Democrats & Liberals Archives

Deflation, Not Deficit Spending, Is The Real Threat.

The folks in the red column are aghast at the latest CBO figures. They’re worried about the wrong thing, at this point. The real problem is that our economy has been running to fill trillions of dollars more worth of demand than now exists, in the wake of the economic collapse. They blasted the stimulus bill as fiscally unjustifiable, and found religion on spending just in time to work to prevent it at exactly the time we need more of it.

The term that should be grilled into everybody's brain at this point is excess capacity. This recession is not being fueled by people being put off of products by high prices. The failure of the credit markets is causing huge amounts of slack to build up in the economy. Unfortunately, we set this whole economy up with a mind to support much more commerce. People's jobs, pay level, and other economic necessities are dependent on somebody else getting paid, or getting a loan, who isn't. Consumer spending was dependent on easy credit. Now consumers aren't getting so much of it. Think that will help with overcapacity?

The toughest thing about deflation is the resistance there will be and must be to the lowering of prices. Companies set up their bottom lines with a certain level of income in mind, paid workers, made new investments, so on and so forth. Now they'll have to cut back.

Government can't make up for this all. But it can help. The question is whether it will be allowed to help as much as is necessary, and in time to stop the backwards drag on the economy.

Some simply will not let that be done, if they can help it. Many of them simply make assumptions about the economy, about what a bad thing deficits are, and apply that generalization recklessly, regardless of the setting or time. To them, the fact that pressures are deflationary is just some technicality. It's an recession. Cut government spending, cut taxes, cut interest rates, and all will be fine. Except ther are no interest rates to cut, Obama's already cutting taxes, and spending?

Cutting spending in this time, when private enterprise is having a hard time keeping up demand, is just feeding the problem. Nonetheless, it's the party line, and the party wants to win the next election. The best way to win that, they think, is to get in the way.

No more spending, nows the time to be austere, they say. They'll shout down FDR, even while using WWII, essentially the biggest experiment in government economic redistribution ever conceived, as their counter example. Why? It's a war. Somehow that changes the fact of who's doing the spending, though I don't know how. Rather than learn from WWII, the Republicans simply use it as a talking point, not really getting into the details of how "un-free market" the whole enterprise was.

Not that we want to be trying to repeat each and everything done. One fact that jumps out to me: America gained a competitive advantage in the wake of WWII in terms of manufacturing, in terms of not having the competitors they once had in Europe. That's not going to be repeated, and shouldn't be repeated if we're lucky. A large scale land war in China would be a hell of a thing to try and fight. But maybe there are other things we can do to increase our competitive edge.

This is where Obama's budget priorities become important, and where the question of deficits truly enters into the equation. What defines deficits is the difference between what taxes bring in, and what we spend. No doubt, there will come a time when our economy recovers. When it does, deficit reduction becomes a priority, so we can avoid inflation. But until that happens, the key means of reducing long term debt is making our recovery quicker, and more profound.

The question in this critical time is who wants to play sail to such an agenda, and who wants to play anchor.

The Republicans have chosen to be anchors.

The distinguishing mark of Republican politics so far this year, is that whatever Obama says, or calls for, the Republicans contradict, without offering real plans in their place, beyond their default political points of the last few decades; you know, the ones that got us into this mess? The truth is, both Democrats and Republicans bought into this mess, helped create it. I was listening on NPR today, and during a history of the crisis, it became clear that the actions of both of the previous two administrations contributed to this mess. But they had one error in common: they thought they could leave derivatives and other such instruments to be self-policed by the market.

Such errors were numerous, and they were bipartisan. But there was a crucial difference: Democrats can let go of it, without risk to their party identity. Republicans are stuck in a position where theirs is the message most likely to set people off in anger or disgust. They're focused right now on changing the political weather. But they ignore the change in the political climate.

The Democrats may be tentative, sometimes wrongheaded, sometimes saddled with the baggage of their past, but they're moving in a new direction, and for this crisis, it's the right direction.

I believe Americans have a choice here: choose a familiar but inappropriate set of policy priorities, or deal with the crisis at hand, with the means that best suit the situation. This isn't about Conservatism or Liberalism, it's about macroeconomics. All the politics has done is paralyzed people into thinking in rigid, unhelpful ways We do not need to have an extended debate whose main questions both voters and the circumstances have answered.

We need to solve the problem, not add to it with a return to the old politics.

Posted by Stephen Daugherty at March 20, 2009 10:03 PM
Comments
Comment #278173

Stephen,

You are drifting toward the soggy apology from the Great Depression stating the economy had merely suffered from “overcapacity”. Of course the fifties and sixties proved no such thing was true.
What we really suffered from was underconfidence. What is happening in Congress this week is not blazing a path to confidence. Neither what the CBO told us today nor the denial tossed on the wall by the administration afterwards (to see if it would stick) were confidence builders. And the last time we attempted to pull off a stunt like that by the Fed this week (monetizing government debt) inflation quartered the value of the dollar over the next four years.

Oh well, at least we’ll all soon know what it means to be a “millionaire”.

Bracket creep, Bracket creep, It’s Christmas time in D.C.

Posted by: Lee Jamison at March 21, 2009 1:30 AM
Comment #278177

I know! I know! I know! The solution is…guess what…cut taxes and deregulate. No more deficit spending for us…that’s for conservatives and Republicans. Now that Democrats are in there it’s time to get serious. The top five percent needs a fifty percent reduction in taxes and the bottom ninty-five percent needs an eighty percent increase in theirs, and throw the law books out regarding business and finance.

See, I told you I knew what to do.

Posted by: Marysdude at March 21, 2009 7:00 AM
Comment #278178

I am glad to see you are still keeping the wolves
at bay, an keeping them at the dark side. Perhaps
once their funds drop a little more, they may see
the light. I looked over some of your past posts an
find that you still still have that neat little
spark of quality about you.

Posted by: _DAVID_ at March 21, 2009 7:54 AM
Comment #278179

Stephen:

You miss the whole point of the CBO report. It has nothing to do with deflation or the economic crisis. It has to do with a trillion dollar deficit in 2019. Obama wont be president in 2019. Are you still expecting deflation then?

You are picking straw men with this post in order to knock them down.

This is liberalism on a credit card. And it is not related to republican fiscal irresponsibility, it is way way way way past that. It is borrowing more than Republicans ever dreamed of, in the future good times. CBO is projecting a return to a normal economy and even in those times, Obama is borrowing at rates not seen since WWII.

Unless you are planning to keep us in a state of emergency for the next ten years, this budget is dangerous and puts America on a course of economic destruction.

Unless you have an explanation of why you support 5 o 6% deficits in good times.

Posted by: Craig Holmes at March 21, 2009 8:07 AM
Comment #278181

Stephen, the above post is for you. Sorry about
the mix up. DAVID

Posted by: _DAVID_ at March 21, 2009 8:33 AM
Comment #278182

Stephen, the above post is for you. Sorry about
the mix up. DAVID

Posted by: _DAVID_ at March 21, 2009 8:38 AM
Comment #278183

Craig Holmes,

Another point was the CBO’s use of the word “unsustainable”. They know full well this is a conjecture and it may itself be overoptimistic. An economy sustaining such deficits would be structually unsound. In our case it could lead to a global economic collapse that would make the recession so far look like one of those gratuitous dips near the end of a roller coaster ride.

When all the clatter accompanying being artificially dragged upward by deficit bingeing is over we’ll get to find out what G forces are all about.

Posted by: Lee Jamison at March 21, 2009 8:41 AM
Comment #278184

Lee Jamison-
People weren’t lacking in confidence in the economy when this started, at least not in proportion to the crash that occured. If people had known just how overvalued the assets of the banks were, on just what thin ice their finances were, we would have seen a decline earlier.

Instead, we were trading pretty exuberantly, with some downward corrections, right up to the point where Lehman Brother’s collapsed. And that took the rug right out from everybody.

Now we got the opposite problem, and its not merely a problem of underconfidence. To diagnose it as such is to ignore the rational and irrational means by which people establish what it is in their interests to do.

I’m happy to see Wells Fargo able to complain and pay back the taxpayers for the loan and the tax breaks which helped his company to acquire Wells Fargo. If his company continues to lend responsibly, that will be a great asset to this economy. When Businesses can get the loans and lines of credit they need, when consumers can buy what they need to buy, plus what they want to buy, when people can look at their investments once more and feel like its safe to put more in, or stop taking more out, then we’ll be in a position to get out of this mess.

But first, we have to deal with the fact that we have more economic muscle than we have economic energy. The Republican’s response is apparently to let the patient sicken and atrophy until the energy level is matched by the capacity of the patient to move. It’s also to avoid doing anything about the actual etiology of the illness involved, and just hope the patient gets better while the disease remains.

We’re not going to hype our way out of it. While it will be useful to inspire confidence and cheer people up to use the money they have, that can only go so far until people’s rational, useful judgment tells them to stop.

Until we deal with the fact and the causes of the overcapacity, what’s laying an otherwise healthy and strong economy in bed, no amount of pep talks will convince people to spend. They’re too wary of what has occured before, times when America was led down the garden path of irresponsible behavior by politicans of both parties, who promised that if we just went out and spent, went out and financed things, all would be good.

Republicans offer tax cuts in the place of spending, but if people are earning less, tax cuts bring less money, not more, into the economy. Obama’s plans, so far, have been to disentangle the mess on Wall Street, determine which banks can recover on their own, and furthermoe stimulate the economy with sharp, strong burst of timely government investment, which will directly create jobs.

The Republicans have not supported that plan. Instead, they’ve supported, depending on who you ask, allowing the overcapacity to continue, whether for educational or doctrinal reasons, cutting spending in a time where government’s practically the only entity that can borrow large amounts of money, and further tax cuts, even total packages of tax cuts.

It’s worse than unimaginative. It’s counterproductive, confused, and ultimately, just an excuse to do the partisan thing. This is the wrong time for Republicans to start beating the same old war drums. They’ve chosen to exploit anxieties over government deficits precisely at a time when the inflation it would cause would hardly be a problem at all.

Or put another way, you’re doing your absolute best to convince the American people that the causes of this crisis are like the causes of the 1970’s crisis, when the nature of the crisis is completely different. You’re giving antibiotics to a patient with viral pneumonia. Worse, if you succeed, you’ll essentially be taking the country down the road to the same kind of situation We saw in the thirties and the Japanese have seen for the past couple of decades, where a deflationary slump exerts a gravitational pull on economic growth and full utilization of our economic muscle. It took a World War, and the production capacity it required to jog us out of the depression the last time. The Japanese are still not out of their slump.

I don’t want this country to have to wait for a crisis that requires extreme economic measures like those that accompanied WWII in order to get out of this recession. I don’t buy that we should leave large part of our economy idle for educational or doctrinal purposes. I don’t think tax cuts will do the trick, any more than they did the trick for Hoover.

The Republicans need to wake up, and start thinking their policy through, rather than simply reciting their party line. They need to start cooperating in saving this economy, rather than opposing efforts like that for their own benefit. The Republican can help, and their ideas can help to, but they must be expressed appropriately to the time and the situation, and not simply be carbon-copied from the glory days of the movement.

Posted by: Stephen Daugherty at March 21, 2009 9:01 AM
Comment #278185

Craig Holmes-
The deficit has everything to do with deflation and the economic crisis. When an economy suffers, revenues to the government go down. Deflation is an economy regularly performing under its capacity to perform. Given the same level of spending, or an increase, this raises deficits.

If we don’t handle things right here, the deficits get worse, not better, and the consequences of cutting spending, the same. You talk about straw men, well this is one: the strawman of fiscal irresponsibility. The Republicans are missing the fiscal forest for the deficit trees.

Let me remind you, as I’ve reminded Mr. Jamison, that WWII was the solution to the deflationary crisis of the Great Depression. We spent because we had to spend, and then we tightened our belt seriously after that to compensate. That might just be what we have to do to get past our current situation.

I have no desire to keep us in a state of emergency for the next decade, however, the real world consequences of the Republican’s kneejerk reaction to this policy, may just end up being a real continuation of that emergency.

The budget is not dangerous. The whole point of a ten year outlook is to shape that policy. You’re right that such deficit rates probably aren’t a good idea to keep up. However, you folks have neglected a couple of critical issues.

First, the CBO assumes a recovery. And if it doesn’t show up, what then?

This budget we’re working on now, focuses on strengthening the economy, so that we do have that recovery to worry about. If we don’t have that recovery, then we run into a problem: even if we don’t add a single dollar of additional spending, the deflationary crisis will drag down revenues, causing even greater deficits. And, like I mentioned, government cuts, or even insufficient spending during a deflationary crisis can have a negative effect.

The Republicans have yet to offer an alternative plan which anybody can judge to do better. Until they can come up with a better plan, and run it through the same calculations to prove its superiority, then all this boasting about the superiority of Republican policy is worthless.

And that’s if the CBO’s assumptions are correct. If the economy doesn’t recover as soon as it does in these calculations, then the Republican measures are almost certain to make things worse.

Posted by: Stephen Daugherty at March 21, 2009 9:23 AM
Comment #278186

Stephen:

You are off topic. The Obama budget that is causing all the issue is his long term priorities. It’s not so much about the recession as about health care, the environment, education etc etc.

Now we know the truth about the campaign.

He campaigned saying we needed a more just society and the wealth should pay. But that isn’t what his budget priorities say. The Obama budget says my grand daughter will pay!! Obama is giving the bill to all those idealistic young people who were so excited. In other words it’s bait and switch.

What is really hard is that the money he is borrowing will come due right when these young people will be needed to step up to the plate and pay of boomer retirement. It is a one two punch.

The ten year projections are nothing compared with the next ten to twenty. For instance before the Obama expansion of government federal expenses were already projected to increase by 50% from 20% of GDP to 30% by the CBO. So without Obama we are already up there. Now he wants to add 9 Trillion of debt to the heap.

So first of all your post is off topic because you are looking at the crisis and this budget is about long term budget outlooks.

But secondly is shows that the Obama budget really will be paid for by our young.

Posted by: Craig Holmes at March 21, 2009 9:32 AM
Comment #278188

Craig Holmes-
Off topic? Pardon me. I assumed the topic was how the budget deficit was secondary to the deflationary slack in our economy, which itself negatively effects the deficit. If we try and combat this crisis with sharp tax increases or spending cuts, we stand a chance of actually making the situation worse.

Obama’s budget priorities tackle some of the greatest problems we have: energy that’s bound to get more expensive; healthcare that’s already a serious drag on our economy, with no correlation of increased quality with that elevated price; the creation of new jobs to replace those we lost, especially with non-exportable ones; and finally a commitment to the sort of education that guarantees that more of our children will be able to contribute to the economy and the revenues that determine things like deficits and surpluses.

Finally, let me post the words of the very man that you folks reference when you call his numbers unsustainable:

CBO’s New Numbers Peter R. Orszag, Director

CBO released its re-estimate of the President’s Budget today. As expected, it showed a worsening of both the economic outlook and the fiscal picture since CBO’s January report.

Some will argue that CBO’s worsened projections are a reason for inaction in the face of today’s large economic and fiscal challenges. But differences in inherently uncertain long-term deficit projections are not a reason to ignore serious issues that have for too long been overlooked and that will only grow worse with time.

First, CBO’s projections, like any budget projections, are subject to a high degree of uncertainty. (Trust me…I know the former CBO Director quite well!) As an example of how much budget projections can shift, at this point last year, CBO was projecting a 2009 baseline deficit of $207 billion. It is now projecting a baseline deficit of about $1.7 trillion. CBO itself has estimated the margin of error around its 5-year deficit projection to be about 5 percent of GDP in either direction—which means the confidence interval around the 2014 deficit is plus or minus about $900 billion.

Also note that a key driver of the new CBO deficit numbers after 2014 are estimates about long-term economic growth—where CBO is somewhat more pessimistic than the consensus. For example, CBO projects long-term real economic growth that declines to 2.2 percent per year. Blue Chip pegs long-term real growth at 2.6 percent per year and the Federal Reserve forecasts long-term real growth of between 2.5 and 2.7 percent—the same as the Administration, which is projecting real long-term growth of 2.6 percent. These differences may not seem big, but over time they accumulate. And since the deficit is the difference between two much larger numbers—spending and revenue—even relatively small differences in assumptions can have a magnified impact on the deficit. (As an example, imagine that spending is $1,050 and revenue is $1,000, so the deficit is $50. If revenue declines by just 10 percent, the deficit triples to $150.)

Second, and more importantly, the CBO report only underscores the severity of the economic and fiscal crisis the Administration has inherited. There is need for urgent action to get our economy moving again, invest for the future, and put the nation on a sustainable fiscal path. The President’s Budget has proposed to do exactly this by addressing our big challenges head on:

*Invest in health care, since rising health care costs are a burden not only for the federal government but also for families, companies, and states;

*Invest in education and in our most precious resource—our people—through a major new commitment to early childhood education, scaling up innovative new programs in our schools, and opening up the doors to college;

*Invest in clean energy technologies like wind power and solar power, advanced biofuels, and fuel-efficient cars—investments that would help free us from foreign oil, create millions of jobs that pay well and can’t be outsourced, and make clean energy the profitable kind of energy; and

*Cut the deficit in half by 2013.

The new CBO numbers do not change our commitment to these goals or our ability to achieve them. I am confident that the budget resolutions both the House and Senate will start to consider next week will reflect these objectives.

We have to consider that economic growth is part and parcel of what gives government its revenues. If the economy goes down, so do revenues. Up? So do revenues. Anything that improves the economy, and the efficiency of its operation helps reduce or even prevent deficits. Additionally, as Mr. Orszag says, the confidence interval for the ten year projection is almost a trillion dollars in either direction, and their numbers depend on a fairly pessimistic picture of growth.

Which is to say that Federal revenues could increase dramatically if the economy also increased dramatically.

The time for melodrama is over. If we solve our economic problems, stop the onset of deflation before it gets out of control, if we deal with our budget concerns at a more appropriate time, when we’re back in a situation of growth, where inflation is once more the concern, then we can start imposing the needed austerity measures. Until then, this obsession about deficits is only a dangerous, counterproductive distraction.

Posted by: Stephen Daugherty at March 21, 2009 10:07 AM
Comment #278189

Stephen

“The Democrats may be tentative, sometimes wrongheaded, sometimes saddled with the baggage of their past, but they’re moving in a new direction, and for this crisis, it’s the right direction.”

The Democrats certainly have not been tentative. You are right that they are saddled with the baggage of the past, which is why they are NOT moving in a new direction. This is a return to the sort of policies we pursued in the 1970s, only much, much bigger.

People ask for THE solution. There ain’t one. There are iterative solutions, where you do something, adjust to changed circumstance – circumstances your actions have helped change – and then do something else. The market is good at this because it is diffuse. It is not that the market is better at making the choice, but it is better at changing direction because the bad decisions are too costly for a firm to bear. Government can tax and coerce, so it can stay on the wrong course for a long time.

The IDEA of a stimulus is sound. The implementation is the problem. Congress has loaded on extras and committed us to a course which will probably not work. It is not that the course itself is wrong today, but it will require course corrections which the government will have a hard time doing, BECAUSE it is the government and it doesn’t have to.

Democrats like to say that government didn’t work well because of Bush. Their performance so far has shown that business as usual in the government is … business as usual.

The question is how much of the economy should be controlled by the government. The new direction would vastly increase the size of government. We would be more like France or Germany. These are nice places, but they tolerate high unemployment and low growth and in this slowdown they are doing even worse than we are.

BTW – I see that the Iranians have rejected the friendly outreach by our President. I think that both Republicans and Democrats can agree that these guys are just A-holes.

Posted by: Christine at March 21, 2009 10:36 AM
Comment #278191

Christine-

The Democrats certainly have not been tentative. You are right that they are saddled with the baggage of the past, which is why they are NOT moving in a new direction. This is a return to the sort of policies we pursued in the 1970s, only much, much bigger.

That generalization depends on one deficit being like another. Contrary to what your colleagues assertions, though, policy is much different. Deficits existed, but that was probably more of a product of a time when stagflation ate away at the economy. Debt as percentage of GDP actually fell, and budgets were brought lower, or at least matched with revenues. It’s Reagan who raised debt, Reagan who started running massive deficits, something that became standard for every Republican term in office since then.

The Fed did not have the interest rates cut to zero. Quite the opposite, in fact: it raised them sky-high. Tax rates were high, much higher than Reagan’s, which are currently greater than Obama’s. Inflation was the monster eating up resources in that day and age. Now we have massive deflation.

So the irony here is that we’re actually seeing a policy more like Reagans: high deficit spending, relatively low taxes, reduced interest rates, only we’re seeing it in a far more appropriate setting: when what America needs is more capital pumped into the economy, more dollars in place.

Normally, I would agree with you: let the market address the inbalance. But right now, the market is like somebody who’s just been dropped off a building or hit by a car. The organs of our economy are malfunctioning, functioning inefficiently. Left to itself, if it even recovers, it will spend years just getting back to where it was, and we WILL feel the loss of those years of productivity.

We’ve been saddled with the consequence of the Republican’s attempt to let nature take its course, with the collapse that Lehman Brother’s bankruptcy precipitated. We might have had a better time of it had the Bush Administration not put doctrine before necessity. Now we’re saddled with a bunch of companies that preferred the more wasteful and less supervised version of TARP, and Republicans are taking these wards of the state at their word, even as they socialize their losses at taxpayer expense.

I don’t think most Democrats want us to continue to prop up these banks forever. Unfortunately, the Business friendly approach that they’ve brought to the table essentially does just that, and unfortunately that may be what Geithner goes along with.

My sense is that if you’re going to take government measures, you get it done and over with quickly. Though I believe in government taking a bigger role in society and in regulation than its been so far, this is not exactly what I had in mind. I would prefer that we be able to put this behind us and return to a normal economy.

Business doesn’t need a friend in Washington, but a check and a balance to their misbehavior.

Posted by: Stephen Daugherty at March 21, 2009 12:18 PM
Comment #278194

Stephen,

Where is the effective “check and balance’ to government misbehavior, expansion, and bloat?

Posted by: Lee Jamison at March 21, 2009 12:34 PM
Comment #278197

Lee Jamison-
It’s called paying attention. It’s called an attentive press. It’s called we have bloggers that are no less merciless with Democrats than with Republicans. It’s called caring about whether government is run right, instead of assuming that it never will be.

Posted by: Stephen Daugherty at March 21, 2009 12:56 PM
Comment #278202

>Where is the effective “check and balance’ to government misbehavior, expansion, and bloat?
Posted by: Lee Jamison at March 21, 2009 12:34 PM

Lee,

Why not try fixing this current, horrible, fast moving, catastrophic problem, then worry about the ‘checks and balances’. Isn’t that what we did with the Iraq stupidity and the Patriot Act? Give us a break! This is no longer just a downturn, this is a full-fledged, serious financial meltdown.

Posted by: Marysdude at March 21, 2009 1:10 PM
Comment #278204


I grew up and started work during the 1970s. I remember those horrible times very well. Let me be clear that the period is roughly 1972-1982. That is when we felt the sting of the oil shocks, inflation, stagflations etc. I didn’t get my information from colleagues or books, thank you.

In those days, we lowered the debt in much the same way we will lower the debt in the next few days. Inflation monetized the debt. We printed money. The value of things collapsed. People who had saved and made good choices lost their money. People who had run up a lot of debt and wasted their money, came out on top. That is what we are looking at in the near future. The only thing we got going for us is that we have experienced it before and some of us might be able to prepare.

The Fed raised the interest rates sky high in order to bring inflation down. This chocked economic growth and stopped the monetization of the debt. It was tough medicine, but it gave us good economic growth for the next quarter century.

I agree that we need a stimulus package, but we need to be very careful in the implementation. We have never contemplated such a massive debt in peacetime. We will have to pay it back sometimes. We paid for the Vietnam war and the Great Society with inflation and economic stagnation of the 1970s. The debts we are contemplating now are even bigger.

You say “Business doesn’t need a friend in Washington, but a check and a balance to their misbehavior.” It goes the other way too. We need to check the misbehavior of politicians by the people (i.e. the private sector). I don’t want business people having too much influence in Washington and I don’t want Washington to have too much influence in business.

I don’t think us bloggers and the free press can do the job of checking politicians if we give them too much power to control the economy. And if they can reward their friends and punish their enemies with regulations and the tax code, we are really in trouble.

Posted by: Christine at March 21, 2009 1:19 PM
Comment #278206

Stephen:

Yes off topic. Deflation is a short term issue not a 10 year issue.

The CBO numbers are not a part of the stimulus bill, but rather Obama’s long term spending plan. IE after the recession is over.

Remember Obama is projecting 4.5% growth of the economy in his projections. That is above trend and inflationary.

Plus this spending was promised during the campaign. This projections are on top of the stimulus package.

So I agree we need to borrow some money to get through this rough patch, but that is not at all what this is about.

By the way, do you make over $250,000? If not then why is it so self righteously moral for liberals to spend and tax our children with a $9 tillion dollar delayed tax? Wow, that is far more moral then tax cuts for the wealthy, spend now and hand the bill to our children.

All you on the left who make under $250,000 shame on you for supporting spending and extra $9 trillion over 10 years and giving our children the bill.

We need a new kind of politics in this country. One where people pay for what they propose.

Let’s talk about the morals of sticking it to our children so Obama can “do some big things” when the bill will come due right when Baby boomers are retiring.

Shame on all who pass this bill, it’s immoral to stick it to our children like this.

Posted by: Craig Holmes at March 21, 2009 1:48 PM
Comment #278207

M. Daugherty writes; “(As an example, imagine that spending is $1,050 and revenue is $1,000, so the deficit is $50. If revenue declines by just 10 percent, the deficit triples to $150.)”

Well then, using the same formula, “if spending increases by just 10%, the deficit triples to $150”.

Posted by: Jim M at March 21, 2009 2:14 PM
Comment #278208

Craig,

Our children and our children’s children have already had it ‘stuck’ to them. Now you are saying that isn’t enough, we also want to leave them with a world they can’t get educated, treated for an illness, and is so polluted it is almost unlivable.

