth and some fallacy in the above.

The recession will end when private consumption increases. Borrowing and spending by the government negatively effects private consumption because inflation results in a loss of purchasing power so less goods and services are actually consumed.

The United States was not removed from the "gold standard" in the 1970's. Former President Nixon's executive order removed the US from an international gold standard (the Bretton Woods agreement) but did not remove the US economy from the gold standard. The US "gold standard" was actually under suspension from the FDR adimistration under the Emergency Banking Act of 1934 which borrowed the lawful money (gold coins) from the American People and Nixon did not address it at all. In 1974 the Congress and President Ford repealed the Emergency Banking Act and reinstated the Right of Americans to possess gold coins. In the early 1980's the Congress also re-authorized the Gold Clause were based upon contract payments could be required in gold coins (lawful money) produced by the US Mint. Congress also redefined the lawful money with the American Gold Bullion Coin Act of 1984 where new American Gold Eagles replace Double Eagles as the current lawful money of the United States.

US law currently states that (gold and silver) Coins and Currency (promissory notes issued and backed by the US government such as Federal Reserve Notes) are Legal Tender and that Currency is redeemable in Lawful Money. Of course that is only what the law says and our government and the Federal Reserve are not in complaince with these laws.

 

Most economists, who don't have their heads shoved up their political bias, should agree that during a recessionary-type economy, that it's a time to increase spending and decrease taxes. However, this should be short-term planning, and in parallel the government and People need to take actions to correct their course...

 

About 60% of our economy is personal spending/consumption. If government spending is reduced, and/or taxes increased, this immediately places downward pressure on the 60% number.

I suggest that 60% is too high and risky. Increasing exports can drive this number down which lowers the risks to our economy...

 

Buzzzzz. Wrong. Plenty of economist advocate tax increases on the super wealthy since taxation of that income has no affect on investment or consumption habits.

In short you're playing fast and loose. Tax increases are only to be avoided during a recession where they decrease consumption or investment. Tax increases on the rich don't have that effect. Indeed, they have a stimulus effect if tax hikes on the rich are coupled with decreases on the lower brackets or increased government services to them (resulting in more cash in consumers' pockets, resulting in more consuption and investment)

If you think otherwise, explain to us how increased taxes on Bill Gates will affect what he buys or where he invests. Be my guest on this fictional narrative of market evangelists.

 

Government spending creates a dependence on government that won't be ended until spending is reduced. If we allowed the jobs in the private sector to grow, we would have self-sustainable growth (growth without external interference) that won't be hurt just because the government decides to balance the budget.

Not to mention that private sector jobs don't rely on the arbitrary redistribution of money that politicized projects like the Stimulus package provide. In the private sector, money goes to the more productive companies and their employees. In a politicized distribution of money, the cash distribution often serves a political purpose (buying votes---see WPA corruption, Stimulus Package waste, Medicare Part D, etc.) and does not increase efficiency and productivity in the market.

 

'Your' problem is that you believe all people in the top tax bracket are just like Bill Gates...and this is as wrong as wrong can get.

You further believe that all of the people in the top tax bracket ARE NOT consumers...and this is as wrong as wrong can get.

You need to establish some 'right' thinking...

 

The problem we have today is that the numbers are so large! We no longer talk about million$, and billion$ quickly become trillion$. In order to cut the spending to whatever appropriate levels, and avoid the negative hit to the economy, we need to enact a 10 or 20 year plan. A 10 year plan requires a 10% reduction per year! A 20 year plan requires a 5% reduction per year. But no matter what longer term plan, it must start today!

And I think we should stop looking at total government expenditures and look solely at per capita spending. Today that number is $11,000+ for every US citizen. The collective we need to ascertain what this number desires to be; $8K per person, $10K per person, $15K per person?? Then let the 10 or 20 year plan achieve the goal...

 

The OP is reasonable. We need to cut our $3.55 trillion dollar budget by at least half, because half of it is deficit spending. If we can keep it cut for a fifteen year period, with some tax increases, we might be able to pay down our debt. I don't see a way to do this will taxes or spending cuts alone. But I'm open to suggestions.

 

There is a historical fallacy related to the belief that raising taxes will lead to a balanced budget. Taxes have been raised (and lowered) in the past always with the promises of spending reductions. The taxes change but invariably the spending continues to go up and the promised spending cuts never happen. Raising taxes will not lead to a balanced budget simple because the politicians, both Democrats and Republicans, aren't telling the American taxpayer the truth when it comes to reducing expendatures.