What we need in order to leave them a world they can thrive in is to fix the current problem as best we can, fix it so they have the resources, i.e., education, energy and health care, so they can work out the problems of paying for it all.

That is pretty much what every past generation has done, but with the exception of cutting services to the point that we, the current population, are seeing what we don’t want our children to see, i.e., poor, run down schools, deteriorating infrastructure, dependence on foreign oil for energy, which pollutes as well as costs, and a health care system that treats the top third of our citizens to the best care in the world, but leaves virtually the bottom two-thirds to fend for themselves.

Posted by: Marysdude at March 21, 2009 2:15 PM
Comment #278209

>Well then, using the same formula, “if spending increases by just 10%, the deficit triples to $150”.
Posted by: Jim M at March 21, 2009 02:14 PM

But, if the economy improves because of the spending, the deficit can be reduced in the future. The other way, the deficit never gets reduced. The latter way creates a debt that can never be paid down.

Posted by: Marysdude at March 21, 2009 2:18 PM
Comment #278215

Marysdude:

That is all fine and good. Here is the rub. Liberals are wanting to do all these things, Education, Health care the environment etc. No complaints yet.

But who gets the check? Everyone but them. The Obama plan is to tax the wealthy and the young, but not themselves. Non of you over 45 or 50 will have to pay a thing for all of this. It is the young that will have to pony up and pay for this when Obama is long gone and accepting awards etc.

If you want this done, tax yourselves!! Tax us, not the young. $9 Trillion dollars!!!! And that is in good times. Obama’s lowest budget deficit will probably equal Bush’s largest except this year when measured as a percentage of GDP!!!

What is unbelievable is to hear the self righteous moralizing about justice. Baloney. It’s taxing everyone accept yourselves to do “the Lord’s work.”

Just don’t claim any moral high ground and we will be fine. Accept responsibility for Obama’s own hypocrisy.

Man this has me pretty angry. How dare the left do this to my children. Moralize and then give my children (our children) the bill.

Posted by: Craig Holmes at March 21, 2009 3:59 PM
Comment #278216

Craig Holmes-
Ask the Japanese and the Greatest generation about the temporary nature of deflationary traps. I sure hope the economy improves at an inflationary rate, because that’s how we get out of a deflationary spiral.

We need a new kind of politics in this country. One where people pay for what they propose.

New? We had that already. The folks you supported gleefully overthrew it. Now they spend their time lecturing us about a deficit we inherited from them. They lecture us about spending that’s meant to bailout banks they let go out of control on their watch, even though there were multiple failures and scandals preceding this one.

Maybe you want something new like that, genuinely do, but your timing could not be worse. Most economist believe just letting things go will be a disaster. But that’s what your party suddenly decides to advocate, that or just do everything through tax cuts, which did nothing at all to save the economy in the Hoover years, and not much to stimulate the economy in the Bush years.

Your party has no solutions with any hope of doing the job. But they aim to take down all rivals, so they’ll unleash their typical torrent of hatred on anything we’ve got to resolve things with. Like the Cigarette companies, doubt is their product: doubt of those who inform you of the dangers of using what they’ve got to sell.

This is not the time to think in terms of the last few great recessions, which is what the Republicans are doing with their talk of deficits and everything. They’re trying to look like the heroes, by swooping in with their “politically correct” solution to bad economic times, but they’re only going to make things worse if they treat a situation in which runaway deflation is the threat as if it’s an example of runaway inflation. But I guess you guys don’t have to listen to anybody else. You know everything.

Posted by: Stephen Daugherty at March 21, 2009 4:05 PM
Comment #278217

Marysdude:

I am not arguing with you over the priorities. I’m saying it’s dishonest to not be willing to pay the bill. Or it’s dishonest to say to the young we are giving you something, when in fact it’s like student loans. You get health care now, but wow when you going to pay through the nose later on in life when all this comes due. We aren’t “giving them” anything. We are just borrowing from their future.

Isn’t that how we got into this financial mess?

At least liberals can feel good about doing something even if they are giving the bill to someone else.

Posted by: Craig Holmes at March 21, 2009 4:08 PM
Comment #278218

Craig Holmes-
And by the way: until you’ve convinced people of the validity of your point, trying to shame them into agreement is a useless manuever. If you believe what I believe, then you believe the shame will belong to those who didn’t do what was necessary to jumpstart the economy.

People will figure out what to be ashamed about for themselves. Your task is to convince people, if the evidence and history will let you, of the truth that would motivate such shame in most people.

Posted by: Stephen Daugherty at March 21, 2009 4:09 PM
Comment #278223

stephen

the road to failure is paved with good intentions, and your boys in washington are paving a super hiway.

Posted by: dbs at March 21, 2009 5:04 PM
Comment #278224

Craig,
Where was your indignation when Bush spent like a drunken sailor and ran up a trillion dollar plus deficit, and we weren’t TRYING to spend to stimulate anything?

Posted by: steve miller at March 21, 2009 5:09 PM
Comment #278226

This spending is “simulous” in name only. Nothing more than liberal spending spree for social programs.

Posted by: Oldguy at March 21, 2009 5:34 PM
Comment #278227

Steve

A couple I know is getting divorced because they always fight about money. Although they make good money, they never have any because they waste it.

The husband bought a new car they could not afford. In retaliation, the wife bought a more expensive new car they couldn’t afford.

So you are saying that because Bush spent more money than you thought he should, now Obama should spend even more. Sounds a lot like that dysfunctional couple making themselves poor.

Of course, maybe they will be bailed out.

Posted by: Christine at March 21, 2009 5:47 PM
Comment #278230

The Cheney/Bush spending spree was un-thought out, unplanned, unsupervised and much of it hidden from view. It doubled the debt from about five trillion to about eleven trillion.

The current spending ‘spree’ is thought out, planned, supervised, open to view and has at least a chance of bringing us into the twenty first century. Without a working economy there can be no future.

I am ashamed to put the bill for it on the shoulders of future generations, but even that is better than not leaving them a country to live in.

Posted by: Marysdude at March 21, 2009 6:17 PM
Comment #278231

dbs-

the road to failure is paved with good intentions, and your boys in washington are paving a super hiway.

Flattery will get you nowhere.

oldguy-

This spending is “simulous” in name only. Nothing more than liberal spending spree for social programs.

If that is all the response I get for listing the macroeconomic reasons why such stimulus is good for the economy, then I guess I’ve done my job. You can trash the idea, but can you do better? Tell me, how do we get out of a deflationary cycle?

Christine-
It is not my intention to make that kind of mistake. I’m not advocating this spending in order to show those Republicans how it’s really done. The point of the stimulus is to knock us out of this rut we’re in, before we get settled in it.

I understand the anxieties about fiscal irresponsibility, but if we don’t fix the economy, there aren’t going to be that many more good options out there concerning the budget.

Do you understand that Hoover tried to reconcile the budget and everything, and just ended up making things worse? That Roosevelt tried the same thing, and it knocked the economy back on it’s rear?

This is not an inflationary period, so the old anti-inflation tactics aren’t going to work.

Posted by: Stephen Daugherty at March 21, 2009 6:17 PM
Comment #278238

Christine,
No….my point underscores the hypocrisy of those who stood by, cheering, while the Bush administration spent us into oblivion. And who now stand on the sidelines sniping because we are forced to spend to keep the engine running……or face certain deep, long lasting depression. Bush could do no wrong, and now Obama can do no right trying to fix the end result of deregulation and laissez faire. Ouch!!!

Posted by: steve miller at March 21, 2009 8:00 PM
Comment #278239

Marysdude:

I am ashamed to put the bill for it on the shoulders of future generations, but even that is better than not leaving them a country to live in.

Sadly they are one in the same. If this budget is not stopped we will be bankrupt. It is that bad. Just go on CBO’s website and look at the long term fiscal forecast. Before the Obama budget we were on track to have more debt/gdp than Germany after WWI. (Remember the hyper inflation stories?).

None of it is necessary. There is plenty of money, just not enough to live at our expensive taste.

There is no reason our children/grandchildren cannot have the same or greater opportunities than we have.

As for me forget retirement. Keep Social Security and Medicare. I would rather work than take away my children’s opportunities.

They (Obama included) are not telling us the truth. The simple truth is that we have been promised more than the economy can produce. But the economy produces a great deal!! Most of the world would be thrilled to live on what our economy can deliver.

We have to put some skunks on the table. We need to find a way to stop the inflation in medicine. That probably means rationing of some sort. (Socialized medicine). We need to move back the retirement age for those under 55. (I am 53). We still as a group will get more retirement years than our parents!! We need to promise what the economy can deliver.

I understand the left wanting the things in Obama’s agenda. He just left out the cost!! We now no the cost, it’s bankruptcy because he did not seek tax increases enough to pay for the programs. The reason is that if he told the truth, he would not have been elected, Hillary Clinton would have.

So he promised what he could not deliver in order to get elected. Politics as usual. It was the only way to defeat Hillary.

Posted by: Craig Holmes at March 21, 2009 8:28 PM
Comment #278240

Steve & Stephen

Nobody really understands the economy and I don’t have faith in the fiat of politicians.

The Fed has just pumped a trillion dollars into the economy. The is how to avoid a depression. It is what they didn’t do in the 1930s.

The New Deal did not solve the Great Depression and some of the programs may have deepened it. I am not saying we should do no stimulus. I am worried about all the add ons. Most of the stimulus package stuff won’t even come into play for a couple of years. I worry about how the politicians will carry it out.

Speaking of FDR etc, the government was a lot smaller then. I think the government was too small in 1929. But things grow naturally until they get to a decent size. Something that just keeps getting bigger is a cancer.

Regulations are necessary and so is the rule of law. Government regulators fell down on the job in both the Clinton (ENRON, dot.com etc) and the Bush administrations. People in charge today, such as Geitner, Dodd & Franks, were in on these failures in BOTH administrations. I hope they learned from there mistakes, but I still don’t trust them with the massive and never before done debt they are planning.

Steven

I am not trying to snipe. I am trying to caution against panicy action that never produces good results. After 9/11, we had a bipartisan push to do something - anything. We did some good and some things we would have been better considering further. We are now in panic about the economy and we are making the same mistakes of frenzy.

Posted by: Christine at March 21, 2009 8:40 PM
Comment #278241

Steve:

I was saying that the Republican congress was spending like a drunken sailor. Actually that is the exact word I used. Repubicans are furious with their party and with Bush for not vetoing the bills.

I’m not going to defend either the Bush Administration or the Republican congress. They got what was coming to them on the budget.

I will only say that Obama makes Bush and the Republican congress look prudent by comparison. $9 Trillion over ten years!!

Until this last year, the debt/gdp ration in our country really didn’t rise all that much. Historians will see it as a non event given we were at war. Oh Baby is Obama planning to change that. His idea is to nearly double it over the next 10 years.

This is not about politics so much anymore, it’s almost beyond that. It’s getting close to the survival of our country. You put that debt burden on our children and America is in rapid decline as a world power.

80% debt to GDP ratio is huge. And then right when we get there in 2019, Boomers are really kicking in on Retirement.

This is very very serious stuff. This is not Bush was evil we need to replace him and now the world will be better. This is our new president just might put our country into a fiscal death spiral.

It has nothing to do with our current crisis either. Our current crisis was about the stimulus package. Stephen wants to put “shame” on those who voted against the stimulus bill. That is so small potatoes. This is far far greater than that. Stimulus spending is temporary, this is forever.

I hope we can at least agree that we want our country to have a strong balance sheet.

You know another thing while I am on my soap box. Obama was suppose to increase our stature on the world stage. After his budget came out, the Chinese in public expressed concerns about our spending to a new president. When has that ever happened? Imagine what China is saying in private!!

Posted by: Craig Holmes at March 21, 2009 8:45 PM
Comment #278242

Christine-
America has survived huge amounts of debt before, and probably will have to again, at some point. We need to keep out of that situation as much as possible. But again I stress the unique nature of the situation. If we don’t prevent enough of the deflation to let the market recover, the deficits and the economic problems are going to become chronic. That’s not what we need to happen here. So my basic position is that we need to inflict a large amount of debt on ourselves now, to avoid a continuing, difficult to end series of continued debt financing of the government.

As for size of government? I think size is not so important as function. It’s no use cutting staff and budgets if the end result is a government that is ineffective at what we still are asking it to do.

Craig Holmes-
First, we’re putting items in the budget that Bush kept off the books. Second, we’re having to lug the banks around on our backs, again thanks to one of Bush’s bright ideas. How much of the new spending is actually government spending in the classic sense, permanent changes?

America has dealt with a high Debt Ratio before, and come out of it better than before. I think the Republicans need to get off our backs about that. We have to do what we have to do. This administration bears the burden of what Government wouldn’t do, but should have done these last few decades. Are we equal to the challenge? I don’t know. But I don’t see this as a liberal or a conservative struggle necessarily. I just think the Conservatives let more of their doctrine get in the way.

Like anybody, I have my sense of what people should or shouldn’t be ashamed of, but the difference here is that my sense is that you really need to leave the decision of what to be ashamed of up to them, and that only by making convincing arguments can you get people to internalize that feeling of right and wrong.

As for China? They’re not screwing around on their own Stimulus Package. They’re pumping the money out like its going out of style. So I would take their publically expressed concerns with a grain of salt.

Posted by: Stephen Daugherty at March 21, 2009 9:40 PM
Comment #278243

Stephen

One of the problems for government is that it just does not have the staff to do all the things we are asking it to do. They will rely on contractors and the contractors will be free of supervision to a large extent.

You know that Bush did NOT cut staff in the government. The government shrunk (a little) under Clinton and expanded under Bush. In many ways, the expansion of government continues the Bush trend. Your point about staffing makes sense, but not for the reason some people are trying to sell.
This is the prosaic but important problem. The government tends to hire in lumps. It hired a lot of people in the 1980s. It wasn’t that Reagan wanted to expand government. It is just that the previous lump (from the 1960s) was retiring. Now the classes of the 1980s are getting near retirement. More than half of all civil servants are eligible to retire or within five years. So we are going to be losing lots of experienced people at the same time we are asking the bureaucrats to do more. Even if we hire like mad, which we will not BTW, we are still faced with an understaffed an less experienced group watching the shop.

Most politicians just don’t understand how to run an organization. I am not talking only a private firm. Politicians live in a different sort of environment. They make rules, but do not understand that practical task of making those aspirations a reality.

What I see happening now is a lot of talk being substituted for experience. The AIG bonus debacle is just a taste. None of the guys making the rules understood what they were doing and then they claim to be shocked by what happened as a result of what they did.

You talk about a crisis, and I am with you. But as it says in the Hippocratic oath: first do no harm. All this hasty action may break that rule.

It really makes more sense to aim before we shoot and to have some idea of HOW we are going to carry out our bold plans. It may well be that when President Obama calls there is nobody there to pick up the phone and when he finally gets an answer it will be a poorly trained new hire.

Posted by: Christine at March 21, 2009 10:44 PM
Comment #278245

Stephen:

America has dealt with a high Debt Ratio before, and come out of it better than before. I think the Republicans need to get off our backs about that. We have to do what we have to do. This administration bears the burden of what Government wouldn’t do, but should have done these last few decades.

So you see Obama’s budget as important as defeating Hitler? The last time and only time we attempted what Obama is doing was WWII.

Here is the big difference. There is a huge overwhelming debt on the way even with out Obama’s budget. The CBO has already long published warnings that our budget is not sustainable. No we cannot deal with high debt like we did before. If we do America may go the way of Germany after WWI. We have to pay for Boomer retirement.

If it is so important to do these things then we need to pay for them now with higher taxes. The problem is that if you actually told the American people how much the cost would be in taxes, you would not be elected.

This is fiscal irresponsibility at the extreme. You will see very responsible people coming forward from Republicans and Democrats putting party aside to defeat this budget. It’s just too far out there.

Posted by: Craig Holmes at March 21, 2009 11:13 PM
Comment #278246

Christine:

Nice posts!!

Posted by: Craig Holmes at March 21, 2009 11:14 PM
Comment #278247

Stephen:

But again I stress the unique nature of the situation. If we don’t prevent enough of the deflation to let the market recover, the deficits and the economic problems are going to become chronic. That’s not what we need to happen here. So my basic position is that we need to inflict a large amount of debt on ourselves now, to avoid a continuing, difficult to end series of continued debt financing of the government.

YOu are again confusing the stimulus legislation with Obama’s 2010 budget plan. The angst on the right is over $9 trillion over 10 years, not this year. Obama’s budget goes way way beyond deflation concerns.

Posted by: Craig Holmes at March 21, 2009 11:20 PM
Comment #278250

Ever watched the Japanese cult classic, Godzilla versus Mothra?

Imagine that Mothra is deflation,
and that Godzilla is inflation.

Mothra is laying waste to cities.
So Godzilla comes along to deal with Mothra.
No doubt, Godzilla kicks butt, and ends deflation.

Hurray!

There’s just one problem.
What to do now with Godzilla (inflation)?

Sure, deflation can be stopped with massive amounts of money created out of thin air.

But how do you stop inflation, or a worse economic terror that many other nations have already discoverd the hard and painful way:

    hyperinflation.

Some say, just take back some of the money in circulation.
Some say, just raise interest rates.
If that were so effective, why did these 33 nations not do that to stop hyperinflation?

There’s a few problems with those theories about being able to control hyperinflation and some inflation being preferred.
Typically, the Federal Reserve creates money at a very steep 9-to-1 ratio of debt-to-reserves.
Therefore, 90% of each new loan is new money created out of thin air.
Therefore, the debt of the nation grows and grows ever larger.
Today, nation-wide debt ($67 Trillion) has almost quintupled from 100% of GDP to 483% of GDP.
The M3 Money Supply in 1950 was $135 Billion, and by year 2005, the M3 Money Supply was $10.15 Trillion (an increase of a factor of 75 times larger).
The population also doubled during that period, so we certainly didn’t all become 75 times wealthier did we?
As a result, 90%-to-95% of all money in existence in the U.S. exists as debt (since 90% of every new loan is new money created out of thin air).
Also, most money doesn’t exist as printed paper money or coins; most of it exists on computers.

Therefore, with so much debt (both federal and non-federal), how do you stop inflation when the money is created as debt?
Well obviously, that won’t work because too many people already have too much debt.
Therefore, the only way to get money into more peoples’ hands to spend is to start giving money away via reduced taxes, tax holidays, stimulus checks, etc.
But how money will it require to stop deflation?
Well, a LOT.
Already, the Federal Reserve has pumped $8.5 Trillion into the banks (source: www.sfgate.com/cgi-bin/object/article?f=/c/a/2008/11/26/MNVN14C8QR.DTL&o=0).
As of 30-NOV-2008, they had spent $3.2 Trillion of the $8.5 Trillion allocated (source: www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/26/MNVN14C8QR.DTL)
By 6-JAN-2009, they had spent $7.2 Trillion of the $8.5 Trillion allocated (source: www.prisonplanet.com/cost-of-bailout-hits-85-trillion.html)
By now as of today (22-MAR-2009), who knows, because this week there are now reports of plans to pump another $1.15 Trillion into the system by buying up toxic assets (source: www.thefinancialexpress-bd.com/2009/03/20/61690.html).
And none of that incldues the $850 Billion Rescue BILL in late 2008, the $787 Billion Stimulus BILL in FEB-2009, or the $410 Billion budget extension BILL in MAR-2009.

For some people, the idea that a massive debt problem should be treated with more debt, borrowing, creating money out of thin air, and rampant, haphazard spending is the worst thing that could be done, and instead beleive what is needed is the elimination of waste, unnecessary spending, smarter spending, and reforms to stop a number of abuses (One-Simple-Idea.com) that have been hammering most Americans for decades.

If the current federal and non-federal debt is untenable, how is growing the debt larger a solution?
That seems a bit bass-ackwards, eh?
Some people will then try to tell Modern Keynesian Economics Models dictate massive debt should be treated with massive spending, borrowing, and creating new money.
Unfortunately that’s not true.
There is nothing in any economic models that states that massive debt should be treated with massive spending, borrowing, and creating new money.
There is no historical precedent of any nation so deep into debt ever borrowin, creating new money out of thin air, and spending its way to prosperity (especially the biggest debtor nation on the planet).
There is not mathematical rationale that shows how a massive debt bubble can be solved with more debt, borrowing, money-printing, and spending.

Also, some people will tell you that the National Debt as a percentage of GDP was bigger in year 1945 after World War II (i.e. it was 116%).
That’s not entirely true either.
For one thing, the current $11 Trillion National Debt is 66% higher today per-capita (i.e. per person) than in year 1945.
Second, that $11 Trillion of National Debt does not include the $12.8 Trillion borrowed from Social Security, leaving it pay-as-you-go, with a 78 Million baby-boomer bubble approaching.
Including that $12.8 Social Security debt and the $11 Trillion National Debt, the total federal debt is $23.8 Trillion, which is 172% of GDP (GDP = $13.86 Trillion in year 2007).
And the total federal debt per-capita is $78,033 (359% higher than the debt-per-capita in year 1945 after World War II; debt per-capita in 1945 was $21,719 in 2008 dollars).

Also, not only is federal debt beyond nightmare proportions, total nation-wide debt is too.
Nation-wide debt has almost quintupled from 100% of GDP in year 1950 to 483% of GDP in year 2008.

  • ____________ Nation-Wide Debt and GDP _____________

  • $70.0T |——————————————

  • $67.5T |—————————————-D (Debt=$67 T)

  • $65.0T |—————————————-D

  • $62.5T |—————————————-D

  • $60.0T |—————————————-D

  • $57.5T |—————————————D-

  • $55.0T |—————————————D-

  • $52.5T |—————————————D-

  • $50.0T |—————————————D-

  • $47.5T |—————————————D-

  • $45.0T |—————————————D-

  • $42.5T |—————————————D-

  • $40.0T |————————————-D—

  • $37.5T |————————————D—-

  • $35.0T |———————————-D——

  • $32.5T |———————————-D——

  • $30.0T |———————————D——-

  • $27.5T |——————————-D———

  • $25.0T |——————————D———-

  • $22.5T |—————————-D————

  • $20.0T |—————————D————-

  • $17.5T |————————-D—————

  • $15.0T |————————D—————-

  • $12.5T |———————D——————G (GDP=$13.9T for year 2007)

  • $10.0T |—————-D—————G
  • ——-
  • $07.5T |———-D————G
  • —————-
  • $05.0T |-D——-G
  • ——————————
  • $02.5T |-G
  • —————————————
  • $00.0T +(1956)————————- (2008)YEAR

    • By the way, there is no overall deflation yet.

Even the federal governments own numbers (which are suspect) for inflation are still positive.
Year-to-year inflation has been increasing since year 2002.
Inflation for year 2008 was 3.85%:

  • ____INFLATION RATE_____

  • 4.00%|———————-

  • 3.75%|——————xxx (2008 __ 3.85%)

  • 3.50%|——————x— (2007 __ 2.85%)

  • 3.25%|————xxx-x— (2006 __ 3.24%)

  • 3.00%|————x-xxx— (2005 __ 3.39%)

  • 2.75%|——xxx-x——— (2004 __ 2.68%)

  • 2.50%|——x-xxx——— (2003 __ 2.27%)

  • 2.25%|—xxx————— (2002 __ 1.59%)

  • 2.00%|—x——————

  • 1.70%|—x——————

  • 1.50%|xxx——————

  • 1.25%|__________________YEAR

  • _____ 2_2_2_2_2_2_2

  • _____ 0_0_0_0_0_0_0

  • _____ 0_0_0_0_0_0_0

  • _____ 2_3_4_5_6_7_8
And based on www.ShawdowStats.com, inflation as of 18-MAR-2009 (based on the pre-1983 calculation method) is actually 7.5%

Any way, we have not had deflation in a long time, because we have had 52 consecutive years of inflation.
We may have some deflation and that’s not a good thing, but neither is inflation.
With deflation, the dollar becomes more valuable.
That’s good if you have a lot savings, but that’s bad if you have a lot of debt, as most Americans do (and very bad if you don’t have enough income either).
With inflation, the dollar becomes less valuable.
That’s bad for wages, food prices, etc., but it is good if you have a lot of debt (provided you have enough income too).

Some people will tell you some inflation is a good thing.
That’s only true for some people, who get to earn interest on a lot of new money, and who get the money early in the cycle, before it has caused more inflation.
Thus, credit became easy to get, credit card applications were in the mail every week, and no-money-down home loans became the norm.

The Federal Reserve typically creates new money at a 9-to-1 ratio of debt-to-reserves.
The Federal Reserve then loans it to member banks at low (to almost ZERO) interest rates.
Those banks then loan the new money at higer interest rates (much higher in the case of some credit cards with rates of 35% or higer).
The Federal Reserve also loans it to the federal government (with interest).
However, lately, the Federal Reserve has been creating many trillions of dollars of new money out of thin air too (source: source: www.sfgate.com/cgi-bin/object/article?f=/c/a/2008/11/26/MNVN14C8QR.DTL&o=0).

Any way, inflation is most often the result of the creation of too much money out of thin air.
That’s why the M3 Money Supply in year 1950 was $135 Billion, but grew to $10.15 Trillion by year 2005 (increased by a factor of 75 times).
That’s why a 1950 Dollar is only worth 10 cents today.
To make matters worse, inflation (among other things) is most likely not being reported accurately (see: www.ShadowStats.com).

Inflation and deflation are both ecnomically destabiliizing.
If a lot of inflation is bad, then how is a little inflation good?
And people seem to be horrified by deflation, and find any levels of deflation to be unacceptable.
So why do they allow any levels of inflation to be acceptabe.
Unforunately, since the Great Depression, we’ve all been told some inflation is OK.

Instead of bubble after bubble, how about targeting ZERO inflation and defaltion?
Why not target sustainability and stability?
Since incessant inflation erodes the value of the dollar, people are running all about all the time looking for someplace to put their money so that inflation doesn’t erode it, and as a result, many people made risky investments. People have lost trillions in the stock markets, and people with safer instruments such as Certificates of Deposit, Treasury Bonds, and Money Markets are still losing money because they are unable to out-pace inflation. Especially if inflation is actually hihger than what is reported.

Any way, if the debt is untenable, how is making it more untenable going to help?

  • If the debt is tenable, why do we have 9,000-to-10,000 foreclosures per day?

  • If the debt is tenable, why are there record bankruptcies?

  • If the debt is tenable, why are the banks scared $#!+l@ss about the $62 Trillion Credit Default Swap/Derivatives bubble?

  • If the debt is tenable, why has the federal government been deficit spending for 52 consecutive years?

  • If the debt is tenable, why has the federal government borrowed and spent $12.8 Trillion from Social Security, leaving it pay-as-you-go, with a 78 Million baby-boomer bubble approaching?

  • If the debt is tenable, why is the U.S. swimming in $67 Trillion ($220,000 per-capita) of nation-wide debt?

  • If the debt is tenable, why is the U.S. dollar much lower today against most major currencies than it was 7 years ago (source: One-Simple-Idea.com/USD_Falling.htm)?

  • If the debt is tenable, why does 90%-to-95% of all U.S. dollars in existence in the U.S. exist as debt?

  • If the debt is tenable, why is inflation a concern?

  • If the debt is tenable, why is year-to-year inflation still rising (2002=1.59%, 2003=2.27%, 2004=2.68%, 2005=3.39%, 2006=3.24%, 2007=2.85%, 2008=3.85%, 2009=??.??)?

  • If the debt is tenable, why is the $60 Trillion of unfunded liabilities for Social Security and Medicare a concern?

  • If the debt is tenable, why have we had 52 consecutive years of incessant inflaton?

  • If the debt is tenable, why is a 1950 Dollar now worth only 10 cents ?

  • If the debt is tenable, why aren’t people spending? Maybe it’s largely because they are tapped out and already deep into debt, eh?

  • If the debt is tenable, why is the current $11 Trillion National Debt the largest National Debt ever in size, and per-capita?

  • If the debt is tenable, where will the money come from to merely pay the interest ($2.7 Trillion per year at only 4.0% on $67 Trillion) on so much debt, when that money does not exist?

  • If the debt is tenable, and inflation is not a concern, why not create more money out of thin air?

  • If the debt is tenable, why can’t anyone provide a explanation or excerpt from some economic model that justifies trying to solve massive debt with more debt, money-printing, and spending? Is it possible that the strategies for handling recessions is totally inadequate for a massive debt problem?

  • If the debt is tenable, why is unemployment at a 25 year high (8.1%; 12-to-28 Million unemployed)?

  • If the debt is tenable, why are 10 more years of deficit spending being predicted?

  • If the debt is tenable, why did the Federal Reserve have to pump $3.2-to-$8.5 Trillon into the banks and corporations?

  • If the debt is tenable, why was it necessary to save GM, Ford, and Chysler?

  • If the debt is tenable, why was it necessary to save AIG over and over ($180 Billion so far)?

  • If the debt is tenable, why did Ben Bennake and Henry Paulson appear before Congress to beg for emergency funds?

  • If the debt is tenable, why was a $850 Billion Rescue BILL necessary in late 2008?

  • If the debt is tenable, why was a $787 Billion Stimulus Bill necessary in Feb-2009?

  • If the debt is tenable, why are Americans liquidating, evidenced by foreign-owned assets which have almost quadrupled from $6 Trillion in year 1997 to $22 Trillion in year 2007?

  • If the debt is tenable, why is the U.S. the biggest debtor nation on the planet (owing many trillions to foreign nations)?

  • If the debt is tenable, why are there so many debt problems as descrilbed above?

And if they start giving away massive amounts of money, does that still mean the debt is tenable?

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at March 22, 2009 2:52 AM
Comment #278253

One problem at a time d.a.n. If Mothra is the problem and Godzilla can rid us of that problem, it means Godzilla is a problem of the future. Problems of the future have to be solved in the future. You can point out the problem, and you can suggest solutions to that problem and you can execute certain steps that will make it easier to solve, BUT YOU CAN’T SOLVE A PROBLEM OF THE FUTURE, until the problem of the present has been taken care of.

Posted by: Marysdude at March 22, 2009 8:43 AM
Comment #278257

Christine-
I can understand the practical concerns of turnover of this kind, but we still have a government and a country to run.

I don’t think Obama is bad at running an organization. In fact, he’s probably one of the best organized presidents of modern times. The appearance of being rushed is probably due to the sheer volume of things on his plate. But really, we’re only at the beginning of things.

I would say that in absolute terms, yes, the government probably did get bigger. After all, we had the creation of a new department, and the addition of a new Medicare Benefit.

But in a certain sense, government withdrew. The SEC was a farce. The FCC couldn’t manage a simple transition to digital television without letting everybody drage their feet. The EPA and other similar organizations were turned into lap-dogs of the industry. The FDA became a shell of its former self, as drugs with deadly side effects were put on the market, and those awful commercials where half the narration describes what might drop off your body if you use the medicine show on television every day.

Worse than that, the Justice department is littered with fourth tier lawyers. It might be for the best that a generation of civil servants is leaving, because many of the bureaucrats in government are used to the dissolute way government’s been run these past few years.

We may not have the luxury of time, or of experience, but maybe we need the right kind of inexperience here, the kind which brings fresh approaches and fresh spirit to problems. You can say that these newbies might screw things up, but if you look at their predecessors, they’ve not necessarily been doing better.

Craig Holmes-
First, it bears repeating: if the Economy improves, the deficit goes down. If it doesn’t, you’re pretty much doomed to deficits, sustainable or not, because a deflationary economy would react badly to a tightening of capital coming from government.

The question is, do you want to get free of this pattern before it begins, or do you want to wait on this like the Republicans waited on Iraq?

Yes, we have overwhelming debt. But that’s something the other party dumped in our laps after deliberately deciding to live with it. Now we don’t want to be tied down to this politically at all. We want to be Clinton, balancing the budget. But if we don’t knock this economy out of this rut, then we get into a situation where not only is balancing the budget going to be more difficult, but it’s also going to be counterproductive for an economy that needs any money it can get to make up for what’s not being invested.

We don’t have an inflation problem yet. These folks in Washington who are lining up against the budget are doing so according to an inappropriate response at this point, which they simply don’t have the experience or knowledge to recognize. They’re treating this problem as if we’re in a situation similar to the late sixties, early seventies, where deficit spending and debt monetizing were the problems causing inflation to spike.

Do you understand what I’m trying to say here? I’m a deficit hawk, under most circumstances. I like balanced budgets. I like it when we avoid going over our budget. Unlike Republicans, I’m willing to see taxes raised moderately in order to finance something if Americans really want it. Like Republicans claim to be, though, I don’t like deficit spending. But here, the alternative would not only disrupt any hope of a return to fiscal sanity, but it would wreck the economy, besides.

I am disappointed to see the Republicans, rather than adjusting to the present circumstances, simply dogmatically trying to apply their party’s conventional wisdom. Such austerity would be wonderful, except in situations like this, like with Hoover, Roosevelt, Japan, and other countries, when a deflationary period is its setting. Then, when government tries to cut budgets and raise taxes, or raise interest rates to cut down the money supply, the result is a decline or a long term flatlining of the economy. The intuitive solution has not been seen to produce good results over history.

Do you think that our children will thank us for leaving them with chronic unemployment, chronic deficits, chronic problems in gaining or establishing credit? Do you think they’ll thank us for a stagnant economy? Because history tells us that’s just what happened when government gets antsy and prematurely stops putting money into the economy. We can plan for the austerity after we’re finished bringing demand back into this economy. I believe I’ve said before, quite frankly that we will have to pay for this, that there will come a time when taxes will rise, when we’ll have to sacrifice. But if our economy is in better shape by then, and out of the deflationary trap, we’ll at least have the growth to cushion it, rather than having to pay out of a long term slump.

Dan-
Is their an actual plan there somewhere, for all those statistics?

You’re confusing me with somebody who doesn’t care. We will have to do a whole lot of difficult things in order to get our economy back in good shape, in healthy shape. I have no doubt, that just as after WWII, we had to bite the bullet and accept some painful austerity, here, too, we’ll have to make some sacrifices. But if we don’t handle this right, right now, it will continue to get worse.

Posted by: Stephen Daugherty at March 22, 2009 9:32 AM
Comment #278260

Lee,
In response to your comment *278194 “Where is the effective “check and balance’ to government misbehavior, expansion, and bloat?”

I do believe that it is the Duty of “We the People” to point out the Political Stupidiy of such actions Loud and Proud as Ladies and Gentlemen.

Posted by: Henry Schlatman at March 22, 2009 10:19 AM
Comment #278261

Stephen

Obama has shown great ability to communicate and campaign. His organizational skills with regards to governing or running an organization are still not manifest.

Obama has been slow off the mark in staffing his agencies. Bush, who got a late start because of the Florida recounts, was far ahead by this time in his presidency. Even Clinton was doing better and Reagan moved at light speed.

As an American, I hope he gets his act together soon. If we look back at modern presidents, we can see that Ronald Reagan faced an analogous challenge in that the economy was in the toilet and the government was facing the constraints of career personnel. The difference was that Reagan was not intending on growing the government. Obama’s success depends on staffing up faster than ever before. This includes WWII, BTW, when massive numbers of Americans entered government service, but mostly as interchangeable masses.

Supporters have faith in Obama – and faith (the evidence of things unseen, the substance of things hoped for - Hebrews 11:1) is what we have to call it.

I hope he can, but it is a enormous change he is proposing. He is not only stimulating the economy, he is remaking the U.S. in ways that not everybody likes, but let’s set that aside and look at the process.

He does not currently have the staff in government to carry out his reforms. The stimulus package does NOT address this. It sloshes money around but doesn’t provide for significantly more full time employees in the civil service.

He talked re bipartisanship and when making such changes it is important to get a broad support. But the Republicans have been shut out of negotiations in the congress. I know you will say they are not cooperating, but cooperation doesn’t mean just going along. It might also mean compromise.

In other words, Obama has sold us a wonderful product, but has not checked with the factory to see if they can produce it. It cannot.

I was in sales a long time ago. A great salesman can sell products and it looks good. But sometimes the terms are not favorable when you analyze them and sometimes the firm CANNOT produce the good sold on the terms the great salesman has negotiated. This results in the “star” losing his job and the firm eating losing reputation and customers. I fear Obama is a great salesman, but his firm (congress and the bureaucracy) is not up to producing on his promises.

BTW - we always have the “luxury of time”. We either take the proper time up front or we find the time to do it over at greater expense later.

Posted by: Christine at March 22, 2009 10:42 AM
Comment #278263

Christine-
With all due respect, the government is not a factory which must physically produce things on fixed equipment. It can retool with a decision and a shifting of manpower.

As for the luxury of time? Well, we should do our best to make our decisions in as deliberate a fashion as possible, but even so, time pressures still exist.

Which leads me to another point: why is the factory unable to produce at this point. What’s the main thing slowing things down here?

The Republicans are doing their very best to get in the way at this critical time. Step back here and think out where much of this resistance is coming from, and who has openly expressed interests in these things failing.

I know you would like to believe that Republicans were simply rebuffed, but it was they who just flat out said no to the president’s agenda, and then proceeded to attack it on virtually every level. And what did they say? They said essentially that unless Obama recapitulated Bush’s policies, they would not support Obama’s policies. How can you expect cooperation from the Democrats when that is your target, that is your expectation? The Republicans are essentially saying that they want to be the main shapers of policy, even those the public elected Democrats, running on a liberal agenda.

The Republicans were consulted. Maybe they weren’t in all the negotiations, but many concessions they wanted, they got before the thing even went through the House. They were given the chance to vote for a compromise, and their response was a unanimous “no”-vote, which could not have been just some spontaneous response.

Now you tell me: why should Democrats essentially act as doormats to satisfy folks in Congress whose party has been smacked down twice?

And tell me this: if Obama just says “oh, it’s too tough”, and abandons his agenda, just how much support will he have left?

This is what Republicans are failing to understand: the general push of the nation’s feelings is against them, and it will be against Obama if he doesn’t fulfill his promise to change the direction of government. I don’t know how one looks at the current situation with AIG and sees an upside to doing what the Republicans on the Red Column want him to do- simply leaving things as they are.

This is why I don’t think much of the Republican’s suggestions at this point. America wants a stronger government that intervenes on the consumer’s behalf, on behalf of the middle class. It’s politically toxic to pursue the old agenda. America wants the folks on Wall Street held accountable. No more tolerance for their free pursuit of greed. Obama ran on a platform of change. Why would he want to gut that by agreeing with Republicans to hold onto government’s old practices? It’s already cost him something to let AIG have its bonuses. How many more such embarassments will Obama tolerate before he makes life difficult for these people?

Posted by: Stephen Daugherty at March 22, 2009 12:19 PM
Comment #278264

Stephen

Politicians think in political terms, but the problem is not with the Republicans, who have no ability to stop the Obama plan. The problem is with reality of what can be done by government, in the short term and in general.

The government is indeed not a factory that produces goods. But it depends on the human capital of the people involved. The guy who has been inspecting coal mines for twenty years cannot be retooled to administer highways. Experience shows that government cannot turn on a dime.

I don’t know about your skills or education, but imagine if they told you that you would be inspecting nuclear facilities. They would give you six month training. Could you do it? What if they decide you are going to be a doctor? Can you learn that business in six months?

The government has structural problems with personnel, information systems and physical plant. A civil service career lasts about 30 years, which put them into various political environments. Shortages in expertise and personnel have 7-10 years lag times. You cannot speed it up because we are talking about human learning, experience, and attitudes that take time to build.
Please let me know if I am wrong, but I don’t see significant increases in government personnel or training in this massive budget.


Government just doesn’t move that quickly. It never has. Even under the exigency of WWII it took the government about four years to make a transformation. Even then, as Harry Truman’s committee revealed, there was a lot of waste and abuse.

I think you and I are talking about different things. You are talking about politics and what public opinion wants. We live in a democracy and these things are important. But I am talking about practical implication. I have to constantly tell my colleagues that a task is NOT done when they put it into their out basket or when they assign the task to a subordinate. There is always a lag time and some misunderstanding, even when the plan is perfect, and no plan is ever perfect.

No matter how much we might wish otherwise, there are human and natural processes at work. They will not usually work to our timetables. You have to build an organization before you can use it. Things have to be produced before they can be distributed. Sometimes the tools you have will not allow you to build the structure you intent.

I can praise President Obama for his bold new direction and still be nearly 100% sure that he cannot achieve the goal as stated. And my goals, as a little person w/o much influence, is help create as much practical success and to limit the damage that will result when the grandiose aspiration hits the reef of reality.

Posted by: Christine at March 22, 2009 1:04 PM
Comment #278265
Stephen Daugherty wrote: d.a.n- Is their an actual plan there somewhere, for all those statistics?
Yes … SOLUTIONS:
  • (01) Stop these 10 abuses.
  • (02) Stop the dishonest, usurious, predatory, lending practices of the banks, or Stop the Federal Reserve’s Ponzi-scheme which steeply leverages debt-to-reserves (i.e. 9-to-1 fractional lending; 90% of every new loan to a member bank is new money created out of thin air). Banks are essentially loan-sharking, jacking up adjustable rate mortgages (foreclosures be damned) with ridiculously high interest rates (commonly up to 10%-to-20% and as high as 64%) and other predetory lending practices. Banks are also preying on the young, poor, minorities, financially naive, and people deep in debt due to outrageously expensive medical fees. As a result, usury has helped widen the wealth disparity gap. 1% of the wealthiest now own 40% of all wealth, while 80% of Americans own only 17% of all wealth. The gap has never been larger since the Great Depression. 40% of Americans have essentially (on average) ZERO net worth. As a result of the Federal Reserve’s Ponzi-scheme, nation-wide debt has never been larger and has steadily grown (now over $67 Trillion; $220,000 per-capita) for decades from 100% of GDP in year 1956 to almost 500% of GDP in 2008. 90%-to-95% of all U.S. Dollars in existence in the U.S. exists as debt. Also, as a result of excessive creation of new money out of thin air, the U.S. has had 52 consecutive years of incessant inflation. A 1950 Dollar is now worth only 10 cents.
  • (03) Stop rampant, irresponsible, wasteful federal spending. The federal government has been deficit spending for 52 consecutive years. The National Debt is now over $11 Trillion (as of 22-MAR-2009). It has never been larger in size or per-capita ($36,066 per-capita as of 9-MAR-2009), and is 66% higher than the previous record-high ($21,719 per-capita in 2008 inflation-adjusted dollars) in year 1945, after World War II, and that does not even include the $12.8 Trillion borrowed from Social Security, leaving it pay-as-you-go, with a 78 Million baby-boomer bubble approaching.
  • (04) Stop growing and eliminate all of the massive bloat and waste (www.akdart.com/gov1.html) in the federal government now. Prioritize and focus on making the U.S. more energy independent. Prioritize and focus on the most important projects. Create jobs to research, develop, and implement better and more renewable energy resources and rebuild and improve the nation’s infrastructure (which will create long-term savings and benefits). Go through the federal budget with a fine-tooth comb and cut all unnecessary spending and waste. Shift unnecessary spending to spending on highest priority projects. For example, cut spending:
      With the federal government’s $2.4 Trillion, change the spending as follows:
    • $700 [$590] Billion for Health and Human Services (including $432 Billion for Medicare)
    • $660 [$522] Billion for Social Security
    • $640 [$447] Billion for Department of Defense
    • (leave Iraq; and reduce military presence in 132 foreign nations).
    • $100 [$30] Billion for Department of Education
    • $100 [$30] Billion for Department of Agriculture
    • $85 [$100] Billion for Veteran Affairs (no cuts here)
    • $75 [$75] Billion for Homeland Security (no cuts here)
    • $56 [$10] Billion for Department of Transporation
    • $50 [$10] Billion for Housing and Urban Development (HUD)
    • $60 [$30] Billion for Office of Personnel Management
    • $550 [$550] Billion for Treasury Department (including $430 [$500] Billion for Interest on the National Debt).
    • ____________________________________________________________________
    • $3.074 [$2.4] Trillion ($574 [$0] Billion over total revenues of $2.4 [$2.4] Trillion in 2008 [2009])
    • What’s wrong with that? The federal government is the biggest employer in the nation, and will still be even after those spending cuts. More people are employed by the government than all manufacturing (nation-wide).
  • (05) Stop the U.S. presence in Iraq;
  • (06) Stop the U.S. military presence in 132 nations around the world. That costs a LOT! Is all of that necessary?
  • (07) Stop throwing money, subsidies, tax breaks, and welfare at failing banks, financial corporations, the wealthy, and Wall Street; stop rewarding failure, which is also unfair to competitors;
  • (08) Stop rampant corruption by increasing and enforcing more transparency and accountability (e.g. One-Purpose-Per-BILL, stop Constitutional violations, etc.);
  • (09) Stop Constitutional violations; reduce lawlessness; enforce existing laws (e.g. Article V);
  • (10) Stop illegal immigration and enforce E-Verify, and stop the $70-to-$327 Billion in annual net losses due to illegal immigration; prosecute greedy illegal employers;
  • (11) Stop H-1/2B abuse and stop importing 1.5 Million (AmericanWorker.org) foreign H-1B workers per year, when there are 12-to-28 Million (www.ShadowStats.com) unemployed American workers.
  • (12) Stop despicably pitting American citizens and illegal aliens against each other for votes and profits, disguised as compassion (severely misplaced compassion at best); prosecute greedy illegal employers;
  • (13) Stop unfair trade practices; set tarrifs on foreign imports into the U.S. at least equal to other nations’ imports tarrifs imposed on U.S. exports.
  • (14) Stop plundering Social Security surpluses; $12.8 Trillion has been borrowed and spent, leaving Social Security pay-as-you-go, with 77 Million baby-boomer bubble approaching;
  • (15) Stop regressive taxation (One-Simple-Idea.com/DisparityTrend.htm#Taxes). This would also save tax payers tens and possibly hundreds of billions per year by eliminating (or greatly reducing) the cost of calculating taxes, cost of tax software, cost of accounting and record keeping, and the cost of storage of many previous years of tax records.
  • (16) Stop killing 195,000 per year due to preventable medical mistakes. Between 1999 and 2004, over 1.5 million people were killed by preventable medical mistakes. That is more than all the American soldiers killed in the American Revolution (4,435), the War of 1812 (2,260), the Indian Wars (1,000), the Mexican War (1,733), the Civil War (462,000), the Spanish American War (385), WWI (53,402), WWII (291,557), Vietnam War (58,209), Korean War (36,574), the Iraq Gulf War (529), and the current Iraq war 19-Mar-2003-to-24-Jan-2009 (4,232), combined! Create a non-profit national health insurance system (get rid of the millions of costly unnecessary middlemen); build more non-profit hospitals and clinics.
  • (17) Stop Congress from rewarding itself with a raise almost every year (Congress recently gave itself the 10th raise in 12 years and $93,000 per Congress person for petty cash and expenses; the raises are actually automitic and a BILL is required to stop the automatic raise; must be nice, eh?). Is that necessary? No. What arrogance! ? ! Especially when U.S. Troops go without armor, adequate medical care, promised benefits, and have to do 2, 3, or 4+ tours in Iraq and/or Afghanistan.
  • (18) Stop pandering politicians who are virtually are FOR-SALE. Allow only equal public financing of elections. Otherwise, politicians will continue to sell-out most Americans!
  • (19) Stop pork-barrel; pass a ONE-PURPOSE-PER-BILL amendment; Congress needs a transparent system for prioritizing spending, which it obviously does not have. Currently, most (if not all) Congress persons are more concerned about bringing the pork-barrel home, than solving the nation’s most pressing problems, growing dangerously in number and severity, and threatening the future and security of the nation.
  • (20) Stop career politicians and judges; pass TERM LIMITS for all offices;
  • (21) Stop the unfair incumbent advantages: One-Simple-Idea.com/FAQ.htm#UnfairAdvantages
  • (22) Stop the deterioration of public education; eliminate the bloated, over-paid, and incompetent adminstrative staff; More education solutions: One-Simple-Idea.com/Education.htm
  • (23) Stop repeatedly rewarding irresponsible, FOR-SALE, incompetent, and/or corrupt incumbent politicians with 85%-to-90% re-election rates. Stop rewarding corruption, or suffer the painful consequences: One-Simple-Idea.com/NeverWorse.htm
Stephen Daugherty wrote: You’re confusing me with somebody who doesn’t care.
Not true.

I never wrote or even thought that you didn’t care (nor others that simply disagree about the spending and growing debt).
A disagreement on the solution(s) does not equate to not caring.

I’m simply not even remotely convinced that Godzilla (inflation) can be controlled, once let loose due to Mothra (deflation).
More of each create instability that is very difficult (if not impossible) to control.
One set in motion, it may be impossible to control.
There is no economic model that advocates the solution for massive and untentable debt is to grow the debt larger.
There is no historical precedent of trying to solve a massive debt bubble with more debt ever being successful.
There is no evidence of any nation so deep into debt ever spending its way to prosperity.
There is no evidence of any nation being able to control inflation once it got out of control.
If inflation were easy to control, why did the U.S. have many years of double digit inflation in the late 1970s and early 1980s.
If inflation (and hyperinflation) were easy to control, why were these 33+ nations unable to control inflation (source: en.wikipedia.org/wiki/Hyperinflation#Examples_of_hyperinflation)?
Other nations deep into debt also tried to borrow and money-print their way to prosperity, and learned the hard way that it not only failed miserably, but made things much worse, by debauching the currency, which will destroy all savings, pensions, entitlements, and wages. It will turn a bad recession into another Great Depression with double or triple or 4+ digit inflation rates. All debts will default. Money will be worthless. And with that will come high crime rates, and more pain and misery than allowing bad debt to unwind and pushing bad debt back to those that created it via irresponsibility and/or fraud (i.e. greedy banks, corporations, and Wall Street).

Stephen Daugherty wrote: We will have to do a whole lot of difficult things in order to get our economy back in good shape, in healthy shape.
I agree completely.

Even some spending is necessary, but it should be smart spending; not rampant, haphazard, out-of-control spending on things that are not of the highest priority.
That list below is far, far from easy to do.
It’s unrealistic to think all of those things can be accomplished, but as many as possible will mitigate a lot of pain and misery, and some pain and misery will be unavoidable.
And not all of those things below require a LOT of spending.

Stephen Daugherty wrote: I have no doubt, that just as after WWII, we had to bite the bullet and accept some painful austerity, here, too, we’ll have to make some sacrifices. But if we don’t handle this right, right now, it will continue to get worse.
I agree completely.

However, the $11 debt today is not only larger in size, but also 66% larger per-capita ($36,066 per-capita) than it was in year 1945 ($21,719 in 2008 dollars) after World War II.
And that does not even include the $12.8 Trillion borrowed from Social Security, leaving it pay-as-you-go, with a 78 Million baby-boomer bubble approaching at possibly the worst time ever.
So, including that $12.8 Social Security debt and the $11 Trillion National Debt, the total federal debt is $23.8 Trillion, which is 172% of GDP (GDP = $13.86 Trillion in year 2007).
Compare that to year 1945, after World War II, when the National Debt was 116% of GDP.
And the total federal debt per-capita is $78,033 (359% higher than the debt-per-capita in year 1945 after World War II; debt per-capita in 1945 was $21,719 in 2008 dollars).
Compare that to year 1945, after World War II, when the National Debt per capita was $21,719 (in inflation-adjusted 2008 dollars).
So, the federal debt problem is much worse today than ever before.
And the problem is not only total federal debt, but total $67 nation-wide debt (source: One-Simple-Idea.com/DebtAndMoney.htm#NationWideDebt), which has never been larger ever in size, per-capita, and as a percentage of GDP.
The $67 Trillion nation-wide debt has almost quintupled from 100% of GDP in year 1956 to 483% of GDP in 2008.
How could the debt-bubble grow so large?
If the total federal and non-federal debt is untenable, how can growing it larger and more untenable help?