As I've repeatedly stated, FIRST CUT EXPENDATURES. We, the American People, are tired of empty promises from Congress. We have a stack of promises from Congress that they were going to reduce spending in the 1970's, 1980's, 1990's and 2000's which have never been fulfilled. Fulfill those promises first. Eliminate the excess spending first and then, and only then, if there is a justifiable reason to raise taxes then present it to us. Eliminate the 40 cents of deficits on every dollar of spending that should never have existed and then talk to us about taxation.

We don't want another empty promise about reducing expendatures someday in the distant future so that taxes can be raised simply to support even more deficit spending. We're tired of being lied to by Congress.

 

OK this I can "semi-agree" with.

The biggest problem with making cuts is this:

http://milazzonpolitics.com/2011/02/27/bill-maher-explains-the-budget-with-dinner/

If the USA is really serious about making expenditure cuts, then get busy on the taters, corn and fried chicken! The garnish is about irrelevant. In fact, I'd say the garnish needs to be INCREASED.

Taxes need to go up and government programs need sponsoring (a rather small portion of the overall budget comparatively) in order to increase employment and overall cash flow in the country. If this smacks of wealth re-distribution...yer right...it most certainly is.

The bottom line for this battle of the economic beliefs is;
Keynes was correct (mostly) and Friedman can rot in hell.
BTW...HISTORY exemplifies this quite clearly.

 

To quote the Sarah Palin response from the link:

Hey Sarah, a 10% cut across the board only results in a $350 billion reduction is spending but the deficit is over a trillion dollars per year and the national debt, which also has to be reduces, is over $14 trillion. A 10% cut across the board does not balance the budget. We need over a 40% reduction in spending if we hope to balance the budget.

After the Congress reaches a balanced budget then we need to talk about a tax increase for ALL Americans to pay down the national debt. Allowing the Bush era tax cuts to expire at the end of 2013 is the correct thing to do. It will increase revenues by $370 billion annually that can pay down the national debt. Even with a $370 billion tax increase it would take over 40 years to eliminate the national debt if we had balanced budgets. The Bush era tax cuts should have been repealed in 2003 and should never have been extended last year.

The only ones that advocate Keynesian economics are the bankers and the wealthy as they are the only beneficiaries of it. The primary tool of Keynesian economics is the control of the money supply and, as we've all seen and know, expansion of the money supply literally steals the labor of the individuals.

I will use the analogy of gasoline and money. Gasoline is stored energy and money is stored labor. When and individual works for a living they are exchanging their labor for commodities. If they don't immediately require the commodity then they store their labor in "money" and this works when money is a commodity. When money is not a commodity and the money supply is artificially expanded with fiat promissory (Federal Reserve) notes the value of the money is lost through inflation. That loss of value, or the ability to redeem the money in the same commodities over time, reflects the loss of labor expended by the individual. We've lost over 97% of the gasoline in the can through inflationary monetary policies of Keynesiansim.

As we've seen wages are not keeping up with inflation but investments are. The wealthy have their assets in investments, not labor, so they benefit from inflation while a laborer is continually losing their purchasing power, or the fruits of their labor, through inflation.

If we want to know why the wealthy are gaining a larger percentage of the assets of America then all we need to do is look at Kenyesian economic policies as they are the method by which this transfer of wealth is accomplished.

Here is a link to the effects of inflation which is Keynesian economics in action.

http://libertymaven.com/2011/04/19/inflation-destroys-real-wages/11557/

 

I would agree with gradual cuts as long as they are cumulative and affect the costliest programs (entitlements).

I think spending should rather be valued by % of GDP. Try to aim for spending at or a little higher than 18% of GDP (thats the average tax revenue taken in). I would suggest making a gradual cut to 30% of GDP by 5 years, and then cutting it to 25% by 2021.

However, to achieve this, serious reforms need to be considered in our entitlement programs. Right now, Social Security is nothing less than a sloppy ponzi scheme. You don't live to 65, say good bye to your money. Too much recipients, not enough benefactors, resulting in huge deficits in the coming years. Use personal accounts so each person gets his/her own money that they saved up over the years. Its only fair.

Cut out foreign aid and war on drugs. End tax subsidies. Doing those alone could easily be a huge step towards lowering spending by 5-10% of GDP.