We can avoid the pain now, or pay for it later with more pain instead.
There will be a much higher price later for more debt, borrowing, excessive creation of money out of thin air, rampant haphazard spending, and waste.
The logic that we “must do something” is sound.
We should and must do something.
And there is no shortage of solutions.
Unfortunately, Congress is where good solutions and ideas go to die.
Unfortunately, Congress believes the solution to a massive debt bubble is to grow it bigger.
Unfortunately, Congress isn’t doing many (if any) of those things listed above.
What logic is there in the idea that a massive debt problem by with more debt, borrowing, creation of massive amounts of money out of thin air, rampant spending and waste.
Massive, untenable debt has been the problem all along.
Where does it state in any macro economics model that massive, untenable debt can be solved by making more untenable?
When in all of history has any nation so deep into debt ever solved its massive, untenable debt problem by making more untenable?

The debt-bubble (both federal and non-federal debt) has been growing for many decades (nation-wide debt almost quintupled from 100% of GDP in year 1950 to 483% of GDP in 2008).
That debt-bubble can grow forever (especially as a growing percentage of GDP).
So much crushing debt and 52 consecutive years of inflation has lead to millions of bankruptcies, 9,000-to-10,000 foreclosures per day, the falling dollar against most major international currencies for many years (source: One-Simple-idea.com/USD_Falling.htm ; www.discount-currency-exchange.com/currency-resources/currency-graph.cfm).
So much crushing debt is also making it difficult to increase the money-supply when money is created as debt at a steep 9-to-1 ratio of debt-to-reserves, and 90%-to-95% of all money in existence in the U.S. now exists as debt.
As a result, the federal government and Federal Reserve must now try to eliminate some debt too by buying up some of the toxic debt.
Of course, the Federal Reserve and the federal government are going to take care of the banks first; instead of doing some common-sense things like limiting usury; high interest rates; rising Adjustable Rate Mortgage Rates; limiting severely usurious rates on credit cards (35% or hihger; no better than loan sharking); or some of those things listed above.

Marysdude wrote: One problem at a time d.a.n. If Mothra is the problem and Godzilla can rid us of that problem, it means Godzilla is a problem of the future. Problems of the future have to be solved in the future. You can point out the problem, and you can suggest solutions to that problem and you can execute certain steps that will make it easier to solve, BUT YOU CAN’T SOLVE A PROBLEM OF THE FUTURE, until the problem of the present has been taken care of.
Not true. We can most certainly avoid bigger problems of the future by doing smarter things today.

Your solution is analogous to driving off a cliff and then saying on the way down, “we will worry about other problems after we crash at the bottom”.
That’s not very smart is it?

Besides, where is the macro economic theory from any economic model, or historical precedent that such massive, untenable debt can be solved with more debt, borrowing, new money, and rampant spending? Until these questions can be answered, proposing to solve massive, untenable debt with more debt is unproven. Especially when many nations have already tried it and failed miserably be debauching the currency, and making things much worse by destroying all savings, 401Ks, pensions, entitlements, and wages.

It appears that this administration, Congress, and the Federal Reserve have chosen their solution. It appears they will do as Helicopter Ben Bernanke said he would in year 2002. They appear to be prepared to fight our massive debt-bubble with massive borrowing, new money, and spending. However, since so many Americans are so deep into debt ($220,000 per capita), it will be difficult to increase the money supply by creating more loans (i.e. money is typically created as debt at a steep ratio of 9-to-1 of debt-to-reserves). Therefore, it’s going to require a H U G E amount of money to even put a dent in so much debt. Ben Bernanke most likely knows this, and as he said in a speech in 2002, if necessary, he will start air-dropping huge amounts of money from helicopters. Unfortunately, historically, while all of that new money most certainly solved the deflation problem, it created more economic instabiity and created another, uncontrolable economic terror: hyperinflation

Christine wrote: BTW - we always have the “luxury of time”. We either take the proper time up front or we find the time to do it over at greater expense later.
Good point. It will take time to unwind so much debt. Much of it will default (as it is now with 9,000-to-10,000 foreclosures per day). While deflation is bad, so is inflation, and too much inflation will be worse if it debauches the currency.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at March 22, 2009 1:06 PM
Comment #278271


The boy’s of Wall Street, with help and encouragement from their politicians, had themselves a nice little game going. Although there were repeated warnings about the negative consequences of their game, they were making way to much money to heed those warnings.

Now the piper has come calling and to put it bluntly, the American people are being blackmailed. Either we pay trillions of dollars to buy these toxic assets and make these people whole and profitable again, including bonuses or many of us will loose our jobs and our homes.

To make this palatable, the politicians (we don’t have a government anymore, just politicians who get millions in incumbency funds and sweetheart lowns) are going to give everyone a tax break and pass the debt on to our children and grandchildren. They will curse us for being the greedy, selfish and fearful people that we are.

I don’t think this is what our founding fathers had in mind when they told us to provide for the posterity.

Posted by: jlw at March 22, 2009 2:49 PM
Comment #278272

jlw-
Remember the truth of what you’re saying when it comes time for these banks and other companies to ask us to let them have all the leeway we gave them. A parents who never says no doesn’t do the kids any favors.

If we want banks that are stable institutions, we have to make certain requirements of their practices. It’s alright to refine our laws and regulations to make it easier to comply, but the results must be the same: responsibility must be taken, obligations must be fulfilled, and we cannot simply let these people just build up potemkin villages of wealth. When we return to prosperity, it must be a real prosperity, a better shared prosperity, rather than the unstable lie that the financial system inflicted on us.

Many people come at liberals like me with the notion that we don’t like people getting rich. That’s nonsense. What we want is for people to get rich doing things that are worth something to other people, and which don’t suck the rest of the economy dry in the process.

I believe that much of the agenda of the budget focuses on bringing the kind of wealth in the real world that we need, back into the equation: the wealth of infrastructure, of knowledge, of making things and keeping them in good order. That’s why I support it, even as many degrade its ambitions. We can either let the situation with the banks swallow any hope we have of creating a real economy based on other things than just financial bubble building, or we can decide that we’ll do what’s necessary to win back the economy for doing real things, and making America truly prosperous, rather than just rich on paper.

Dan-
There are models that say that the best thing to do in a situation like this is to pump a lot of money into the economy every way you can. I think that’s basic Keynesian economics for you.

I agree with dealing with waste and excess, but the deficit spending will be necessary, for the time being. When this economy gets back in line, it’s crunch time, though. For me, liberal government works best when efficient, and so does stimulus. What bugs me the most of the way the Republicans approached it is simply this: while they berated us for perceived waste (all too often, heavy on perception rather than reality) They offered no alternative construction of the plan. They merely brought those things up essentially to try and stop the progress of what they considered politically unpalatable programs, or at least look like they were doing so.

I also agree with dealing with the credit situation to where people are either paying for things more in cash, or paying for them with credit that’s on more sustainable terms.

What we need in this country isn’t the conservatives all trying to rally to regain political ground they’ve lost. Rather than merely opposing policy, they should work to make it leaner, more responsible. It might not be the fabled return to true conservatism that their pundits and leaders are trying to push on them, but they can say: in our position, we can’t keep this stuff from passing, but we can shape it so that it looks out for your interests.

That’s what’s necessary. Simply saying no to everything does little good.

Posted by: Stephen Daugherty at March 22, 2009 5:21 PM
Comment #278273

Stephen:

Yes, we have overwhelming debt. But that’s something the other party dumped in our laps after deliberately deciding to live with it. Now we don’t want to be tied down to this politically at all. We want to be Clinton, balancing the budget. But if we don’t knock this economy out of this rut, then we get into a situation where not only is balancing the budget going to be more difficult, but it’s also going to be counterproductive for an economy that needs any money it can get to make up for what’s not being invested.

You keep talking both ways. Clinton was a part of our current problem. So don’t blame all this on Republicans and then site Clinton at the same time. Just check out Gramm-Leach-Bliley_Act and who signed it.

So don’t have it both ways at least in the same quote!!

Secondly, I understand you but please understand me the current agast over CBO has nothing to do with the current crisis. It has to do with Obama’s recommendation to have 4-5% of gdp deficits for the next 10 years AFTER THE CRISIS IS OVER.

It is totally irresponsible in light of the fact that we are already on course for bankruptcy even without Obama.

You mentioned earlier that we have “from your view” under invested in government. Ok, we all have our opinions of how government should be funded and what amount of monies should be spend. Do so in a way that moves our country away from bankruptcy not in a way that moves us faster toward bankruptcy. Sell your ideas in a way that they help our fiscal situation. Actually if you did that the American people would not support them. Liberal ideas in America don’t have enough support to raise taxes over unless they are someone elses taxes like our young.

Posted by: Craig Holmes at March 22, 2009 6:45 PM
Comment #278276

Craig Holmes-
I can freely admit two facts: that the budget was balanced under Clinton and that his people passed, even actively advocated for damaging legislation. I’m not trying to fit some pre-arranged narrative where Clinton made every decision right.

As for Bankruptcy? I’m sincerely trying to avoid that. But as Republican forgot, with many others in this economy built on economic scams, sometimes you have to spend money, to make money. Getting out of chronic debt financing will likely take more investment in this country and spending to deal with toxic assets that your people are willing to put forward. There are problems we have to solve before being able to solve the deficit problem will be more than just fiscal handwaving.

Posted by: Stephen Daugherty at March 22, 2009 8:49 PM
Comment #278277

And, again, I repeat… Clinton never balanced the budget. There was never a single year in which Clinton was president when the debt of this country decreased.

And, for the record, AGAIN, control over the nation’s pursestrings is the responsibilty of congress, not the President. Who was running the congress during those times?

And what did our economy look when Bush took over and there was a recession going on?

Posted by: Rhinehold at March 22, 2009 8:52 PM
Comment #278280
Stephen Daugherty wrote: d.a.n- There are models that say that the best thing to do in a situation like this is to pump a lot of money into the economy every way you can. I think that’s basic Keynesian economics for you.
HMMMMMMMmmm … are you sure?

Keynesian and other Economic models profess strategies to deal with recessions and depressions, but none have yet dealt successfully with massive, untenable debt.
There is no historical precedent of any nation so deep into debt solving its massive debt problem with more debt, borrowing, new money, and rampant spending.
There is no mathematical rationale to show how any nation can solve a massive debt problem with more debt, borrowing, new money, and rampant spending.
Many nations deep into debt have already tried and failed miserably to solve their massive debt problem with more debt, borrowing, new money, and rampant spending.

For example, see the following about deficit spending from wikipedia:

  • Deficit spending is not Keynesianism. Keynesianism recommends counter-cyclical policies to smooth out fluctuations in the business cycle. An example of a counter-cyclical policy is raising taxes to cool the economy and to prevent inflation when there is abundant demand-side growth, and engaging in deficit spending on labor-intensive infrastructure projects to stimulate employment and stabilize wages during economic downturns. Classical economics, on the other hand, argues that one should cut taxes when there are budget surpluses, and cut spending—or, less likely, increase taxes—during economic downturns. Keynesian economists believe that adding to profits and incomes during boom cycles through tax cuts, and removing income and profits from the economy through cuts in spending and/or increased taxes during downturns, tends to exacerbate the negative effects of the business cycle. This effect is especially pronounced when the government controls a large fraction of the economy, and is therefore one reason fiscal conservatives advocate a much smaller government.

  • Keynes argued that the solution to depression was to stimulate the economy (“inducement to invest”) through some combination of two approaches: a reduction in interest rates, and government investment in infrastructure. Investment by government injects income, which results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth. The initial stimulation starts a cascade of events, whose total increase in economic activity is a multiple of the original investment.
However, we’ve never had this situation before with so much debt (both federal and non-federal debt is larger than in the Great Depression and after World War II).

The situation today is different in several important ways:

  • (01) The U.S. did not enter the Great Depression with the massive level of federal and non-federal debt we have today. The $11 Trillion National Debt is 66% larger per-capita ($33,066) than in year 1945 after World War II ($21,719 per-capita in 1945 in 2008 inflation adjusted dollars). The $11 Trillion National Debt-to-GDP today (79%) is less than it was (116%) in year 1945 after World War II. However, that is not all current federal debt. See (02) next.

  • (02) That $11 Trillion National Debt does not even include the $12.8 Trillion borrowed from Social Security, leaving it pay-as-you-go, with a 78 Million baby-boomer bubble approaching. The combined federal debt (i.e. $23.8 Trillion = $11 Trillion + $12.8 Trillion) is the largest debt ever in size, per-capita ($78,033), and as a percentage (172%) of GDP (GDP=$13.86 Trillion in year 2007). Therefore, total federal debt is 56% higher today than the previous record-high in year 1945 after World War II. That $23.8 Trillion of total federal debt does not include any unfunded liabilities for Medicare. Also, so much of the current budget is already designated to mandatory spending. The federal government has been deficit spending for 52 consecutive years.

  • (03) The $11 Trillion National Debt is much larger today than during the Great Depression in size, per-capita, and as a percentage of GDP (79% today, up to 45% in the Great Depression). The U.S. did not enter the Great Depression with debt of the nightmare propotions of today. The National Debt in the Great Depression ranged only 10%-to-45% of GDP, and the highest debt-per-capita in the Great Depression was only about $6923 (in 2008 inflation adjusted dollars). Today, the $33,066 debt per-capita for the $11 Trillion National Debt is 397% higher than in the Great Depression, and that does not even include the $12.8 Trillion borrowed from Social Security. Including that $12.8 Trillion, the debt per-capita for the $23.8 Trillion federal debt is 1127% higher today than in the Great Depression.

  • (04) The total nation-wide debt is much larger today than in the Great Depression, and after World War II. The nation-wide debt as a percentage of GDP has almost quintupled from 100% of GDP in year 1956 to 483% of GDP today (GDP=$13.86 Trillion in year 2007). The $67 Trillion nation-wide debt is $220,000 per-capita, which is several hundred percent larger than in the Great Depression, and after World War II.

  • (05) The U.S. was more rural in the Great Depression, and after World War II.

  • (06) In the Great Depression and World War II, the U.S. did not have globalism to the degree of today and it had not de-industrialized, outsourced, and gutted the U.S. of jobs as it has today.

  • (07) In the Great Depression and World War II, the U.S. did not have the degree of global competition that we have today.

  • (08) In the Great Depression and World War II, the U.S. economy was not 70% consumer-driven.

  • (09) In the Great Depression and World War II, the U.S. did not have the financial liabilities that it has today, such as a $60 Trillion Credit Default Swap/Derivatives Bubble, unfunded liabilities for Social Security and Medicare.

  • (10) In the Great Depression or World War II, 90%-to-95% of all money did not exist as debt, as it does today. Decades of easy credit, new money created at a steep ratio of 9-to-1, usury, incessant inflation for 52 consecutive years, and other abuses have created a massive debt-bubble of epic proportions. The U.S. is the biggest debtor nation on the planet.

  • (11) And none of the above includes (not considered debt?) recent $850 Rescue BILL in late 2008, a $787 Stimulus BILL in Feb-2009, and the $410 budget extension BILL of Mar-2009, or the $8.5 Trillion pumped into the banks by the Federal Reserve.

So, the questions persist.
Is the solution to a massive debt-bubble more debt, borrowing, new money, and rampant spending?
Is there any historical precedent of any nation so deep into debt ever successfully solving massive debt with more debt, borrowing, new money, and rampant spending?
Is there any macro economics model that states that massive debt can solved with more debt, borrowing, new money, and rampant spending?
Is there any mathematical rationale that demonstrates how any nation has ever successfully solving massive debt with more debt, borrowing, new money, and rampant spending?

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at March 22, 2009 9:11 PM
Comment #278283


Stephen:

I can freely admit two facts: that the budget was balanced under Clinton and that his people passed, even actively advocated for damaging legislation. I’m not trying to fit some pre-arranged narrative where Clinton made every decision right.

And I will happily admit that a Republican Congress and Clinton were arguably the best team in decades on the economy even with some errors. (All make errors).

As for Bankruptcy? I’m sincerely trying to avoid that. But as Republican forgot, with many others in this economy built on economic scams, sometimes you have to spend money, to make money. Getting out of chronic debt financing will likely take more investment in this country and spending to deal with toxic assets that your people are willing to put forward. There are problems we have to solve before being able to solve the deficit problem will be more than just fiscal handwaving.

You still don’t get my point. I will try again. Obama has had a stimulus bill that was designed for the current crisis.

Now Obama has gone beyond that and published his budget blueprint that is separate from the crisis. It shows his spending plans for middle class tax cuts, education, the environment, and health care.

TOTALLY SEPARATE FROM THE CURRENT CRISIS, Obama’s plans move our country closer to bankruptcy because even with the economy growing (AS IN NO RECESSION) Obama’s budget calls for deficits that are borrowing money on non sustainable levels (Obama’s official guy’s words).

Your team is proposing borrowing so much money after the crisis that we are heading for bankrupsty.

Get it? AFTER CRISIS borrowing money worse the Bush.

This is the exact opposite of what we should do when the economy recovers. We should lower the deficit so the debt grows at a slower pace than nominal GDP. That way over time debt as a percentage of GDP will decline. Obama is doing exactly the wrong thing fiscally.

It is the spending Obama is proposing that is 5 to 10 years out that will cripple the economy. $9 Trillion over 10 years.

Posted by: Craig Holmes at March 22, 2009 9:31 PM
Comment #278285

>And, again, I repeat… Clinton never balanced the budget. There was never a single year in which Clinton was president when the debt of this country decreased.
Posted by: Rhinehold at March 22, 2009 08:52 PM

And, again I repeat…a balanced budget is a break even budget. Clinton had one which is more than can be said of any other modern president. If you want pay down on the debt, the budget is no longer in balance. Had Clinton been able to stay in office another term, he’d have started paying down the debt, even though there was a slippage due to the dot com bust. The budget handed over to Bush was a positive budget, which Cheney/Bush immediately squandered.

Posted by: Marysdude at March 22, 2009 9:33 PM
Comment #278286

Craig,

Spending that accomplishes something is a net positive. It is stupid spending that has a negative return…as in that ‘war’ that was going to pay for itself…then when that did not transpire, costs of it were removed from the budget and treated as if they did not exist. That kind of spending is ruinous.

Posted by: Marysdude at March 22, 2009 9:37 PM
Comment #278288

Craig-
What’s the difference between money that comes from a stimulus package, and one that comes from a budget? The dollar has no memory, once spent. The interesting aspect of your argument is that it essentially fails to give a good reason why we shouldn’t invest federal dollars within the regulation budget for the same kinds of things we have in the stimulus bill; that is, spending on infrastructure, spending on research and development, spending on getting this country further into sustainable energy and resource usage.

Should the business of government be to do… What exactly?

Recall what Obama said about this: the stimulus was a down payment.

Also recall what Orszag said: economic growth one way or another can have big effects on deficits. What is unsustainable with one economy, may well be entirely sustainable under another.

Posted by: Stephen Daugherty at March 22, 2009 9:59 PM
Comment #278290

Marysdude:

Spending that accomplishes something is a net positive. It is stupid spending that has a negative return…as in that ‘war’ that was going to pay for itself…then when that did not transpire, costs of it were removed from the budget and treated as if they did not exist. That kind of spending is ruinous.

Well, I actually agree with you on this, except the war. Basically “good spending” puts America in a better position. However the CBO says Obama’s spending puts us in a worse position.

Let me say this, and I think you might agree. Good spending should be good enough to be willing to pay for it ourselves. My that I mean, the good should be measurable. Take for instance Grand Coulee Dam. Americans invested in the dam and it has provided electric power for a long time. It was a good investments.

I think Education is a good investment because it increases productivity of the work force. I have voted many times to tax myself locally through bonds and levies.

The good spending Obama proposes does non of this. At the end of the next 10 year period we are in far far far worse shape according to an independent analysis.

If Obama’s ideas were so important, they should be able to be discussed and funds raised by you and I to accomplish them. After a good debate, and votes cast, even if on the loosing side, I can go on because at least i know they were paid for.

There is comparison here to Bush. This is way way beyond Bush in fiscal irresponsibility. As bad as Bush was, he is small potatoes compared to Obama’s plan.

Posted by: Craig Holmes at March 22, 2009 10:09 PM
Comment #278291

Stephen/Marysdude:

http://www.cbo.gov/ftpdocs/100xx/doc10014/03-20-PresidentBudget.pdf

If you go to page 14, and go down the page about to the middle you can see clearly what I am trying to say. Look for the row that shows the additional budget deficits from Obama’s budget.

This year it starts out at $177 billion. But then it increases every year for the next 10 years until in the 10th year it is 765 billion. Now this isn’t the whole deficit in 2019 just Obama’s part the whole projected deficit in 2019 is 1,189 billion.

That needs to be reversed. What I mean is that in light of the fact that we have huge fiscal imbalances, it is critical for the future of our country that instead of doing 765 Billion in harm in 2019 that who ever is president turn it around. The proposals should have a net positive on the deficit not a huge and dramatic negative.

If you look further into the CBO numbers and look at previous publications that go for longer term you will see a train wreck coming that Obama is adding to.

Posted by: Craig Holmes at March 22, 2009 10:24 PM
Comment #278294

Craig Holmes-
What I and Marysdude have been trying to tell you for the past few comments here is that these are only potential numbers, and very uncertain. They could swing either way by a factor of 900 billion dollars, over just the first five years.

Orszage also point out that though we have a budget defict of 1.7 trillion now, we were supposed to have a deficit of about 207 billion.

So, treating these numbers as reason to panic about the budget may be swerving to avoid the dog, only to hit the tree. The Deflationary downturn is real, right now. The deficits, five years hence, have not come to pass yet.

Posted by: Stephen Daugherty at March 22, 2009 11:20 PM
Comment #278296

Stephen:

They could also be worse. What is your plan if they are worse?

The CBO is the official score card of congress.

Again, as I have been saying over and over to you STephen is that these numbers have nothing to do with the deflationary downturn. Core inflation is fine. It’s because of Obama’s spending plan.

The deflationary issue was called the stimulus bill.

Besides deflation or inflation is more in the area of the federal reserve not congress.

Posted by: Craig Holmes at March 23, 2009 12:09 AM
Comment #278297

Craig Holmes, $1 Trillion Dollar deficits per year for 10 years and a $20.3 Trillion National Debt by year 2019 may be a very small amount, when a loaf of bread costs $1279.99 (unless that projected $20.3 Trillion is in inflation adjusted dollars, in which case the National Debt would be $10.4 Quadrillion due to 200% inflation per year).

Consider that a 1978 Dollar is only worth 30 cents today.
And a 1950 Dollar is only worth 10 cents today.
Those days of incessant 4%-to-5% inflation per year will seem like the good ole days when facing 200% inflation per year (raising the price of a $2.49 loaf of bread to $1279.99 by 2019).

With so much debt, borrowing, new money, and spending, it wouldn’t surprise me one bit if a 2009 Dollar is only worth 13 cents by year 2019 (25% inflation per year).

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at March 23, 2009 12:12 AM
Comment #278300

Sen. Susan Collins, a Maine Republican who sided with Obama on his $787 billion economic stimulus plan, said she couldn’t support the White House plan this time.

“It would double the public debt in 5 years, triple it in 10 years. … That is not sustainable. It poses a threat to the basic health of our economy,” Collins said.

Posted by: Rodney Brown at March 23, 2009 12:57 AM
Comment #278309

SD
Good journeyman work. To quibble a bit, the real danger of deflation is when it last long enough to become ingrained. People stop buying until the price goes down. Businesses shrink or fail to start. How do you start producing anything when you do not know what the end product will fetch in the market. Altogether deflation is a much harder thing for an economy to deal with than inflation.
I am also concerned with the debt. If the Reps want to keep bring up WW2,fine by me. The marginal tax rate on the top brackets was %90. It stayed that way until JFK(a Dem) pushed to have it lowered to about %70. Its past time to go back to rates. The current crises is arguably as dangerious as ww2 and the response needs to be as profound.Every time we hear a Rep whine about the debt their policies necessitated we should come back with a tax increase on the wealthy. Ay this point we have ample evidence that the top brackets aren’t earning that money. They are stealing it from us and future generations.

Posted by: bills at March 23, 2009 4:59 AM
Comment #278310

d.a.n.

As a child, I occasionally watched Godzilla movies. I was amused by your use of Godzilla as another evil. You need to recast your movie. Any fan knows Godzilla was only fighting defensively. He eventually became a hero and good guy to the Japanese. Just like the evil deficit spending will eventually be vindicated. I know you didn’t mean it, but you finally got it right.:)

Posted by: gergle at March 23, 2009 5:15 AM
Comment #278313

Isn’t it great how we were told that Bush and the Republican congress’ spending was wrong and we needed the spendthrift Democrats in office. Now, super-deficits are what this country needs!

It was wrong then and it is wrong now. There are other options, just because our current leadership isn’t interested in looking for them or pursuing them is not a virtue…

Posted by: Rhinehold at March 23, 2009 6:04 AM
Comment #278314

Another thing likely to make the numbers improve is for the new Dem leadership to purge the left over Republican stooges in the CBO so we can get some real numbers.

I forget who gets the credit but it was pointed out that now instead of McCarthy we have a Senate Committee looking for capitalist that are trying to damage the country.

Rodney Brown

Susan Collins does not run the country. The undemocratic fillibuster is traditionally not used in budget measures.

Posted by: bills at March 23, 2009 7:06 AM
Comment #278316

Rhinehold-
It’s so easy to have moral certainty when you have just one answer to every question on a subject. Though such rigidity though, we got into this situation in the first place.

Under most circumstances, yes, large budget deficits are bad. But in times like this, when we have overcapacity and underutilization, you need every dollar in the economy you can get.

The problem is not one of excess money supply or excess economic energy, where all the additional financial energy goes into making things cost more, even while wages and means remain the same. The problem is, not unlike a blackout: lines carrying energy have been cut, and folks are unable to maintain the system at its current level of activity. What was sustainable and funded a while back, is no longer so now. Prices haven’t increased all that much, in fact downward pressures haven’t been this high in half a century. People simply can’t get the loans or lines of credit to keep businesses opening, and open. But Americans still have the same needs.

You would have us either cut spending or raise taxes. When Roosevelt did that during the deflation of the thirties, it was a disaster. Same when Hoover did it. Their moves to cut the money supply also helped to prolong the crisis. All these actions by the government were anti-inflation measures, which typically would have helped the economy. They thought and worried as you do.

But what they failed to realize is that Government is the only viable provider of needed capital at this points. The banks are either going under or not lending. It’s not a desireable or sustainable thing to go over budget, but it’s the least bad of a number of bad choices.

You folks have to realize that this is not some Liberal conspiracy. That’s just political rhetoric. The truth is, Democrats tended to balance budgets better than Republicans. Republicans, of late, have run the deficits. If any other conditions were in place, I think you would see Obama moving to cut the budget, or raise taxes to cover revenue shortfalls. It would be the politically smart thing to do, to bring back memories of when a Democrat did the same.

But he’s faced with a situation now where the needs of politics are overruled by the needs of the economy. Hence the Stimulus, hence his budgets. He’s not looking to create a fiscal crisis or disaster that’s going to get pinned on him.

Posted by: Stephen Daugherty at March 23, 2009 8:17 AM
Comment #278326

Rodney Brown

“Susan Collins does not run the country. The undemocratic fillibuster is traditionally not used in budget measures.” She has a voice the last time i knew and so do I, Funny on the fillibuster I remind you Bills that when your side used it- it was OK.

Posted by: Rodney Brown at March 23, 2009 10:49 AM
Comment #278328

Rodney Brown-
We used it. In moderation. The Republicans have used it so often they’ve literally set records. There’s a difference in the occasional filibuster designed to force consideration of the minority’s position, and the constant use of it to force the minority’s view on any issue where they can’t get sixty votes.

I could reverse that comment: funny, it was your side talking about the nuclear option, talking about the need for up and down votes. The Democrats never were so insistent on doing away with filibusters when they were in power before, but the Republicans were so committed to getting their way that they threatened to completely rule it out.

Power seems to be the guiding principle for when the GOP tries and determine the way this government works. When they have it, they have much more of a record of expanding executive and legislative powers. When they don’t they’re always seeking to limit them. We see examples of this with “PayGo” and deficit spending, with uses of executive power and privilege, with the Republican’s adventurous use of the military.

The Democrats, so far, have proven better at restraining their own power.

Posted by: Stephen Daugherty at March 23, 2009 11:09 AM
Comment #278333

I’m not a Republican haven’t been since 1992.

Posted by: Rodney Brown at March 23, 2009 12:31 PM
Comment #278337

rodney

“Funny on the fillibuster I remind you Bills that when your side used it- it was OK.”

ssshhhh..your not suposed to say that.


stephen

“Rodney Brown-
We used it. In moderation.”

keep telling yourself that stephen, and just maybe someday it’ll be true. who are you trying to kid anyway?

“There’s a difference in the occasional filibuster designed to force consideration of the minority’s position, and the constant use of it to force the minority’s view on any issue where they can’t get sixty votes.”

you mean like when appointing federal judges, or the ambassador to the united nations ( a worthless parastic organization BTW ). is that all that was happening? just wanted your opinion heard? funny thing is it was heard and the democrats continued obstructing. can’t have it both ways. when democrats do it there’s a good reason. when republicans do it, it’s just obstructionist. now tell me the one about goldie locks and the three bears.

“The Democrats, so far, have proven better at restraining their own power.”

thats funny stephen. do you use that one in your stand-up routine.

Posted by: dbs at March 23, 2009 12:38 PM
Comment #278339
gergle wrote: d.a.n. I was amused by your use of Godzilla as another evil… . He eventually became a hero and good guy to the Japanese. Just like the evil deficit spending will eventually be vindicated. I know you didn’t mean it, but you finally got it right. :)

gergle, your own link contridicts that, since Godzilla sometimes “just shows up to smash stuff and Stomp Tokyo” …

  • The story: Is there anyone out there that doesn’t know who Godzilla is? … Godzilla is a giant radioactive monster that makes frequent visits to Japan to fight other giant monsters, robots and aliens…. or sometimes he just shows up to smash stuff and Stomp Tokyo.

“Good guy”? So smashing and stomping and laying waste to Tokyo is a good thing?

gergle wrote: Just like the evil deficit spending will eventually be vindicated. I know you didn’t mean it, but you finally got it right.
Deficit spending will be vindicated? We’ll see.

I hope you’re right.
You hope I’m wrong.

gergle wrote: I know you didn’t mean it, but you finally got it right.
We’ll see.

Still, the questions persist:

  • (a) Is there any historical precedent of any nation so deep into debt ever successfully solving a massive debt-bubble with more debt, borrowing, new money, and rampant spending?

  • (b) Is there any macro economics model that states that a massive debt-bubble can solved with more debt, borrowing, new money, and rampant spending?

  • (c) Is there any mathematical rationale that demonstrates how any nation so ridiculously deep into debt (much less the biggest debtor nation on the planet) has ever successfully solved a massive debt-bubble with more debt, borrowing, new money, and rampant spending?

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at March 23, 2009 12:46 PM
Comment #278341

Stephen:

It must be hard defending this insane budget.

The CBO is run by Democrats right? Also you have lost the moderates. About 45 of them are forming a “study group”, that will only support a budget that increases spending on non discresionary itemms by the rate of inflation!!!!

Obama will cave since he has no choice.

Posted by: Craig Holmes at March 23, 2009 1:12 PM
Comment #278343

Stephen,

Looked at on the slant, this crisis will change some time this year or perhaps early next year…then we will find out that:

1. The meltdown was never serious, and was cooked up by Obama to make himself out to be the hero…or

2. It has been a great conspiracy from the beginning…all the Democrats got together and hatched the plot just to advance some ‘Socialist’ program on America…or

3. It was the putting on of brakes by the minority in Congress that actually helped us out of the mess.

But, if it requires longer than I expect it to to begin to straighten out, we will hear:

1. If conservatives had had their way it would have taken half the time to show significant improvement…or

2. Obstructionism had nothing to do with the delay in recovery, it’s all the fault of the authors of the plan…or

3. Cheney/Bush should be imortalized…;)

Posted by: Marysdude at March 23, 2009 1:19 PM
Comment #278344

I know it is difficult for some to see, but the ‘stimulus’ and the ‘budget’ have to be married in order for each to work. They are two cogs of the same gear.

The stimulus is to get the economy to stop it’s descent into the grease pit, and put it into a sluggish first gear…just going in the right direction, slowly picking up speed. Then the budget, with it’s emphasis on energy, health care and education, is to help maintain the forward motion, pick up speed and finally put us into overdrive. It is an ingenious plan, and should be passed as soon as possible.

Posted by: Marysdude at March 23, 2009 1:30 PM
Comment #278345

Stephen/Marysdude:

Here is what the future looks like with big goverment:

‘Sense of McCarthyism’

The political rhetoric “has a terrible sense of McCarthyism about it,” said Laurence Geller, president and chief executive of Chicago-based Strategic Hotels & Resorts Inc., which owns 19 properties, including the Hotel Del Coronado in San Diego, and who didn’t attend the Washington meetings.

Christopher Dodd, a Connecticut Democrat who heads the Senate Committee on Banking, Housing and Urban Affairs, sponsored the amendment to the $787 billion stimulus package that requires companies that received funds from the Troubled Assets Recovery Plan to curb “excessive or luxury expenditures,” including spending on events and private jets.

Over the weekend of Feb. 27, two weeks after the Senate passed the measure, the Democratic Senatorial Campaign Committee and the National Republican Senatorial Committee, the party fundraising arms for Senate candidates, each held their annual winter meetings in Florida.

It is the same thing as taxes. With taxes liberals are exempting themselves by taxing the wealthy and our young.

Now they are self righteously condeming business for where thay have their meetings, but then of course liberals have their meetings at the same place!!

Of course, liberals condem business for how they spend the publics money, but then they themsleves are feeding at the trough with earmarks.

Posted by: Craig Holmes at March 23, 2009 1:36 PM
Comment #278347

Stock Market Up Today , “”Oil pricing is driven by the financial rally. It’s questionable whether $50 is the new floor because the fundamental picture for oil has not changed. Demand remains weak in the near term and oil pricing may be vulnerable,” said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.”“” I tend to Agree with that statement.

Posted by: Rodney Brown at March 23, 2009 1:41 PM
Comment #278348

More spending is the answer to everything. What a surprise!

How about the fact that the over regulation, the Unions and insane trade policy turned us into consumers instead of producers? How about the fact that revenues from income taxes are falling and revenues from import tariffs are growing? That has nothing to do with the economy right? It’s Republicans that are screwing everything up. That is your answer to everything.

The fact that we have borrowed money from China to buy goods from China is not a problem right? The fact that only retail outlet that is doing well today is Wal-Mart who sells cheap Chinese products, isn’t a problem. Over the past 30 years we have destroyed the American middle class. If you remember, in the 50’s and 60’s 1 income was enough to support a family. Now, 2 incomes aren’t enough. Has anyone asked why?

We live on the borrowed money. Did we not think that it would eventually catch up with us? Protectionism is one thing, but common sense is a whole another one. We don’t put any barriers against Chinese goods, but in return Chinese have a very heavy tax on imported goods. We trade with Europe, who subsidizes their production so their products are cheaper than American products, but we don’t do a thing about it. That is not free trade, that is stupidity. When American milk producer can’t compete with an imported milk because Holland pays its dairy producers a dollar for every gallon sold, how long will it take before that American farmer who used to produce milk, becomes a consumer of a Dutch milk?

We are playing a Russian Roulette. Republicans and “free traders” on one hand and Democrats and unions on the other hand. One is pushing the “global” agenda because one or two corporations would benefit from it and party will get more money, and other is pushing the union and social agenda because they would get political benefits from it. No one is concerned at what cost.

Right now, all the borrowed spending has come to bite us in the rear. No one has money to spend and look what happened. We outsourced high tech jobs to India, industrial jobs to China and agricultural jobs to Mexico. We are left with MacDonald’s, KFCs and Pizza Huts.

Why can’t we say to our partners, if the country that is trading with us is subsidizing an industry, products produced from that industry should have a higher tariff if they want to sell in the US. If they stop their own unfair practices we will stop ours. If anyone want to sell their product in the US with favorable tariffs, they should allow the US goods to enjoy the same benefits. It’s not protectionism, it’s fairness. No industry should get a government handout just to save the union contracts. That is wrong. Sick and badly managed companies need to fail so the well managed and healthy companies take over their market share.

We have become a nation of consumers. Why are we surprised that our quality of life is reduced. We shop at Wal Mart to by Chinese products, we buy vegetables produced in Mexico, we buy gas made from Venenezuelan, Middle Eastern and Canadian oil, we drive cars made from steel produced in China, we watch television produced in China. Only thing that is Made in the US is a MacDonald’s hamburger. This is the country we have turned into. We want everything now yet don’t want to work for it. We elect politicians who tell us what we want to hear yet do what is the best for their bottom line. We had one president who was elitist moron, and now we have another who is a populist moron. Only reason why we elected first one was because alternative was even more moronic. We elected the second one because we were pissed at first one. We have lost our sense as a nation. Only thing we have left is our military and we are demonizing and destroying it every day. We believe when one guys says I will give you everything you want, without asking HOW? We envy what others have earned, yet we don’t want to get off our arses! There is an old saying, if something sounds too good do be true, it’s not true.

We were a nation founded on the principles of Life, Liberty and pursuit of happiness. We have lost it all. Life has become a choice, liberty has been traded for political correctness and “security”, and instead of pursuit of happiness we just have a government entitlement programs. The schools are more concerned with teaching about gay marriage than Algebra and English language. Once great universities are preaching political ideology instead of educating students and giving them choices. Some of the loudest foreign policy advocates are the fricking actors who haven’t got experience or education in these matters. The banking is controlled by lawyers, the healthcare is controlled by lawyers, national defense is run by lawyers. We have become the nation of reality TV. We live our lives through others, we let others make choices for us and then complain how things aren’t going our way.

WAKE UP AMERICA, before it’s too late! We don’t need more government spending, we need to take our country back. After all, it was ment to be the government of the people, by the people and for the people. There is only ONE AMERICA, and all it’s LEGAL RESIDENTS ARE AMERICANS. Stop deviding ourselves into demographic groups, into social groups and into ethnic groups. WE ARE AMERICANS. In the eyes of the US Constitutions we are all equaly endouwed by our rights. I don’t want government handouts, I want government to leave me the frick alone. Only thing I want government to provide is security! If they can’t do that stop collecting taxes and I will take care of it myself. I don’t need some a-hole deciding what is good for me or my kids.

Posted by: Crusader at March 23, 2009 2:01 PM
Comment #278356

d.a.n. said:

gergle, your own link contridicts that, since Godzilla sometimes “just shows up to smash stuff and Stomp Tokyo” …

* The story: Is there anyone out there that doesn’t know who Godzilla is? … Godzilla is a giant radioactive monster that makes frequent visits to Japan to fight other giant monsters, robots and aliens…. or sometimes he just shows up to smash stuff and Stomp Tokyo.


Umm Ya gotta quit that premature readus interuptus:)

Early in Godzilla’s career, he was pretty much the villain in his movies…..***…….Godzilla had been transformed from a bad guy role, to a hero role. whenever the Earth or at least Japan was threatened by a giant monster or aliens, Godzilla would show up and kick its ass. Godzilla vs Megalon firmly places Godzilla in the role of the good guy.

….because they didn’t understand Godzilla was just fighting defensively. Sure, Tokyo got a few buildings and people crushed, but hey, to bake a cake you gotta break a few eggs.:)


Somehow I never though I’d be defending Godzilla in a political blog. Life’s funny that way.

Posted by: gergle at March 23, 2009 4:14 PM
Comment #278358

p.s. Zorro wasn’t really gay or timid.

Posted by: gergle at March 23, 2009 4:25 PM
Comment #278368

>WAKE UP AMERICA, before it’s too late! We don’t need more government spending, we need to take our country back.
Posted by: Crusader at March 23, 2009 02:01 PM

Crusader,

Back to where? Where Cheney/Bush left it??? Why?

Posted by: Marysdude at March 23, 2009 6:13 PM
Comment #278372
gergle wrote: Somehow I never though I’d be defending Godzilla in a political blog. Life’s funny that way.
Yeah.

That appears to be a common problem.

So Godzilla is still a hero even if Godzilla “sometimes just shows up to smash stuff and Stomp Tokyo?

Any way, there is no doubt Godzilla can kick all of the other monsters’ butts (including Mothra / deflation), just as it is easy to battle deflation with non-stop money-printing presses.

Deflation (Mothra) is easy to beat (i.e. by Godzilla).

But inflation (Godzilla) is not easy (and possibly impossible) to beat or control.

If inflation were easy to control, why did the U.S. have many years of double digit inflation in the late 1970s and early 1980s.

If inflation (and hyperinflation) were easy to control, why were these 33+ nations unable to control inflation?:

  • (01) Madagascar 2004 - 2005 (1/5th of starting value),

  • (02) Zimbabwe 2003 - present (6 quadrillionth of the starting value and continuing to fall),

  • (03) Romania 1998 - 2005 (1/50,000th of starting value),

  • (04) Former Soviet Union 1993 – 2002 (1/14th of starting value),

  • (05) Angola 1991 - 1995 (1 Billionth of starting value),

  • (06) Belarus 1994 - 2002 (1/1,000 of starting value),

  • (07) Georgia 1993 - 1994 (1 Millionth of starting value),

  • (08) Ukraine 1993 - 1995 (1/100,000th of starting value),

  • (09) Bosnia-Herzegovina 1992 – 1993 (1/100,000th of starting value),

  • (10) Krajina 1992 - 1993 (1 Millionth of starting value) reincorporated into Croatia in year 1998,

  • (11) Republika Srpska - Bosnia 1992 - 1993 (1 Millionth of starting value),

  • (12) Turkey 1991 - 1999 , double-digit inflation 2005 - 2007(1 Millionth of starting value),

  • (13) Poland 1990 – 1994 (1/10,000th of starting value),

  • (14) Yugoslavia 1989 - 1994 (1/1x10^27 of starting value),

  • (15) Zaire 1989 - 1996 (1/30 Billionths of starting value),

  • (16) Nicaragua 1987 - 1990 (1/5 Billionth of starting value),

  • (17) Mexico 1987 to 1993 (about 1/3 of starting value),

  • (18) Peru 1984 - 1990 (1 Billionth of starting value),

  • (19) Bolivia 1984 - 1986 (1/1,000 of starting value);

  • (20) Israel 1976 – 1986 (1/16th of starting value),

  • (21) Argentina 1975 – 1983 (1/1,000th of starting value),

  • (22) Chile 1971 - 1973 (1/12th of starting value),

  • (23) Brazil 1960 – 1994 (1 trillionth of starting value), Chile 1971 – 1973 (1/3rd of starting value),

  • (24) China 1947 – 1955 (1/10,000th of starting value),

  • (25) Taiwan 1947 - 1949 (1/40,000th of starting value),

  • (26) Greece 1943 – 1953 (1/50 trillionth of starting value),

  • (27) Hungary 1945 – 1946 (100 quintillionth of the starting value),

  • (28) Japan 1934 – 1951 (1/362nd of starting value),

  • (29) Hungary 1922 – 1923 (1/4 of starting value),

  • (30) Austria 1921 – 1923 (about 1/4 of starting value),

  • (31) Free City of Danzig 1922 - 1923 (1/10 Millionth of starting value),

  • (32) Weimar Republic of Germany 1920 – 1923 (1/466 billionth of starting value),

  • (33) U.S.A. (Confederate States of America) 1861 – 1865 (1/90th of starting value, and then, by the end of the Civil War, the Confederate Dollar depreciated to zero).

  • (34) It also happened in the ancient Roman Empire, when the silver and gold coinage of that day was progressively debased with less valuable metals, in order to fund wars, giveaways to the Plebeians, and various other adventures.

Many other nations have already tried to borrow, create massive amounts of new money out of thin air, and spend their way to prosperity, and they all learned the hard way that it not only doesn’t work, but makes things much worse, by debauching the currency, which will destroy all savings, pensions, entitlements, and wages. It will turn a bad recession into another Great Depression with double or triple or 4+ digit inflation rates, most debts will default, money will be worthless, crime rates will rise, and result in much more pain and misery.

So, a few basic questions still persist:

  • (a) Is there any historical precedent of any nation so deep into debt ever successfully solving a massive debt-bubble with more debt, borrowing, new money, and rampant spending?

  • (b) Is there any macro economics model that states that a massive debt-bubble can be solved with more debt, borrowing, new money, and rampant spending?

  • (c) Is there any mathematical rationale that demonstrates how any nation so ridiculously deep into debt (much less the biggest debtor nation on the planet) has ever successfully solved a massive debt-bubble with more debt, borrowing, new money, and rampant spending?

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Until some of these simple questions can be answered, the strategy of the planet’s biggest debtor nation to try to solve its massive debt-bubble with more debt, borrowing, new money, and rampant spending will continue to be questioned.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at March 23, 2009 6:29 PM
Comment #278384

The Chinese just voted against the Obama budget

Posted by: Craig Holmes at March 23, 2009 9:21 PM
Comment #278387

Chinese leadership votes against the Chinese people every day in every way…whoop-de-doo! How many years has China been in the free market? How long has China locked their currency against the world? Why are we talking about the Chinese except to worry they’ll call their loans. China could use any excuse to do that, just like OPEC could stop producing oil…now THAT would bring us to our knees…or Clile could stop selling us grapes…would someone please tell the rest of us that this is a world recession, and may become a world depression? We may have provided the dill and the salt, but we are not alone in the pickle brine.

Posted by: Marysdude at March 23, 2009 10:25 PM
Comment #278395

That arm of AIG, that little office in London…you know…the one where this derivative selling scheme was hatched…has anyone checked to see if the whole thing was fabricated by al Qaida, just to bring us to our knees? First they attacked our economy in the basement of the World Trade Center. Then they attacked our economy from the top of the World Trade Center. When that didn’t stop our successes, did they attack our economy through our financial greed?

The greatest terrorist organization known to man…AIG!

I knew I could figure this thing out if I was given enough time. al Qaida (AIG) whupped our ass…

Posted by: Marysdude at March 23, 2009 11:11 PM
Comment #278397

To al Qaidq, Iraq was the diversion they needed…

Posted by: Marysdude at March 23, 2009 11:13 PM
Comment #278398

I’ll bet Phil Gramm is an al Qaida operative too…

Posted by: Marysdude at March 23, 2009 11:15 PM
Comment #278399


Five years ago, a half trillion deficit was considered excessive. Today, a trillion dollar deficit is excessive. Five years from now, a two trillion dollar deficit will be considered excessive. Ten years from now?

Posted by: jlw at March 23, 2009 11:48 PM
Comment #278405

Excellent retort, Marysdude. Craig is usually a lot more spot on, on financial matters.

Posted by: gergle at March 24, 2009 1:25 AM
Comment #278413

Rodney Brown
I have never been much in favor of the filibuster, certainly that I can recall at any rate. Its fundementally undemocratic. It was never intended by the framers but only came about as as a quirk,an oversite. The minority position is protected by other parlimentary means not only in the US Senate but in every other democratic legislative assembly in the world.
Collins indeed does have a voice. She is one of two senators from the great state of Maine. Thats is all she was elected too and the only voice given to her in that capacity. She is a “moderate” Republican. Better than most. Being a “moderate” is not a political stance. It is a pose,a style and nearly always leads to policy mistakes. Most policy decisions are either correct or incorrect,either good policy or bad policy. The filibuster gives the “moderates” far too much power to obsfucate,confuse and weaken the outcome of serious decision making. An example of this occured about the stimulus plan. In an effort to compromise the plan was shifted more toward less stimulative tax cuts and less money to struggling states for immediate needs. Point is, if the stimulus is a good and needed plan then it needs to focused and large enough to do the job.If it is not a good and needed plan then it should have been opposed on those grounds. The original plan was supported by the majority of the senate.Instead we have a weakened plan, less likely to fulfill its objectives but still costing a great deal. What that means is we may well need a second one that will cost even more.Moderation is not cheap.

Posted by: bills at March 24, 2009 8:51 AM
Comment #278419

Marysdude:

I think the Chinese are correct in what they are proposing. Looking at the fiscal future of our country, I would not want to be in China’s position of relying on the American Dollar for a reseve currency.

I understand and agree with your concerns about human rights in China. but his is about the economy.

It seems no coincidence to me that the Chinese have given two clear and public concerns about our fiscal policy since Obama has announced his budget plan. They are clearly signaling to Congress and Obama to get it’s act together.

One can only imagine what the Chinese are saying and doing in private if they are making clear public comments about our fiscal irresponsibility.

I hope these comments from our banker the Chinese will give pause to Congress and our President as they basically write from scratch (democrat in congresses words, or implication).

Obama’s budget is the most irresponsible budget ever proposed by a US President from a fiscal standpoint.

Even from a moral stand point, it clearly and blatently exempts the liberal left from paying for the liberal lefts agenda by using funds from the wealthy and future generations through borrowing.

Obama is in for a rough ride. Moderate Democrats are critical for Obama to raise taxes for his agenda and they are leaving him. The Chinese are critical for Obama to be able to borrow money for his agenda as well, and they are voting no, by raising the threat of a new reserve currency.

Obama mania has seen it’s peak, and like oil prices it is starting to fall.

Posted by: Craig Holmes at March 24, 2009 11:49 AM
Comment #278425
jlw wrote: Five years ago, a half trillion deficit was considered excessive. Today, a trillion dollar deficit is excessive. Five years from now, a two trillion dollar deficit will be considered excessive. Ten years from now?
Right. Inflation does that.

If we were to have 25% inflation (not even considerd hyperinflation by most standards), a single 2009 Dollar would become worth 6 cents by year 2019. Or what now costs $1 Dollar in year 2009 would cost $9.31 by year 2019 (almost 10 times more).

  • _________ 25% INFLATION _________

  • YEAR _ FuturePrice _ FutureWorth

  • 2009: _ $1.00 __________ $1.00

  • 2010: _ $1.25 __________ $0.75

  • 2011: _ $1.56 __________ $0.56

  • 2012: _ $1.95 __________ $0.42

  • 2013: _ $2.44 __________ $0.32

  • 2014: _ $3.05 __________ $0.24

  • 2015: _ $3.81 __________ $0.18

  • 2016: _ $4.77 __________ $0.13

  • 2017: _ $5.96 __________ $0.10

  • 2018: _ $7.45 __________ $0.08

  • 2019: _ $9.31 __________ $0.06
  • Based on pre-1983 CPI (inflation) measurement calculations, inflation as of MAR-2009 is 7.5% .
    In the late 1970s and early 1980s, inflation reached 15% (source: www.shadowstats.com/alternate_data ).
    That could very easily happen again, with recent record-levels of spending.
    At 15% inflation (as it was in year 1980), a single 2009 U.S. dollar could be worth only 20 cents by year 2019.

  • _________ 15% INFLATION _________

  • YEAR _ FuturePrice _ FutureWorth

  • 2009: _ $1.00 __________ $1.00

  • 2010: _ $1.15 __________ $0.85

  • 2011: _ $1.32 __________ $0.72

  • 2012: _ $1.52 __________ $0.61

  • 2013: _ $1.75 __________ $0.52

  • 2014: _ $2.01 __________ $0.44

  • 2015: _ $2.31 __________ $0.38

  • 2016: _ $2.66 __________ $0.32

  • 2017: _ $3.06 __________ $0.27

  • 2018: _ $3.52 __________ $0.23

  • 2019: _ $4.05 __________ $0.20
  • Inflation is good if you have a LOT of debt, are not still growing the debt ever larger, and still have adequate income and revenues to still service (and reduce) the existing debt. It’s not rocket science.
    However, that is the problem today; the debt continues to grow ever larger beyond nightmare proportions.
    Debt is very bad if deficit spending continues to grow the debt ever larger (such as the proposed $1+ Trillion per year for several years to come).
    Time and inflation can help reduce a debt faster, but not if the debt is still growing at record rates.
    It is especially bad if additional borrowing is used to merely pay the interest on the debt year after year, as we have seen happening for many years.