 

While entitlements, specifically Social Security and Medicare, are extremely expensive they do have their own funding base in FICA/Payroll taxes. Currently they have a limited surplus based upon over-taxation since the 1980's which basically violated the "pay as you go" funding that was initially established for these programs. When those excess tax revenues eventually run out then the programs go belly up. But even now, because they do have dedicated taxation, they are not the costliest of programs.

DoD expendatures can be easily reduced by 80% and the US would still be spending more annually than any other nation in the world on defense. This is at a time when not a single nation presents any threat of invading the United States.

While the excessive expendatures related to social programs must certainly be reduced so must the excessive expendatures related to the US military which do not directly support the defense of the United States from potential attacks of foreign nations.

 

Interesting then what is Emperor Child Obama talking about that the money may not be there to send out SS checks?

 

The PAYGO program was later altered by congress to exempt entitlement programs i think. Medicare costs are projected to increase exponentially, Social security will run permanent deficits by the end of this decade, and the social security trust fund has nothing but IOUs from the government. They are costly, and the cost will only continue to rise exponentially.

And that Robert Gates announced the day before 9/11 that the DoD could not account for over $2 trillion (i think) of defense spending.

Yep. Avoid costly interventions like the Libya mission that doesnt impact US interests at all. Avoid interfering in the drug wars in latin america with the war on drugs. If we legalized non-addictive drugs like marijuana mexican cartels would be stripped of their major source of funding. (not to mention new tax revenue on drug sales)

 

Debt and deficit are two separate things. Above you talk about reducing deficit spending, but if you don't create a budget surplus, you cannot pay down debt...unless you cancel government services.

Since we remain in a recessionary-type economy, how about the idea of just serving the debt for a few more years? Why reduce spending or increase taxes when the economy remains fragile?

 

Today the government's per capita spending is about $11,000. I personally cannot say if this is too high or maybe too low...this depends on what the collective we expect from our federal government.

But for this discussion, let's say $11,000 is acceptable. Today's population is about 310 million and it is forecasted to increase to about 400 million by 2050. This is on average an increase of ~2.31 million per year. If government spending remains at $11,000 per capita, then each year just for population growth the government will spend an additional $25.4 billion. If the government realizes a 2.5% inflation on spending per year, this is another $87.5 billion. So if we do absolutely nothing, and just respond to population growth and inflation, government spending must increase by about $113 billion per year! Any other natural disasters or national emergencies or those nagging and continuous and unnecessary wars will simply exacerbate the annual government spending increases.

Instead of all the talk about reducing government services, I would rather see the dialogue turn to talking about how to help the USA become much more competitive on the global scale. If we can increase exports by $1-2 trillion, this solves all the government's deficit issues...

 

It's all political BS and an outright lie.

Even if government does not raise the debt ceiling, the government is still receiving on average about $180-200 billion per month in tax revenues!

And as Shiva mentioned, Social Security pays for itself through FICA withholding.

So, Obama and Congress can still spend $180-200 billion per month...it's just a matter of how they prioritize the spending?? They MUST service the national debt and the remaining can be spent anywhere they decide. If Obama is threatening not to pay SS, then I guess he is prioritizing other government programs over SS...or he is lying...but for sure...he will soon be asking for your vote...

 

Which only shows that Obama and left of our society is lieing, can't deal with liars.

 

I like how you're calling progressives conservatards and all, but truly the funny thing is you're saying they are doing what the right is doing by playing Calvinball, and changing the rules as they go. As to tax hikes, since it won't hurt demand if the hikes happen to the wealthiest americans, i don't think there is really an argument you guys can make against a return to Clinton Era rate, or even one or two more tax brackets on those making 41 million/year and $5 million/year.

 

But you're willing to use hyperbole to make a case for something that isn't even on the horizon...

All of those depressions and recessions before 1929 are a hoax? Now you're plainly trying to rewrite U.S. History.

First, negotiating with unions just means that there is a bargaining contract, which doesn't hurt most companies, because wgaes are usually not one of the larger expenses in many industries. Second, no one is talking about price or wage controls, so again you're relying on hyperbole to make an argument. and third, if those unions and companies agree to terms, they both win: unions with higher wages/benefits for workers and companies with more productive employees. The economy wins with larger demand as a result. I'll note that in other exchanges with you, you dismissed demand with supply-side rhetoric.