    And reports of more borrowing and much larger deficit spending for several years into the future is ample cause for concern.
    As it is already, it would take centuries to pay down the $11 Trillion National Debt. Even if the federal government had the extraordinary discipline to stop deficit spending (as it has been for the last 52 consecutive years), it would currently require about $495 Billion per year in interest alone (over $41 Billion per month) at only 4.5% interest, to simply stop the $11 Trillion federal debt from growing ever larger. It would take 180 YEARS of extraordinary discipline to pay off the current $11 Trillion debt (as of 3-MAR-2009). Yet, there’s now an estimated $1.7 Trillion deficit for fiscal year 2009, and $1 Trillion dollar deficits schedule for several years into the future.

    Who really believe the debt can grow much larger?

    Who can answer the 4 following questions:

    • (a) Is there any historical precedent of any nation so deep into debt ever successfully solving a massive debt-bubble with more debt, borrowing, new money, and spending?

    • (b) Is there any macro economics model that states that a massive debt-bubble can solved with more debt, borrowing, new money, and spending?

    • (c) Is there any mathematical rationale that demonstrates how any nation so ridiculously deep into debt (much less the biggest debtor nation on the planet) has ever successfully solved a massive debt-bubble with more debt, borrowing, new money, and spending?

    • (d) If the current debt is untenable, how is growing it bigger going to help?

    At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that

    Posted by: d.a.n at March 24, 2009 12:05 PM
    Comment #278428

    I suppose the definition of moderate would be different from the person who describes it because of their ideological leanings bills, I classify myself as a Independent I hold no political affiliation right now because i believe our parties are corrupt on both sides the culprit is our congress as i have described before I’ve voted for Carter and Reagan , In my mind things work in balance if we lean to far to the left we become to socialistic and to the right to authoritarian so when i take a stand sometimes i swing one way or another, our parties tend to be polar opposites from each other, I believe your term that moderation is not a stance is incorrect. I felt the right abandoned Reagan in the last 15 years did i support all of his agenda no so this cycle i voted for Obama do i agree with all of his agenda no what other choice was there at the time.

    Posted by: Rodney Brown at March 24, 2009 12:15 PM
    Comment #278430

    Rodney:

    As a moderate I agree with you. Moderates or from Missouri. SHOW ME!! I can support liberal ideas when I am convinced the premise to be true. For instance I can easilty support Public Education because as far as I have been convinced, improvement of job skills is the only true weay to help the poor.

    On the other hand, I do not support wealth redistribution because, I don’t see the long term benefits.

    Posted by: Craig Holmes at March 24, 2009 12:33 PM
    Comment #278431

    “We’re not sure what happened when and in what circumstance,” said Rep. Paul E. Kanjorski (D-Pa.), who told Geithner that Americans “feel boxed out of what’s happening in this economic crisis.”

    Kanjorski said that lack of information by the Treasury Department and recipients of government funds will make it extremely difficult for Congress to authorize the additional financial bailout money for the administration plans to request.

    Posted by: Rodney Brown at March 24, 2009 12:34 PM
    Comment #278432

    Marysdude:

    I think we are at a tipping point in fiscal history that is going to change the future. The future debt projections of our country according to CBO, under current law, show that the debt burden on our grandchildren (50 years) exceed those of WWII by several times.

    I want to admit to becoming for forceful in this argumentover time, for a couple of reasons. First of all the future is now. Oldest boomers this year are 63 years old. If you were to look into the future past 2019, you would see enourmous problems ahead.

    We are now living through the results of fical irresponsibilty for several reasons. I will easily admit the right’s share in this problem. I also want to clearly state that Obama’s plan is fiscally irresponsible as well because of the proposed long term debt.

    I want to be an advocate for our children. I want our children and grandchildren to have the same opportunities that I have enjoyed. Obama’s plan is a direct threat to my children because in 20 to 30 years, when they are my age, they will be saddled with enourmous tax increases to pay for the next ten years of spending.

    I’m out of this thing. What I mean by that is I am out of Corporate greed without regulation from the right, and I am out of taxing everyone but oneself from the left. If the right wants to make so much money that is fine, but they don’t have the right to take risks that can bring down the system. We need to eliminate banks that are too big to fail. We need sensible regulation to prevent what we are living through. What these bankers did was also a great threat to our children.

    Just as we are living through the conseqeuencss from the right, we are also creating the consequences from the left. Just as we must hold corporations accountable for their actions we must also hold the left accountable. Now that the wealthy are going to be taxed at higher rates, we need to debate the rest of his agenda with the current taxpayers paying the bill. If Healthcare, improvements in education and the environment are critical issues as the left has proclaimed then they are worthy of current sacrifice from all of us.

    Liberals on the left, be straight up and do not defer the taxes to our children and grandchildren, but on the present taxpayers. Do not propose one thing in legislation what we do not pay the cost. Bring down those CBO debt figures to historical levels.

    In the end, only part of your agenda will go forward, because only part the american people will support with current wallet. I believe that is the honorable thing to do.

    On the other side of the coin, (the right side) we should only allow risk in Corporate america that we are willing to underwright with our tax dollars. Corporate America at least the financial part needs a leash. When they fail, we pay as we are today.

    Posted by: Craig Holmes at March 24, 2009 12:54 PM
    Comment #278433

    dbs-
    I have a factual point of comparison: the absolute spike in the number of filibuster threats. I don’t need to kid anybody to say the the Republicans literally set the record with obstruction. You, on the other hand, are forced to essentially indulge in a rhetorical habit of trying to always trying to boomerang Democrat allegations, when in reality, the evidence says the Republicans have no peer on obstruction.

    Neither do I have to engage in a comic muddling of the facts to allege that Bush sought and received more executive power than previous presidents, and was vastly more secretive than Clinton was.

    I don’t have to have it both ways. I can have it one way, because I’m not trying to win an argument with clever turns of rhetoric, but few facts to back me up.

    Craig Holmes-
    Keep up with the news. China is not about to cut the throat of its best customer. Then we’d both be screwed. It also seems that for now, they like the Treasury Rescue Plan/

    The thing you must keep in mind is that when we sneeze, they get a cold. Right now, we got the flu. Do they want us getting any sicker?

    As for the rest? I will calmly, patiently attribute that to the mental distress Republicans must be feeling at the thought that they’re politics have been mostly rejected by the American people, and that they back Obama’s economic play.

    The Republicans can continue to pretend that economic situations have one-size-fits-all solutions, while Democrats try every thing we can with everything we can to actually deal with the problem at hand.

    This budget is way higher than it should be, but most of the reasons for that have to do with the abuse the Republicans allowed of the economy and its institutions. If Republicans had done the right thing years before now, we wouldn’t be having to face such an uncertain future in our markets.

    Our strategy is to make material progress on all fronts, not just fix the radiator, then the belts, then the transmission, and then each part as the jalopy comes apart. This is a full on economic restoration job, made necessary by the negligence of the previous owners of the policy. Maybe you’ll get your chance later on, but in the meantime, it’s not our intention to fail, so as to give your side the opportunity to return.

    Posted by: Stephen Daugherty at March 24, 2009 1:00 PM
    Comment #278436

    Craig,

    We both wear blinders, I guess. I’m still trying to reconcile this business of weighing down our progeny with our accumulated debt, yet not providing them the education, health care, and energy sources with which to manipulate themselves out of that debt. Leaving my children’s children, and their children ignorant, uneducated, sick and dying, and dependent on an ever decreasing fossil fuel supply which has polluted their world beyond reconciliation, but with limited debt just does not ring the right bells with me.

    Saying that we should place the tax burden back on the middle class, many of whom have lost their jobs and been downsized and down waged, and who need a second job which is not available because of the rotten economy, makes no sense to me. That burden has been carried by the middle class too long as it is, but now that the middle class is shrinking and the loss of jobs is reaching critical mass, it is even more important to place that burden back on the only folks left who can shoulder it.

    But, I think I’ll give up on this conversation before you really get to ranting. I certainly don’t mean to get anybody’s shorts in a twist.

    Posted by: Marysdude at March 24, 2009 1:12 PM
    Comment #278440

    Marysdude/Stephen:

    I understand you wanting to do all of those things. I am simply saying who pays for it? right now it’s everyone exept you.

    Stephen and Marysdude, you both need to be willing to pay for these priorities, and you should promote others doing the same.

    You can’t exempt yourselves from taxation for your priorities, at the expense of the young.

    Posted by: Craig Holmes at March 24, 2009 1:32 PM
    Comment #278443

    Stephen-

    Filibuster threats are obstructionist? Wow those Republicans have a lot of power in the Senate…

    How many filibusters have there been and how many cloture votes have passed? Probably none and all.

    Posted by: George at March 24, 2009 1:42 PM
    Comment #278448

    Marysdude writes a sweeping statement of charges, leveled I suppose at conservatives, without any basis in fact.

    “I’m still trying to reconcile this business of weighing down our progeny with our accumulated debt, yet not providing them the education, health care, and energy sources with which to manipulate themselves out of that debt. Leaving my children’s children, and their children ignorant, uneducated, sick and dying, and dependent on an ever decreasing fossil fuel supply which has polluted their world beyond reconciliation”

    Marysdude, it must be hell to live life with such unfounded beliefs. PO and his liberal congress are apparently unable to restore your confidence. What will it take to create “MarysdudeWorld”? To which period of history would you point as ideal and under what system of government would you flourish? Play God for just a moment and reveal your plan for humankind.

    Posted by: Jim M at March 24, 2009 2:16 PM
    Comment #278452

    Jim M,

    You were so interested in putting me down, you forgot to make a point…go figure…

    Posted by: Marysdude at March 24, 2009 2:46 PM
    Comment #278453


    Stephen D., the Chinese are busy developing markets all over the world for their products, including their own people. I doubt if we will be as important to the Chinese in another decade.

    Posted by: jlw at March 24, 2009 2:55 PM
    Comment #278454

    Jim M.

    I have found Marysdude to be a person of goodwill.
    I enjoy debating issues. Don’t need the put downs.

    Conservatives are in a pretty big glass house right now. Need to use caution when we throw a stone or two!!

    Posted by: Craig Holmes at March 24, 2009 2:59 PM
    Comment #278460

    Marysdude is confused and writes; “You were so interested in putting me down, you forgot to make a point…go figure…

    I challenged your statement as based upon “unfounded beliefs”. No answer from you.

    I asked, “To which period of history would you point as ideal and under what system of government would you flourish?” No answer from you.

    No Point???

    Posted by: Jim M at March 24, 2009 3:48 PM
    Comment #278462

    M. Holmes writes in Marysdude’s defense; “I have found Marysdude to be a person of goodwill.”

    What goodwill did you find in the post I referenced? I read a list of imagined grievances with no factual references, supposedly perpetrated upon Americans by government with malice toward them. What did you read? Goodwill??? Towards whom???

    Posted by: Jim M at March 24, 2009 3:57 PM
    Comment #278492

    Craig Holmes-
    Everybody but me? I’m a taxpayer. I get footed the bill, too. Me and 95% of everybody else who’s getting a tax CUT under Obama. But I’ll also likely have to pay an increased rate at some point, in order to balance the budget. Hopefully, I’ll be able to pay the top rate, one day.

    You know, that’s the funny thing. I’d kill to earn what these people make after taxes. I don’t see how making that much money is a discouraging thing, unless you’re green with envy over some other executive’s take. If you’re spending so much, you can’t settle for being rich, and making more in on year than a large part of the population makes in a decade, then you’re not getting much sympathy from me. You are fortunate, even for your terrible burden of paying that high of taxes.

    It’s only in this rat-raced, over-competitive world that people can’t enjoy themselves on that much money. If we look at it that way, then the big exec who pays for a house that strains even his massive resources is no wiser than that person who accepted a mortgage they couldn’t afford.

    I digress, though. I’m willing to pay for this. Why? Because I haven’t let this noxious poison of government paranoia get into me. Even in my Republican days, I didn’t buy into the “government is the enemy” credo. Government is government. It’s necessary. Places without it are the places we consider hellholes. It can be corrupted, or given power that lets it overwhelm the freedom people need to live happy, productive lives. But that’s what Democracy is for. Republicans have made it a point to oppose government intervention at all turns, but really, it’s the people’s job to decide, by majorities and by political action, where the balance of freedom and obligations begin and end, and this line does not have to be drawn where any one individual wants it. After all, if it was about where you or I wanted that line drawn alone, we could very easily invent a system that is good to ourselves, but tyrannical to others.

    Republicans have the freedom to oppose, as much as we have the freedom to support. The question is, in the end, where do the dynamics of public opinion run to. If we let our pride and hope in our politics blind us, we might not see things heading against us, but in the Republicans terms, two lost elections and dismal poll numbers should give pause to those who think that the ball is still in their court.

    Posted by: Stephen Daugherty at March 24, 2009 6:34 PM
    Comment #278493

    My statement above…your ugliness below:

    Marysdude, it must be hell to live life with such unfounded beliefs. PO and his liberal congress are apparently unable to restore your confidence. What will it take to create “MarysdudeWorld”? To which period of history would you point as ideal and under what system of government would you flourish? Play God for just a moment and reveal your plan for humankind.
    Posted by: Jim M at March 24, 2009 02:16 PM

    I was in a direct conversation with Craig, and while it is acceptable and common to break in on a conversation between others on this site, it is at least the responsibility of the intruder to catch up with the conversation…for your information, I live in the same world you do, and my wants and desires are the same as yours. I may have opinions that differ with yours as to how to go about achieving my goals, wants and aspirations, but they are no less a part of the world than yours. You tell me I have unfounded beliefs, but do not point out which of my beliefs is misguided or incorrect. Then try to justify that by saying I have been offensive in some way.

    My words to you…BACK OFF!

    Posted by: Marysdude at March 24, 2009 6:36 PM
    Comment #278521

    stephen


    “Everybody but me? I’m a taxpayer. I get footed the bill, too. Me and 95% of everybody else who’s getting a tax CUT under Obama. But I’ll also likely have to pay an increased rate at some point, in order to balance the budget. Hopefully, I’ll be able to pay the top rate, one day.”

    you got a tax cut under george bush. don’t know what bracket you’re in, but it was probably @ a 5% reduction in that bracket. at the end of 2010 that reduction will expire. when you couple that with the increased tax on energy under obama, and the possibility of your employers contributions to you heath care being taxed as income ( if you have that ) you will see a drastic increase in your cost of living. that roughly 13 bucks a week pittance you’ll get won’t even begin to cover those extra costs.

    Posted by: dbs at March 24, 2009 8:49 PM
    Comment #278529

    dbs-
    I’m aware of the tax cut I got under Bush. It came from the bracket below mine. Most of the money, though, went way over our heads to a few, wealthy individuals. People who, whether or not you felt they deserved those cuts, didn’t need them and wouldn’t spend much of them.

    When the bulk of the income tax benefits go to a few, the populism is dubious at best. If we’re going to cut taxes, and we truly want to benefit the market, why give that money to folks for which it is a luxury? Why not give it to those who we know have to spend it?

    If it phases out in 2010, look to your side for the people to blame. I’m under the impression long term cuts are there in Obama’s budgets, but that seems to be one of the target for the conservatives of both parties. Go figure: investor-class tax cuts are holy and must not be touched, but the working class and middle class tax cuts must be sacrificed for the good of all.

    As for 13 bucks? I could use any money I can get. And when things get better, I will likely be better able to pay for what I get. That’s the deal. As for later? Look, I’m prepared to take on a shared burden with others in this country, to improve our country’s economy, improve it’s future. I have pride in this country enough to give out of my own self interest for it.

    jlw-
    The developing markets don’t have our wealth, even in our weakened condition, and we’re a bird in hand that is worth many in the bush.

    Posted by: Stephen Daugherty at March 24, 2009 9:19 PM
    Comment #278537

    Stephen D.In my opinion those business tax credits cuts under bush was a joke where i was working at the time we about got on are hands and knees with the owner to invest into new equipment for the lab and to upgrade the store to meet the demands of today in health insurance and profitability and efficiency he bought three gas hog suv’s for himself and his family. I left 7 months later he had to move into a much smaller store and a less busy area.

    Posted by: Rodney Brown at March 24, 2009 9:47 PM
    Comment #278539

    Unless the current tax system is significantly reformed, it will still be regressive as it is today.

    At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

    Posted by: d.a.n at March 24, 2009 9:51 PM
    Comment #278542

    stephen

    “Most of the money, though, went way over our heads to a few, wealthy individuals. People who, whether or not you felt they deserved those cuts, didn’t need them and wouldn’t spend much of them.”

    that is my problem with the liberal mindset. they feel they have the right to decide who is deserving of keeping more thier own money. it doesn’t matter what someone does with the extra income they keep when taxes are cut. it is thier money, and is thier right to spend it, or do as they wish, and no one elses. as far as the more going to the top, thats a bogus argument they pay far more in taxes and would naturally see a bigger savings. even if the bracket they’re in was only reduced by 2% when the lower brackets were reduced by say 5 to 7%.


    “When the bulk of the income tax benefits go to a few, the populism is dubious at best. If we’re going to cut taxes, and we truly want to benefit the market, why give that money to folks for which it is a luxury? Why not give it to those who we know have to spend it?”

    once again the arrogance of someone thinking they should decide who is more deserving of keeping the money they’ve earned, really boggles my mind.


    “as for 13 bucks? I could use any money I can get.”

    so can i stephen. the problem is that 13 bucks will be lost and more in order to pay increases in other areas like i described above.

    it was like mailing out stimulus checks. it would have been cheaper to give that money at the end of the year as tax reduction or part of a refund check that was to be mailed anyway. it was all a PR campaign.


    Posted by: dbs at March 24, 2009 10:02 PM
    Comment #278555

    Stephen:

    Everybody but me? I’m a taxpayer. I get footed the bill, too. Me and 95% of everybody else who’s getting a tax CUT under Obama. But I’ll also likely have to pay an increased rate at some point, in order to balance the budget. Hopefully, I’ll be able to pay the top rate, one day.

    Exactly, you are getting a tax cut, but our children are getting a tax increase through additional debt, higher interest rates, or inflation. Now that we know the true cost of Obama’s ideas, I think you personally are in a morally week position to tolerate this injustice.

    You should be required to pay for some of the ideals YOU believe in. You are not. Obama is saying “Stephen, I am going to do these things you want, but I’m going to give you a tax cut, and instead I am going to give the bill to the rich and the young.”

    I presume that you want healthcare reform, education and the environment looked into. I think the taxes for these programs should come from todays workers not tomorrows. I understand your presumed argument about fairness of the tax code. However, I don’t believe it is morally right to propose spending without a cost.

    This is a change. It’s a change because the world has changed due to demographics, and the dramatic size of the Obama debt that is coming.

    By the way, if I were a democrat I would not be alone in this thinking.

    Posted by: Craig Holmes at March 25, 2009 12:38 AM
    Comment #278558

    The sad part is that Stephen really believes that he won’t be paying any more in taxes.

    Posted by: Rhinehold at March 25, 2009 4:46 AM
    Comment #278559

    Craig,

    We should be moving away from an income tax an towards fees and sales taxes to better represent what people’s actual use of societal resources are… But of course, the favorite tool of the Democrats to pit people against each other for political power goes out the window then…

    I can’t wait to find out the time I’m going to be spending in jail in 2010 when I refuse to answer all but the 1st question of the census (which is all I’m legally, and constitutionally, required to answer). The dems will be in charge then and they NEED that information.

    Posted by: Rhinehold at March 25, 2009 4:50 AM
    Comment #278562

    Craig,

    Tax cuts for middle and lower classes are spent in real time, and thus are stimulants to the economy (I’m assuming that the economy IS the subject), while tax reductions in the higher brackets are many times salted away into off-shore accounts, off-shore investments and in building American manufacturing sites on foreign soil…thus that money is NOT a stimulant to the economy in real time.

    Posted by: Marysdude at March 25, 2009 7:54 AM
    Comment #278572

    Marysdude:

    Stephen started this thread by talking about the CBO numbers that show the effect of the Obama proposal over 10 years.

    I understand tax cuts stimulate the economy in the near term. The effects of Obama’s plans accumulate over time. The last year the CBO keeps track of Obama’s proposals add $750 Billion to the deficit. (2019).

    I am saying, Obama exempts you from the tax increases for all time, even after the stimulus is no longer needed. Instead he gives the bill to the rich and the young.

    Posted by: Craig Holmes at March 25, 2009 10:42 AM
    Comment #278583

    Rodney Brown-
    I think the point that I would make is that we’ve made the mistake of thinking that because it’s natural to want more than we have the means to attain that it’s right to indulge this natural impulse; inhibitions have their natural place, too. Efficiency is more than just a matter of coupon-cutting or bean counting. The constant attempt to attempt to improve efficiency by rewarding workers less and less for productivity makes a mockery of the word, often times.

    Efficiency isn’t merely more for less, it’s about optimization. It’s become a byword for expedience and cutting things close to the bone, but sometimes if you cut things to close to the bone, and don’t leave spare capacity, small disruptions become amplified into big problem, or at best one is left unable to exploit improvements in the market.

    I guess I’m rambling a bit. But my point is this: sometimes in our quest to be cheap, and do things only in the easiest way, we make expensive mistake and make things more difficult in the future.

    Sometimes efficiency requires re-thinking how the system itself is set up, and being willing to rebuild some things from the bottom up. Unfortunately, the systems we create in society often have inertia, and people invested in protecting their turf, and so bad, inefficient systems linger.

    I think the Republicans would like things to stay as they are in many ways, enduring the crisis so they can restart business as usual after people’s motivation to change things has died down. But what hasn’t served us well recently, likely won’t serve us well later, and I fear that by not making the necessary investments now, inside and outside of stimulus, we’re just going to make things more difficult and expensive for us down the road.

    Posted by: Stephen Daugherty at March 25, 2009 11:44 AM
    Comment #278584

    The comparisons to FDR aren’t really applicable. He assumed office more than 3 years after the crash. Bernanke claims to have solved the banking problem, exemplified by Corus Bank , an aggresive condominium developer that now has plenty of unsold condos on their hands. Now, people want to extend the same protections to corporations that are “too big to fail”.

    Posted by: ohrealy at March 25, 2009 11:46 AM
    Comment #278591

    This is a good string. Have only this to add:

    It does no good to water the lawn when the house is on fire. The situation we are presently in will not be resolved through out-year altruistic intiatives (not that we do not want such things).

    The best approach right now, is to focus on resolving the things of right now. Do not assume that everything we have today is steady state.

    My take, put The Prophet’s ‘stimulus’ plan on hold. Reset, refocus on the right-now economic needs of the citizenry.

    Posted by: Indiana Oracle at March 25, 2009 12:29 PM
    Comment #278592

    Marysdude writes; “You tell me I have unfounded beliefs, but do not point out which of my beliefs is misguided or incorrect.”

    OK…here it is again…”weighing down our progeny with our accumulated debt, yet not providing them the education, health care, and energy sources with which to manipulate themselves out of that debt. Leaving my children’s children, and their children ignorant, uneducated, sick and dying, and dependent on an ever decreasing fossil fuel supply which has polluted their world beyond reconciliation”

    Posted by: Jim M at March 25, 2009 12:31 PM
    Comment #278593

    dbs-

    that is my problem with the liberal mindset. they feel they have the right to decide who is deserving of keeping more thier own money. it doesn’t matter what someone does with the extra income they keep when taxes are cut. it is thier money, and is thier right to spend it, or do as they wish, and no one elses. as far as the more going to the top, thats a bogus argument they pay far more in taxes and would naturally see a bigger savings. even if the bracket they’re in was only reduced by 2% when the lower brackets were reduced by say 5 to 7%.

    I believe I said that regardless of what you felt about how much they deserved that money, they needed that money less, and would spend a relatively smaller amount of what they were given.

    That’s a simple fact. Rich people, by their nature, are beneficiaries of surplus income above and beyond what they need to simply survive. The Rich, by their nature, accumulate wealth better than those lower down, who cannot keep as much of their money, even if taxes are not part of the equation.

    Also: remember, income tax is payed by brackets. People imagine that they pay the same rate for all of their income. They don’t. What happens can be described in terms of a series of barrels.

    Brackets of income are like rainbarrels. You have a series of them, all put together, so that the overflow from the first, goes into the second, and so on, until you reach a final tank which has unlimited capacity.

    If your income is water, the government is going to scoop up a certain percentage of that water out of each barrel. Once you reach the limit of that barrel’s capacity, you will essentially see the same amount of water taken out of those first, filled up barrels, no matter how many other barrels you fill up.

    That’s how the Middle Class got money out of the reductions of income tax for the poorest of the brackets: reduce the amount taken out of the lowest of the brackets, and everybody who pays more taxes than that benefits from the cut, since that bracket shows up in everybody else’s income, and hence the figuring of their tax liability.

    Bush essentially cut the first one or two barrel’s rates, and then skipped over the subsequent barrels until he got to the last two. He removed the last tank, and converted the new final barrel into an unlimited tank to replace the old one, taxing that income, that unlimited income at a lower rate than the former top bracket.

    Which means the rich, whose income in those areas is proportionately larger, saw tens of thousands of dollars, or even more, in tax cuts. Remember: the same percentages of different amounts will produce different numbers. If I take 10% out of 100, that’s ten. Out of a thousand, it’s 100.

    Why were we doing that? The rich, by definition, have surplus; literally speaking, they have more money than they can spend.

    The poor and middle class, though, need to go through much, much more of their income just to make ends meet. They don’t have as much money to spare, so anything extra they get, they’ll put to use. This is called marginal utility. The more money you have, the less necessity and usefulness each dollar has for you. A rich guy can light his cigar with a hundred and think it a joke. For a person in the inner city, it’d be an act of brazen stupidity. Look at all the rap videos, at the conspicuous consumption there. That’s what people want to be able to do in our country’s poorer areas; the marketers know who they’re selling to, and what they’re selling: the promise of getting out.

    If you’re going to cut taxes, give the money to the person who has the most use for it, and it won’t simply accumulate. I mean are you going to contradict me when I say that rich people are the best folks at accumulating wealth? Why try and stimulate the economy through them?

    The objection often brought up is that this means that rich folks wouldn’t invest so much, create so many jobs. I dont’ know. If somebody pays money to a store, that goes into the store’s coffers, which finds its way into the investors and the higher earner’s pockets. The money will accumulate in the hands of the rich eventually. The question is, what does that money do in the meantime?

    If it just outright lands in an account, and sits there, it’s not nearly doing as much as the dollar that filters up through the economic hierarchy.

    Posted by: Stephen Daugherty at March 25, 2009 12:39 PM
    Comment #278594

    Rhinehold-
    The sad part is that you haven’t read my posts well enough to find out that I do expect to pay more in taxes eventually, one way or another.

    I just don’t have near the phobia of that that some have. To me it’s an obligation, not particularly enjoyed, but something I’m not going to have a crying fit over at this time.

    Sometimes the fear of a thing is worse than the thing itself. And sometimes the bad judgments inspired by the irrational fear of something are even worse still.

    Craig Holmes-
    I think you’ve missed the point of much of what I’ve said. First, at this point, we’re in a deflationary state of economics. What that means, is that if we raise taxes, it’s going to cancel out much, if not all of the added value from the spending. Same thing with raising interest rates. We will have to tolerate both increases in taxes and interest rates to balance off what’s going on now.

    However, if the economy doesn’t get out of its deflationary economic funk, we will see continued lows in revenues, coupled with a sensitivity to any removal of government support in the economy.

    What you suggest here is, we pay for the deficits in order to improve the economy, by essentially taking more money from people in the economy who have too little money already.

    Well, you do that, the economy gets worse, not better, the deflation deepens, rather than level off or decrease.

    We need to prime the pump with tommorrows dollars, because potential wealth in the future is the only wealth we have available that can be used in this fashion, and we’re in desperate need of that. If we don’t act soon, act quickly, and act strongly, then we’re essentially screwed; the deflation continues, the economy keeps contracting, and the things that would be smart, no, brilliant to do under normal circumstances will only make things worse.

    Alice needs to get out of Wonderland first before she can start looking for the path back to her house, get it?

    As for the CBO numbers, you’re missing a major point: it is extraordinarly unlikely that the following will remain true:

    1) That the economic projections of today will come to pass; the CBO even allows for this by assuming that the economy could differ from five year projections by about 900 Billion. What’s the uncertainty ten years out then?

    2) That the budget we run on for the next year will be the same as that which we run on later on in Obama’s administration. He’s going to be adjusting this thing every year.

    3) That we won’t see any number of critical events happen between now and then, including those that change the nature of the economy itself. A 1990 budget projection of the next decade would have been way off. The 2001 baselines essentially had revenues go in the complete opposite direction, by 2004: surpluses at 3% of GDP, as opposed to deficits of over four, as they actually occured.

    All in all, it’s like giving precise answers to the effects of global warming. Your numbers look sharp, but their real world uncertainty cannot be understated.

    Posted by: Stephen Daugherty at March 25, 2009 1:10 PM
    Comment #278596

    M. Daugherty writes; “If you’re going to cut taxes, give the money to the person who has the most use for it, and it won’t simply accumulate. I mean are you going to contradict me when I say that rich people are the best folks at accumulating wealth? Why try and stimulate the economy through them?”

    Whoa Big Fella, your saying, “I say that rich people are the best folks at accumulating wealth” is like saying that to accumulate wealth one must first be rich. Do you doubt that rich people can become poor, or that poor people can become rich?

    The accumulation of wealth, unless by inheritance or winning a lottery is usually accomplished by working for it. When they do have a surplus, they invest it to make it grow. Everyone in this country, unless they have a mental or physical impairment that makes it impossible, have the chance of accumulating wealth. It is really very simple, save more than you earn and hope that government doesn’t decide to share all the fruits of your labor with those who don’t.

    It took me nearly 50 years of continuous work and saving to achieve what I now possess. And, at age 68 I still work every day. I am willing and do help those who thru misfortune or inability need help.

    The decision to help those folks falls upon my conscious and is the obligation of my government. To give my resources to others who have not yet achieved my level of success, simply because some feel I have too much and they have too little, is not the business of our government.

    Posted by: Jim M at March 25, 2009 1:26 PM
    Comment #278597

    Craig,

    When I wrote about leaving our progeny in debt up to their ears, I meant that no matter what we do today, it will reflect on a huge debt in the future…greater or smaller have no meaning as the debt will be HUGE!

    My argument is that the budget being proposed will try to bring our national systems/policies/priorities in education, energy and health care back from the lows they each have suffered for at least the last thirty years.

    Since we are, of necessity, leaving a HUGE debt to the young’s young, and to their young as well, it would be best to leave them equipped with enough education to think of ways to pay that debt, health enough to accomplish it, and cleaner energy sources with which to preserve their environment, so they can enjoy the fruits of their labors.

    Our world IS GOING TO CHANGE. Our progeny will not inherit the world we did…first because we’ve attempted to wreck it physically with our pollutions, overfishing, etc., and second because our economic system will have to undergo major adjustments, and will perhaps never flourish as cavalierly as it has in the past.

    In essence this is what I tried to convey when I said:

    “I’m still trying to reconcile this business of weighing down our progeny with our accumulated debt, yet not providing them the education, health care, and energy sources with which to manipulate themselves out of that debt. Leaving my children’s children, and their children ignorant, uneducated, sick and dying, and dependent on an ever decreasing fossil fuel supply which has polluted their world beyond reconciliation”

    Some might find this hard to cipher, but I have faith that you, Craig, have understood it within the context of our conversation here…if someone else has a problem with the understanding of it…well, hey, you can’t please…

    Posted by: Marysdude at March 25, 2009 2:09 PM
    Comment #278600

    The National Bureau of Economic Research said that the U.S. has been in a recession since December 2007, making official what most Americans have already believed about the state of the economy . Using that Data Obama Walked into Office close to 14 months of a ongoing Recession.
    http://money.cnn.com/2008/12/01/news/economy/recession/?postversion=2008120115

    Posted by: Rodney Brown at March 25, 2009 3:02 PM
    Comment #278601

    Marysdude writes; “no matter what we do today, it will reflect on a huge debt in the future…greater or smaller have no meaning as the debt will be HUGE!”

    Wrong…we don’t have to increase our future debt with unwarranted spending today. We can reduce our discretionary spending today as well to reduce tomorrow’s debt.

    He writes; “…try to bring our national systems/policies/priorities in education, energy and health care back from the lows they each have suffered for at least the last thirty years.”

    Wrong…we have thrown money at education and it continues to fail. We now have government providing 50% of all health care and the costs only increase. Who has lacked sufficient energy in the past 30 years?

    He also writes; “Since we are, of necessity, leaving a HUGE debt to the young’s young, and to their young as well…”

    Wrong…it isn’t necessary to accumulate a huge debt. PO and his liberal congress wish a huge debt to pay for their social entitlement programs. This isn’t necessary to restart our economy.

    He also writes; “Our progeny will not inherit the world we did…”

    I agree, our progeny will understand from where wealth and good living comes. Not from government but from their own willingness to work and be responsible for themselves. Government can’t give anyone anything unless it first takes it from someone else. Liberals are perfectly willing to rob the future by squandering today’s opportunities. As a people we have the perfect time to call for government to be frugal, not spendthrift.

    PO in his press briefing last night said in so many words that the way to saving money is thru spending more money. That’s the problem…not enough government spending. That pig won’t fly…no matter from whose mouth the lie emanates.

    Posted by: Jim M at March 25, 2009 3:03 PM
    Comment #278611

    Jim M-
    I don’t like to generalize virtue among the classes. I think people are just plan human, which means, like the classic Spaghetti Western, there’s the good, the bad, and the ugly.

    (ahyee-ahyee-ah… wah wah wah)

    Seriously, though, I think wealth is an amoral thing, in the sense that it’s irrelevant to where a person stands on the economic ladder. That said, those who are rich, influential, have a great deal of power, when they get bad and ugly, can have a much greater effect on the rest of us. So if people are harder on the rich, it’s plainly because the rich can be harder on us, too. It’s less personal than it is common sense.

    I think a person deserves every dollar they work for. Maybe one guy deserves to keep more than that. Maybe another guy, even if he’s poor, deserves to be taxed into the grave. I don’t know, can’t know, and really shouldn’t make a broad based societal decision based on such thinking.

    Because I can’t know, I’m going to proceed from generalizable principles. Generally speaking, tax cuts to the rich only make sense if there’s an extraordinary amount of money being taxed from them. During the fifties, sixties, and other times, the top rate could get up to 90%. If there’s no solid reason for that high rate, it’d be nice to cut it, because such a high rate would definitely drag on the economy. That’s part of what Kennedy did, and his tax cuts worked.

    But since then, it’s not worked much, for the reason more or less that tax cuts don’t increase incomes much nowadays, and particular in the case of the rich because all the money they already have gets spent before it.

    If we’re in a situation where economic harm might come of raising taxes, who should we take from? The poor and middle class form the consumer base, and the tax increases most decidedly WOULD impair their disposable, and even necessary income.

    So then the question becomes “why not the rich”? If you keep the higher taxes for them moderate enough, the rich can still be rich, feel rich, make jobs, make investments, and in the mean time, the folks beneath their tax brackets can pay more into the economy, which makes them more money, grows the economy, and makes for a much more stable situation. If you’re not unrealistically expecting that those who have most of the money won’t or shouldn’t pay most of the taxes, you will find that the economy can run perfectly well under the Democrat’s tax plan. If, however, the mention of the IRS makes you break out in hives, that’s an allergy for which there’s not enough antihistamine in the world.

    Wrong…we don’t have to increase our future debt with unwarranted spending today. We can reduce our discretionary spending today as well to reduce tomorrow’s debt.

    Not necessarily. If government stops putting dollars in the economy, it could get worse. Normally, cutting spending would work to lower the budget, but in this case, it might also lower revenues by impeding growth in the economy. Deflationary periods are sensitive to attempts by government to withdraw spending. FDR tried it, and it brought back a downward trend in the market with a vengeance.

    Too many folks have a one-dimensional view of Government spending. There’s more than one variable in the equation. The question is, does the spending help the economy grow enough to offset the costs.

    For example, a few billion dollars in additional enforcement and manpower could have prevented trillions of dollars of losses, and the huge deficits that come from that loss of GDP.

    More spending doesn’t necessarily, of course, create cost savings. But there’s nothing that says that leveraging to buy the right tools, equipment and manpower in a certain area, might not create additional savings to make up for it. If we do a good enough job on the reform of healthcare, it pays for itself.

    What made TARP a waste of money last year wsn’t some general principle of economics. What made it a problem was the haphazard structuring and oversight, the lack of cohesive goals the unwillingness to make requirements of those accepting the funds.

    If we want government that works, we can’t simply be the kind of defeatist cynics that the Republicans seem to like to be. We cant’ be business friendly. America’s interests have to come first. Waiting for problems to be solved until more convenient times is often a wait until motivation to deal with things is dead, and then from there is just waiting to another crisis to force a hasty solution to be drawn up. Let’s stop waiting for problem to become crippling to deal with them.

    Posted by: Stephen Daugherty at March 25, 2009 5:17 PM
    Comment #278614

    Marysdude:

    Thank you for your thoughtful reply. First of all, there is no reason we need to leave our children with a huge debt. This is the very best economy the world has ever seen. This economy produces the highest standard of living, has the best trained work force etc etc.

    A person that makes a million a year can easily be bankrupt if they spend two million a year. It’s all about expectations and prioritires.

    The reason we are going to leave a huge debt to our chldren is that we have over promised fiture retirees what we can provide. Actually there is nothing at all wrong with the amount of money our children can safely provide us in future years. There is plenty just not as much as we have been promised.

    There is also plenty of health care, just not as much as we have been promised. What our children can safely provide us in the future is however liimited.

    If we build medicare and social security around what our chldren can provide instead of what we have been promised, we will be fine. No one around the world will say “oh those poor americans” because we still will have a great retirment compared to the world.

    I speak this as a man 53 years old. Don’t fear cutting your Social Security/medicare benefits, because frankly there is little need. It’s the future that is bleak.

    It is that big shadow of future needless bankrupsy that has me worked up.

    People my age will adjust. It will probably mean working a few years longer. Big deal.

    Secondly about your priorities. I support healthcare reform, education and the environment. Maybe not the way Obama wants to do it, but I certainly am for those three topics. I have children that can’t afford healthcare.

    I still think there is plenty of money within historical norms. So where do we get the money?

    With regard to healthcare for the young, I would cut medicare subsidies for the affluent and give it to the young. Bill Gates doesn’t need a medicare suppliment. He can pay full price!!

    We have a budget system that works. You keep the defict within a sustainable pattern which means you target our debt so that it grows slower than the economy in good times and faster than the economy (like now) in the bad times. You keep the over all tax burden within historical norms and you keep spending at or below 20% of gdp.

    My argument for these numbers is that they have worked well in the post WWII economy and have produced a great standard of living. Why change?

    We can still get a lot Obama’s priorties done. We just have to sort things around a bit. And of course fight and argue and eventually vote.

    I hope Obama and the left back off on the timing as well. Reality is that we have a huge mess to clean up. Deferring some of this spending down the road a bit would be great for the economy.

    Posted by: Craig Holmes at March 25, 2009 5:34 PM
    Comment #278616

    Stephen:

    So then the question becomes “why not the rich”?

    The top 5% pay 50% of all income taxes now.

    The top 1% pay 29% of all taxes.

    How much of all Income taxes do you want the top 5% to pay?

    This about this Stephen, What happens to our democracy when most voters pay no Income tax? The bottom 40% pay negative Income tax in that the second quartile pays 1% of all taxes and the poorest pay a negative 2% of all taxes.

    Where is the tipping point to where most voters pay no taxes and what does that mean for our future?

    Posted by: Craig Holmes at March 25, 2009 5:51 PM
    Comment #278618

    Craig,

    The only thing you left out of your last post to me…the current meltdown. If something is not done about that the most robust economy of which you refer can not exist. That is why I say the debt we leave our young is going to be huge, no matter what else we do…so, to protect them as best we can, why don’t we leave a legacy of unified health care, superior education and renewable energy? That way they may have a chance against the debt. Without those things, they have no chance at all.

    I helped raise eleven children, have seventeen grandchildren and five great grandchildren…do you honestly believe I want to leave those I love saddled with twenty or so trillion dollars? But even the best case scenario shows we are currently at least eleven trillion down and falling. That means to me that our progeny are responsible for a HUGE debt, that they are and won’t be capable of taking care of unless we get health care costs in check, provide energy sources beyond fossil fuels, and an education system that teaches them enough to cope with it.

    Posted by: Marysdude at March 25, 2009 6:27 PM
    Comment #278619

    Marysdude:

    No, we can afford to stimulate the economy and get out of this mess.

    The problem with Healthcare, Education and the Environment is that the are not stimulative in that they “fire” long after the recession is over.

    2010 should be a year of recovery, but the spending plans are for ever.

    It’s not 20 Trillion, it’s far more than that when you look out a ways.

    The crisis is a short term problem that we are going to recover from. Bankrupsy is a long term problem. As the head of EU said “American’s spending plan is the way to hell”. (Or something like that).

    Posted by: Craig Holmes at March 25, 2009 6:39 PM
    Comment #278625

    M. Daugherty writes; “If we want government that works…,. We cant’ be business friendly.

    Turn that around and it would read; If we want business that works we can’t be government friendly. Are they really exclusive? Hardly… Is this what you are getting from PO and congress…that we can’t be business friendly? It might be news to them after all the money they are pumping into the business community. Is that wasted and unfriendly?

    Posted by: Jim M at March 25, 2009 7:21 PM
    Comment #278635

    Craig Holmes-
    When you have most of the money, you pay most of the income taxes. The reason the rich’s share of the burden has gone up is not that taxes are high, it’s that a system has been fostered that essentially delivers a greater and greater proportion of the wealth to the already wealthy. The income taxes come along with that. If they wanted to take on less of the tax burden, they might try novel solutions like using more of their money to employ people, or giving employees raises. This will of course mean that they don’t get directly rich as fast, but when others are being paid better, more taxes will be paid by more Americans.

    Jim M-
    I believe in a government that’s not stuck in constant conflicts of interests regarding doing good by the American people. We gave into these people to let them trade derivatives unfettered, to let them essentially make up the figures they’re handing to their investors and the government. We let polluters pollute, and gave free rein to those whose negligence and failures have compromised the safety of the food and drugs we rely upon for our health. We let the healthcare industry get so out of control that now even conservative industries that oppose unions and other liberal initiatives now want universal healthcare.

    At the end of the day, we have to realize that not everybody’s special interests neatly mesh, and all this effort towards being business friendly has gotten us is a dysfunctional regulatory system, greater corruption in government and industry, and companies that, having been shielded from critical realities, now face them in stark terms.

    You can relax: I don’t favor business-hostile government. I favor business-disinterested government, government that is more concerned about protecting the public welfare than it is with satisfying some big company’s bottom line. I don’t mind government doing things with business to help Americans. But I also don’t mind government taking business to the woodshed, which the past few administrations have been woefully unwilling to do, to the cost of all.

    Government has to be a third party. As it repeatedly sided with business interests, it helped distort the market, by allowing companies to cover up their weaknesses, consolidate lean companies into bloated giants, and take excessive risks.

    The distortion of risk and the limiting of competition by consolidation helped create an environment of laxness and stupidity. Why compete to win when you can cheat? Why work towards greater profitability when you can just fictionalize it?

    Part of the critical reason for financial regulations, among others, is to discourage dishonest business behavior, behavior that lets companies get away with getting something for nothing, or at least less than promised.

    If we just relax all the rules, then real productivity is replaced by cheating, manipulation and fraud.

    Well, shucks. It already happened, didn’t it?

    Posted by: Stephen Daugherty at March 25, 2009 8:15 PM
    Comment #278639

    Stephen:

    Exactly. Since tax revenues were coming in at reasonable levels before the recession, and since the wealthy are paying a higher and higher percentage of the taxes, that means over time lower income Americans have gotten a huge tax cut.

    That is very true because I used to be one of those poor years ago in college and I paid taxes!! Income taxes. Now people in the same position get money back without paying any in.

    Taxes for middle and lower income workers have dropped dramatically over the last 30 years or so.

    Posted by: Craig Holmes at March 25, 2009 10:19 PM
    Comment #278642

    Craig Holmes-
    You’re making my head ache here. It’s pretty simple: If you take in half the wealth, you’ll pay half the taxes.

    The concentration of taxation is caused by the concentration of wealth, a concentration augmented by government policy and tax rates.

    The question remains: Why not the rich? Why should they be allowed to pay a percentage beneath their proportion of the nation’s wealth?

    I just wish people would recognize that they have to pay their fair share. Trying to get out of this only helps to create tensions that ultimately motivate people to seek government restraint against those in the upper classes. The best way to forestall populist movements, is to balance your interests with theirs.

    Posted by: Stephen Daugherty at March 25, 2009 10:48 PM
    Comment #278649

    stephen


    “The question remains: Why not the rich? Why should they be allowed to pay a percentage beneath their proportion of the nation’s wealth?”

    because it doesn’t belong to the nation. it belongs to the earner. it’s not community property. the money a person earns is private property, just like a car, house, boat, etc. this idea that society as a whole has some devine right to confiscate the property of an individual in the name of fairness is just bullsh#t. this country was not founded on these socialist principles, even if you want it to be. i’m sorry but life is not fair, and it never will be regardless of how many laws you pass.

    there are plenty of places in this world that do things the way you think they should be. why not live there?


    Posted by: dbs at March 25, 2009 11:29 PM
    Comment #278657

    Stephen:

    The rich are paying the taxes now. The top 25% pay something like 79% of the taxes. The top 1% pay 29%. What percentage would you like?

    Basically half of Americans pay little or no taxes. Where is the gripe? Do you want the bottom 75% to pay no taxes? Do you want the top 1% to pay them all?

    Where is the limit? It appears to me that the wealthy are doing there share.

    Where the problem comes in is that people want (And I believe you are in this camp), the US government to spend more that is our historical norm. You want us to spend more than 20% of our gdp on federal expenses. There is no reason to. Our country has done just fine since the end of WWII with our current spending level.

    Besides the spenders are never happy. When we spend 25% people will want to spend 30%. On and on it goes.

    The reality of the situation is that American has done great with keeping spending around 20% of gdp. Hard to argue with success.

    Posted by: Craig Holmes at March 26, 2009 12:05 AM
    Comment #278661

    craig

    fair would be everyone paying the same tax rate. someone making 100k would pay 10 times what someone making 10k would. unfortunately for the left it’s not about treating the taxpayers equally. it’s about redistributing wealth through punitive taxation, ie punishing those that are most successful, because it’s not fair that they are more successful. the left feels they have some god given right to play robin hood.

    Posted by: dbs at March 26, 2009 12:24 AM
    Comment #278685

    >That is very true because I used to be one of those poor years ago in college and I paid taxes!! Income taxes. Now people in the same position get money back without paying any in.
    Taxes for middle and lower income workers have dropped dramatically over the last 30 years or so.
    Posted by: Craig Holmes at March 25, 2009 10:19 PM

    Craig,

    You are right…except…when you were in college paying taxes we had a middle class. With the dissolving of the middle class, which threw more people to the bottom (poor) and to the top (rich), only one of those two sectors could pay taxes. That is true in any economy…someone has to pay the piper. If the rich want (and to you deserve) all the wealth, then it is they who must shoulder the burden of paying for all that wealth. I don’t know when you were in college, but did families have to have two wage earners in order to survive? Was there downsizing and outsourcing? Were manufacturers building their plants on foreign soil? Were we importing more goods than we were exporting?

    Posted by: Marysdude at March 26, 2009 6:20 AM
    Comment #278688

    dbs-
    Unless you have some bright idea of how to fund a government without taxes, taxes will be necessary. If taxes are necessary, we need to target them properly. And yes, life is not fair. But that doesn’t mean the people deliberately have to set up systems unfairly.

    You talk about some basic right of property, but the truth is, people don’t have any rights unless a government can and will enforce them. We were lucky enough in this country to put together a country that could and would enforce such rights. But having a government that does that is not cheap, and you’re just bitching about taxes without proposing anything to replace them. There is no conceivable way at this point for society to go back to being an agrarian, rough and ready frontier civilization. So, we need a government capable of handling the challenges of managing an industrialized, modern country like our own.

    But that takes money. So who, and how?

    Posted by: Stephen Daugherty at March 26, 2009 8:28 AM
    Comment #278692

    Craig Holmes-
    Has it occured to you that this share of taxation has gone up while their tax rates have gone down? The Obama tax hikes on the rich have not yet gone into effect. In fact, they’re not going into effect until 2010. Essentially, for now, we tax at Bush’s rates.

    Yet the share of taxation has gone up. But so has their share of the wealth. What you’re essentially saying is now that the rich are getting richer, and the poor getting poorer, the time has come to shift the tax burden on to those whose share of the wealth in the country is going down. Cause, you know, those low, low tax rates are breaking the back of the rich in this country.

    Do you understand that it’s useless for a rich person or corporation to open up a store and hire people, if nobody can afford to shop enough to return on their investment?

    Until the rich stop hording wealth, until the banks start lending again, until we are in a situation where the economy is making up for lost demand, this sudden drive towards fiscal reconciliation is not only pointless, but both counterproductive and unlikely to work as intended. Solve the deflationary crisis, or there won’t be the revenues to solve the fiscal crisis.

    Posted by: Stephen Daugherty at March 26, 2009 9:05 AM
    Comment #278707

    In America we have 3 groups of people:

    The Rick annual earnings of 500k
    The Poor annual earnings of 30k>
    The Middle Class annual earning of 30k-500k

    Middle class has lower, middle and upper middle class but that is besides the point. Numbers wise, middle class is the most populated, is well educated for the most part, is independent for the most part and is self sufficient. The middle class has been responsible for the growth of America from the birth of this nation. Innovation comes from the middle class, great leaders come from the middle class, initiative comes from the middle class etc.

    At the moment Americans in the 30-500k income range are the target because they decide the elections and there isn’t a thing the Government of the Rich can do about it. The government already has the poor in the pocket (this goes for both republicans and democrats because there isn’t much difference between them atm) because without entitlement the poor would cause lot’s of problems and unrest. The middle class is not dependant on the government and retains it’s independence to some extent. The old Roman saying “divide and conquer” stands true here. The middle class has been divided into the groups:

    1.Religious right
    2.Fiscal Conservatives
    3.Social Liberals
    4.Liberal Socialists
    5.Minorities
    6.Homosexuals
    7.Unions
    8.Environmentalists

    By dividing and pitting these groups against each other government has easy time forecasting the outcomes of the elections. A case in point, in 1993 Republicans were able to out fundraise democrats almost 2:1. In 2006 democrats out fundraised Republicans 2:1 and in 2008 even more. What has changed? Nothing, people that contribute to the political process never loose. With the advent of internet, controlling the public opinion through the media is not as easy so now the new name of the game is to chip away at the middle class. How, by raising taxes and inflation so the lower middle class is more dependant on the government and will join the poor as serfs.

    Question is, who is the government. As of the great depression, the government has been of the People and for the Rich. You can call me a loony conspiracy theorist but facts are for all to see: You need money to run for office, an incumbent has unfair advantage verses a challenger, national party committees decide who to support locally with their funds and “pollsters”, most politicians become either lobbyists or go to prison after they serve their terms in the elected office, the rich pay lower % taxes than the middle class and have greater access to the government than the middle class. The rich are segregated from the rest: VIP, First Class, Members Only, Country Clubs, Exclusive Resorts etc.

    Why do the Rich need to control the government and hence the rest of us? Answer is simple - inheritance. Before the capitalism, wealth was transferred to the heirs and heiresses along with the titles and the incomes and holding associated with those titles. This ensured that the “money” and “the titles” stayed in the family no matter how deserving the next generation was. In the free market, there is only inheritance which can and has been squandered by heirs and heiresses over the past century. Also, free market allows the poor and the middle class to improve their station. This threatens the gene pool of the “old money” because it created a competition and usually self made rich win out. In the absence of the titles and noble birth, only way to preserve the privileged status of the next generation is through the control of the middle class and the poor.

    Perfect example of this are Kennedy and Bush families. The father of JFK, Robert Kennedy and Patrick Kennedy was a great man. Their grandfather was a great man, but those three brothers have not done a thing outside of their public life. JFK worked for his father as a bank president, though he was unqualified to hold that job, and rest were senators for life. (no pun intended). Another example is Bush family. The father was a great man, but two sons (George and Jeb) have done nothing on their own yet they have held highest offices in the land.

    One may ask, how can I explain Clinton and Obma’s presidency? Very simple, both of those men were political prostitutes. Clinton was an extremely brilliant politician, where Obama was a right fool at the right time in the right place. If Obama was white, he would not have won Democratic primaries and you can call me a racist if you wish. Guy was not qualified to run a Burger King restaurant let alone the whole country which he proves every day. Clinton was a phenomenon and that is the reason why he was immediately checked by electing a “republican” congress and senate. Ask yourself a question, why didn’t President Bill Clinton get involved into the healthcare debate and instead let his wife take the lead? The main reason why the healthcare reform failed, which would have been disastrous for the US, was because public was outraged by non-elected person leading the legislative initiative. Don’t you think Clinton, who never did anything without poling first, would have known this? He was hard to control and hence the counter balance was put in place. Obama is a puppet of the rich. $1.2 billion was spent on electing him. For his inauguration, over 600 private jets flew into D.C. This should tell you exactly who got him elected, if you could call that election. McCain took public funds of $84 mill vs. $1.2 billion. Obama’s number one job is to break the middle class and make it dependant on the government as much as possible. Ask yourself, why is it a person who sounds so eloquent and well spoken during his speeches, is a total moron and gets agitated so easily when he has no teleprompter? Agitation is caused by discomfort. You can’t say he is uncomfortable in the public eye because he delivered some of the best speeches to the record crowds. So what agitates him? I think it’s the fact that he knows he doesn’t know. How?

    1. Universal healthcare
    2. Expanded education funding
    3. Union card check
    4. Taxes

    The middle class doesn’t need healthcare. Most people who hold a job that yields them $35k+ income have HMO’s through their work. Are they perfect, no but they are better than what government will give you through the Universal Health Care. By introducing Universal Healthcare, they are able to tax you more so you are forced to opt for it rather than one that you currently have, hence you are more dependant on the Government than you were before.

    The middle class doesn’t need increase in funding for education. The US spends more money per student than any other nation in the world, roughly $11K per year. A tuition at a private school which in most cases will give a student a much better education is about $9-10k on average. Why do we need to spend more money on something that doesn’t work? Because education isn’t the government’s main goal. The main goal is to create serfs. That is why today’s youth isn’t educated, instead they are indoctrinated. Politicians and the rich send their kids to private boarding schools, while the serfs are told about greatness of the public indoctrination. Why is it that schools today concentrate on advancing gay lifestyle more than Algebra and Geometry? Why is it that in a public class room English isn’t the primary language in some states? The reason is dependency. If you don’t know the primary language of the country, you need help and the government is more than happy to help at a cost of your freedom.

    Unions were needed 100 years ago, they aren’t needed today. Only purpose of the union today is to divide a worker from a supervisor, a nurse from a doctor. More unions = more segregated groups = less individuals = easier to control. A Card check is designed for this.

    Taxes are the ultimate bane of the growth. You can’t grow wealth if you don’t invest. You can’t invest if you don’t have disposable income to invest. If you can’t grow wealth you can’t threaten the status quo and that is the end game goal. The Social Security is a government run Ponzi Scheme yet not one US Attorney General’s has raised question of its legitimacy. They call it a pay-as-you-go but that is what Ponzi Scheme is. Did you know that wealthy do not pay into the Social Security for the most part? I had a business which I sold, I had to pay myself a “reasonable” salary which = minimum I could get away with. That salary was taxed with so called “fica” taxes (Medicare, SSI, etc) that amounted to about 30% of my total income. Rest I earned from my “stake” in the company as a preferred stock holder. Those “dividends” were taxed at 15% rate and no social security tax was deducted from it. It’s all perfectly legal.

    14 years ago I wrote a paper about this and was kicked out of the class. I identified myself as an anarchist to my professor since the US Supreme Court suspended the US constitution when it discovered a right of privacy and my belief was reinforced when US Supreme court upheld the eminent domain. Our first amendment right has been taken away, only the politically correct and non-offensive speech is allowed. Our second amendment rights are being assaulted so we become even more dependant on the government. Our property rights are under assault. President Obama publicly announced that the treasury will regulate incomes of executives who received public funds as part of the bailout, and those companies who can impact the economy in general whether they received the public money or not. The number mentioned many times was $500k per year income. There is your line in the sand. You can not, you must not, make more than $500k per year.

    The people needed change from Bush. Main reason was the Iraq war, whether that war was right or wrong is not the point. We got the change in 2006 but that wasn’t enough to quench the public thirst. So they gave us a true change, African American president. This by itself, was a great even, and I hope it will help heal the divide between the races and unite us, but I doubt it. We are still in Iraq (but now it’s ok because CNN says it’s ok) we are sending more troops to Afghanistan (now it’s a noble war), we are calling terrorism “a man caused disaster” which opens up the whole new set of problems. We are bailing out companies left and right.

    The economic stimulus bill was signed a month ago, have you seen a dime of that money? How about have you felt a stimulus to your lives? In stimulus bill tax credit to individuals was reduced, yet we are spending money on saving field mice, remodeling a museum, removing tattoos, etc. In $800+ billion spending they couldn’t find 10 billion to extend the tax credits to you and I. If every working American received 1000 dollar credit, that equals to about $10 billion, instead of that we got 400 dollars that we can use to pay 2 credit card bills or buy a TV. If you give each family $2000 credit if they have two working parents, I will guarantee some of that money will go to a down payment on the house, or gets invested into the market. But that isn’t the goal of the stimulus. Goal was to set the stage for tax hikes.

    How long will we tolerate this I don’t know. I wish I did, but I don’t. Some say, if you can’t beat them join them! I will “fight” for a few more years and then evaluate my strategy if not enough care by then.

    We need to take our country back. Take it back from politicians, from corrupt bureaucrat, from greed and dishonesty. The Rich aren’t the problem of this country. Our problem are those who enable them to control us. We need to reestablish our Republic. Our founding fathers had it right that it was the only counter to a faction taking over (James Madison Federalist X). Vote for fresh candidates to the state assemblies, vote for new senators, new representatives. Do not vote for incumbents unless they earned your vote. Don’t let politicians control you through fear. We need to change politicians, not the American way of life.

    Posted by: Crusader at March 26, 2009 11:24 AM
    Comment #278709

    >Middle class has lower, middle and upper middle class but that is besides the point. Numbers wise, middle class is the most populated, is well educated for the most part, is independent for the most part and is self sufficient. The middle class has been responsible for the growth of America from the birth of this nation. Innovation comes from the middle class, great leaders come from the middle class, initiative comes from the middle class etc.
    Posted by: Crusader at March 26, 2009 11:24 AM

    Crusader,

    The middle class is the reason for our successes from the birth of our nation?

    If you wrote a treatise about our system, and included the part about the middle class being part of America before unions formed after the industrial revolution, WWII, which opened manufacturing after the depression and the GI Bill, it is no wonder folks shrugged it off.

    Posted by: Marysdude at March 26, 2009 11:46 AM
    Comment #278711

    stephen

    where did i suggest that taxes were un nessesary? we obviously need to fund the operation of gov’t. where we differ is in how much gov’t needs to be funded. at this point gov’t is so overbloated and wasteful there’s no way of truely determining what is reasonable. welfare, gov’t run healthcare, throw more money at failing public schools without requiring results, you name it. we have created a society of people that think they are some how entitled to these things, and someone else should pay for it.

    you then go on to say that the money earned by individuals is the community property. sorry stephen, but contrary to what you’de like to believe we do have individual property rights. the founders believed our rights were granted by our creator, and took the measure needed to protect those rights from mob rule, by limiting the power of gov’t in the const., and adding the bill of rights. the gov’t didn’t grant them therefore cannot take them away. but go ahead and continue to argue otherwise.

    now we have a socialist baffoon for a president who is going to bankrupt this country in order to build this imagined socialist paradise. they tried it in california, and bankrupted that state with out of control spending, and now these same liberals are going to do the same thing to the country as a whole. BRILLIANT ! it’s no wonder these same folks are so hell bent on undermining the second amendment. hitler, stalin, mao, and many others did exactly the same thing.

    Posted by: dbs at March 26, 2009 12:34 PM
    Comment #278714

    Perhaps a look at this oped from the AJC might help allay some fears of ‘socialism’…???

    http://www.ajc.com/opinion/content/opinion/bookman/stories/2009/03/26/bookmaned_0326.html

    Posted by: Marysdude at March 26, 2009 12:43 PM
    Comment #278715

    Md. You have a good Point there.

    Posted by: Rodney Brown at March 26, 2009 12:49 PM
    Comment #278716

    Crusader,

    Has anyone pointed out that one of the reasons for the current taxation conundrum is the shrinking middle class? The middle class don’t need health care? The middle class has shrunk by about a third, and the middle class that is left is making about a third less than they were thirty years ago.

    Posted by: Marysdude at March 26, 2009 12:50 PM
    Comment #278720

    “Perhaps a look at this oped from the AJC might help allay some fears of ‘socialism’…???”

    you’re kidding right? he decided that taxing the aig bonuses was unwise? more like unconstitutional, besides the legislation was dead anyway. it wasn’t going to get through the senate. now his AG wants the congress to give the power to take over companies that he feels might fail, but haven’t taken any taxpayer money. BTW, congress doesn’t have the constitutional authority to grant that power. nope this is a full scale push to turn the US into a socialist democracy plain and simple.

    Posted by: dbs at March 26, 2009 1:15 PM
    Comment #278726

    I’m afraid you’ll just have to continue to live in fear. I though that if you read the oped piece, it might allay some of your panic, but you either did not read it, did not understand it, or are particularly set on living the rest of your life in fear of a ‘socialism’ that does not exist, and even if it did would not be the end of the world. The nub of the oped is that Obama has done about all one man can do to salvage a market system that was imploding. That does not sound like socialism to me…

    Posted by: Marysdude at March 26, 2009 2:08 PM
    Comment #278727

    Stephen:

    No I am not in favor of the rich getting richeer and the poor getting poorer. I’m also not in favor of what does not work.

    I am for making live better for the working class. Obama’s plan is not going to do that at all. With Obama’s plan, any improvements in productivity are simply going to go to future higher taxes to pay off debt leaving them in the same or worse position than before.

    The only true way I know to really lift the poor is through job skills. Giving them money only gives the wealthy are target to market to.

    So the question is, how do we find the money? There is non right now. Even with the tax increases coming with bush’s tax cuts expiring, ther is no money. With the financial crisis, it is gone. And it’s gone for 10 years according to CBO figures.

    So with Obama’s agenda of education, health care and the environment, and the fact that the money counted on for these things from reclaiming Bush’s tax cuts for the wealthy, is now needed simply to pay for the financial crisis, where is the money for his agenda?

    Personally, I am for cutting future retirement benefits. No not Marysdude’s Social Security. But mine!! I’m 53. If I have to work a year or two longer, so that these young people can have the skills needed, then that is fine with me. Just tell me now instead of when I am 65.

    I also think we should cut the retirment benefits of the affluent. Let’s say I get there and am making a good salary in retirment. Let’s say for fun that I make $200,000/year IN RETIRMENT. (I know I’m smoking something here). Give me the group rate on medicare, but have me pay the full cost. See what I mean? Give that money to the the working poor for heath care.

    That way we live within our budget and still can do some of these things that Obama is talking about.

    It is also more ethically sound because guess what, I am putting skin in the game.

    Right now Stephen with your proposal (Obama’s) you get a tax cut. You on the left are for taxing everyone but yourselves, in that you tax the wealthy and the young through debt.

    My plan has more integrity because it costs me something.

    Posted by: Craig Holmes at March 26, 2009 2:14 PM
    Comment #278730

    craig

    are you suggesting means testing for soc. sec., and medicare beneficiaries?

    Posted by: dbs at March 26, 2009 2:43 PM
    Comment #278731

    “I though that if you read the oped piece, it might allay some of your panic, but you either did not read it, did not understand it, or are particularly set on living the rest of your life in fear of a ‘socialism’ that does not exist,”

    i don’t buy the premise that because he bailed out the banks he’s not a socialist, and wants to save capitalism. one of the hallmarks of socialist nations is the gov’t ownership financial resources.

    http://www.merriam-webster.com/dictionary/socialism

    i’m afraid it does, or we wouldn’t have welfare, and many other programs in this country that redistribute wealth.

    Posted by: dbs at March 26, 2009 2:52 PM
    Comment #278737

    dbs:

    Not for Social Security. I am suggesting two things:

    1. Move back the date to receive full benefits.

    2. (you might think of this as means testing). But there is an innequality with the poor in that longevity is tied to income. Higher income workers live longer than low income workers. This means that for every dollar the working poor puts into SS, they get less benefits on average.

    I am for correcting this inequality based on actuary tables to make everyone’s benefit per dollar invested the same. The net effect of this would be to “water down” higher paid workers Social Security benefits by the month. However in general over their longer lives, they would receive the same benefits as a lower income person.

    Yes I am for means testing of Medicare. Bill Gates doesn’t need the help. But I am not a “fundamentalist” on this. If there is another way to stop the bankruptsy train, without putting such a burden on our children, count me in. My main interest is having the next generations be in a position to enjoy the same opportunities that we have enjoyed.

    Posted by: Craig Holmes at March 26, 2009 3:23 PM
    Comment #278744

    dbs-
    If you define taxes in terms of an illegitimate taking of personal property, then it doesn’t matter the amount or the reasons. Is it suddenly not a violation of personal property rights if the rate is lower? That’s like saying its alright to pick a pocket so long as there’s only something like twenty dollars in the wallet.

    If property only matters when somebody’s asking the rich for more taxes, then I think something else than a old fashion defense of property rights is at work.

    I don’t define it that way, so nobody’s confused about whether I think moderate taxes are legitimate operations of the government. I don’t think that the money in people’s pockets is community property. Let me repeat it back to you so I can quote this when you once again claim that I’ve got a communist attitude towards property: the money in your pocket is yours.

    But this is basic civics here: taxation with representation, representation that both decides tax rates and what’s done with the money. After which, we decide whether they keep their jobs. If we don’t have the will to vote down those who spend, then we shouldn’t have the temerity to complain about the taxes necessary to pay for these things.

    We also shouldn’t consider it illegitimate, that in a Democracy, the elected majority is making law. That’s the bloody point. If people wanted to continue down the Republican road, they would have done so.

    Posted by: Stephen Daugherty at March 26, 2009 4:02 PM
    Comment #278747

    Craig Holmes-
    The CBO figures depend on the economy, not the other way around. If the economy recovers faster, then the budget situation recovers with it. The CBO’s numbers are projections, for tax revenues not yet gathered, and ultimately, budgets not yet written up.

    Basing policy purely on a reaction to projections is no less a gamble than what Obama’s doing. Only difference is, you’re betting on failure.

    You’re betting that nothing Obama does helps. And on what basis? You didn’t wait for his programs to fail before you predicted gloom. No. He’s already wrong, a prediction made by the party that started this decade saying that tax cuts would improve revenues, that deficits wouldn’t grow. This is a prediction made by people who kept many items off the budget, and then shifted to a five year plan. This from people who, all the while they governed, threw out PayGo rules.

    Why shouldn’t we listen to people with such a track record? Who, despite having found fiscal sanity, suggested by a vast majority among their numbers that Obama stimulate the economy purely through tax cuts.

    America needs better than contrarianism, and rusty old ideas dressed up as newfangled policy. Republicans once tried to tighten up fiscal policy in the midst of a deflationary cycle. The result was a deepening of the Depression. FDR tried it, and the result was the failure of growth for the first time since he took office.

    Until we’re clear of this situation, the first concern is to stimulate the economy enough to get us out of the rut. You say it won’t work. But you have a vested interest in it not working. You need to prove that only conservative methods will work, or on the other side of things try and browbeat people into rejecting liberal methods so they never even get the chance to work.

    Americans hired us on because they wanted somebody to try something else. The Republicans have never accepted that verdict, nor have they accepted that if they do manage to make a failure out of Obama’s policies, damaging or not, additional damage will be dealt to the economy.

    They want, after three decades of getting their way, to continue to get their way, whether or not the majority of Americans have decided against doing things their way.

    At some point, the Republicans are just pulling back the source of the next backlash against them, giving more energy to those who think the Republicans and conservative Democrats are a deadweight on the change this country needs.

    Posted by: Stephen Daugherty at March 26, 2009 4:23 PM
    Comment #278751

    stephen

    “If you define taxes in terms of an illegitimate taking of personal property, then it doesn’t matter the amount or the reasons. Is it suddenly not a violation of personal property rights if the rate is lower?”

    i guess it comes down to what those taxes are used for. if they are given DIRECTLY to another who din’t earn them then yes they are illegitimate. and just to be clear we’re not talking about say a worker on a public project earning an income as say a construction worker. we are talking about something such as welfare, or food stamps. those are not legitimate.


    “If property only matters when somebody’s asking the rich for more taxes, then I think something else than a old fashion defense of property rights is at work.”

    nice spin. it is you that are insisting on using the most productive members of society as your own personal slush fund to pay for more gov’t entitlements. if you were talking about using all tax payers in that fashion i would stand up for them too.

    “I don’t define it that way, so nobody’s confused about whether I think moderate taxes are legitimate operations of the government.”

    there’s is no way of knowing what amount is legitimate until you first cut through the BS and determine where the waste is. until then your’re just throwing more money down a gov’t run rathole. it may very well be that light as opposed to moderate taxation might cover LEGITIMATE gov’t expenses.


    ” I don’t think that the money in people’s pockets is community property.”

    really, because this is what you said:

    “The question remains: Why not the rich? Why should they be allowed to pay a percentage beneath their proportion of the nation’s wealth?”

    emphasis on “the nations wealth ” so is it thiers or the nations? can’t have it both ways.


    Posted by: dbs at March 26, 2009 4:46 PM
    Comment #278760

    M. Daugherty writes; “I don’t think that the money in people’s pockets is community property. Let me repeat it back to you so I can quote this when you once again claim that I’ve got a communist attitude towards property: the money in your pocket is yours.

    But this is basic civics here: taxation with representation, representation that both decides tax rates and what’s done with the money. After which, we decide whether they keep their jobs. If we don’t have the will to vote down those who spend, then we shouldn’t have the temerity to complain about the taxes necessary to pay for these things.”

    Well said M. Daugherty. You and I agree on something after all. The money in my pocket is mine. Yes, taxes are necessary to run government at all levels. And…the size of that government determines the amount of tax required to pay for it or else it runs a deficit.

    When politicians fear raising taxes may cause their non-election the way around is to run deficits. The U.S. has huge deficits. Had politicians had the balls to tax for their spending one of two things would have happened. Voters would have approved of higher taxes or demanded cuts in government spending.

    Knowing that higher taxes levied on all American’s is unpopular politicians came up with the more acceptable call for “just taxing the rich”. This is dishonest at best and down right disgusting. PO promised tax reductions for 95% of American’s. That’s a promise that hasn’t been kept…and can’t be kept, for long.

    The honest politician would address American’s by saying 1. We have a huge deficit and if you wish us to spend more we will have to increase everyone’s taxes to pay for it. 2. I wish to spend more of your money so I will tax you more. 3. I wish to balance our budget so I will tax you more.

    That honest politician wouldn’t have a chance of being elected as no one wants higher taxes. So, they talk in ways that make American’s believe that they can have everything they want and only a few will pay for it.

    PB was not honest about this. PO is not honest about this. Yet, most American’s insist that they want the truth. Well…they can’t handle the truth so they accept the bullshit. And, we keep electing the same liars to public office. d.a.n. is right, we have the government we deserve.

    Posted by: Jim M at March 26, 2009 5:20 PM
    Comment #278762

    Stephen:

    The CBO figures depend on the economy, not the other way around. If the economy recovers faster, then the budget situation recovers with it. The CBO’s numbers are projections, for tax revenues not yet gathered, and ultimately, budgets not yet written up.

    You are assuming the numbers in the end will be better. What if they are worse? If I accept your premise that the CBO’s numbers are simply projectiions then that means the over all numbers will be better or worse.

    Basing policy purely on a reaction to projections is no less a gamble than what Obama’s doing. Only difference is, you’re betting on failure.

    Not at all. The CBO numbers are run by Democrats. They are in charge of the Congressional Budget Office.

    You do realize that we could not get into the European Union because of the budget numbers. And that the head of the Union has called Obama’s plan “the road to hell”.

    So much for improving our image overseas.

    Posted by: Craig Holmes at March 26, 2009 5:29 PM
    Comment #278763

    Stephen:

    Until we’re clear of this situation, the first concern is to stimulate the economy enough to get us out of the rut. You say it won’t work. But you have a vested interest in it not working. You need to prove that only conservative methods will work, or on the other side of things try and browbeat people into rejecting liberal methods so they never even get the chance to work.

    you still do not get my point so I will say it again. You are confusing stimulus with Long term budget changes. The CBO numbers are not at all about the stimulus bill, but rather Obama’s 2010 budget and beyond.

    Obama is using the crisis to promote his agenda. It’s the $750 billion dollar deficit that is scheduled for 2019 that is only because of obama’s legislative agenda today that bothers me. Unless you think we will still be needing to stimulate in 10 years after Obama is gone.


    Posted by: Craig Holmes at March 26, 2009 5:33 PM
    Comment #278821

    Craig,

    I don’t think Stephen is confused at all. I may be, because I don’t even try to separate the two (stimulus/budget)…to me they are a married couple. One cannot survive or work without the other. What good is a stimulus that fizzles when it runs its course and there is nothing to keep things going except more debt, people who are too ignorant because of a lack of enough education to prod it in the right direction, a health care system that adds to the financial woes faster than anyone foresees, and saddled with an antiquated energy policy that pollutes while it evaporates?

    Posted by: Marysdude at March 26, 2009 10:55 PM
    Comment #278823

    Craig,

    The difference between the debt this administration proposes and the debt that has accumulated over the past twenty seven years, is that this time there is structure and sound reasoning behind it…even a plan to help reduce it a little until future folks can deal with it…if they are educated enough, have health care costs under control and are unsaddled from fossil fuels.

    Posted by: Marysdude at March 26, 2009 11:02 PM
    Comment #278824

    dbs-

    i guess it comes down to what those taxes are used for. if they are given DIRECTLY to another who din’t earn them then yes they are illegitimate. and just to be clear we’re not talking about say a worker on a public project earning an income as say a construction worker. we are talking about something such as welfare, or food stamps. those are not legitimate.

    You might be entitled to such an opinion, but why are the rest of us? Why does your personal sense of what is legitimate extend to an overall reality of illegitimacy that the rest of us HAVE to pay heed to?

    Me? I might have different opinions about what should be law, what should be considered legitimate. But I recognize the rule of law makes things I don’t agree with legitimately law. I can opine that they are unconstitutional, but until the courts agree, it’s just an opinion, one I’ll have to support on its merits or defend on it’s weaknesses.

    Which I’m willing to do. I’m used to arguing points I have to support against conventional wisdom. I don’t feel that I have to use the constitution as a bloody shirt on every issue.

    nice spin. it is you that are insisting on using the most productive members of society as your own personal slush fund to pay for more gov’t entitlements. if you were talking about using all tax payers in that fashion i would stand up for them too.

    My own personal slush fund? Oh, I’d love to have just a millionth of all that money. I’m afraid my personal share of that is low. The reality is, I don’t control that money. The Reality is, Congress, elected by the people, controls that money. My personal opinion doesn’t have an extraordinary amount of pull here.

    You say that you would defend other taxpayers if I decided to use them that way. Even if I was, here’s the thing: this is not about exploiting the rich for my own gain. This is about matching taxation to those who have the means to live normal, happy lives while bearing that burden.
    That, as opposed to the alternative, which is to dump taxes on those who actually can’t pay all that much before the weight crushes them.

    I don’t want to hear about waste from the Republicans. I just don’t. I don’t believe that the GOP suddenly just saw the light either. The Republicans simply have a conflict of interest at this point with government that works well. They don’t want to fund it properly, they don’t want to improve it’s performance, given that this might raise people’s positive opinion of government. They don’t want to add staff if its needed, because that would be growing government.

    It’s like they’re presented with this ten thousand dollar workstation that can edit and composite video, that can render 3-D Animations of great complexity and realism, and they’re playing Minesweeper and looking at porn on it, and ignoring all the anti-virus and firewall warnings.

    Americans want that power handled by adults who understand their responsiblities. They don’t want to see people they know can do better tell them that for ideological reasons, they can’t be be bothered.

    As for any emphasis on the term “nation’s wealth”, I was discussing Craig Holmes’ notion that because the few rich were being taxed so much, they should be relieved of taxes, rather than the rest of us. I was point out to him that the big reason why the rich pay more of the taxes, is that they’re making more of the income, taking in more of the wealth.

    There are real question as to whether an economic system that concentrates wealth like this is good. But aside from that question, I don’t think there’s a good reason to have the rich pay in proportion to their population, rather than their income. And really, what have gotten from years of the same ideas, the same goals? Well, the rich are in the sorry state of paying most of the taxes, because they make more of the money than any other group.

    And has that changed that situation, so far? Not at a top rate of 35%. Not with inheritance taxes repealed. Not with Long Term Capital Gains rates at 10 percent.

    This is perhaps the least hobbled upper class, as far as taxes go, as there has been in a century. Did that mean the economy got better? Even if the collapse never happened, no. Growth under Bush was inconstant at best.

    There is more to good business and good economics than the tax rate. The greatest tax cuts in our history did not bring the economy back. Nor did Bush Sr. cutting back top rates to 28% And yet, Clinton raised taxes, even added brackets, and still the economy took off.

    And what did it? The information superhighway. The one we now commute on every day, without a second thought. A commercialized version of something the government began.

    Craig Holmes-

    You are assuming the numbers in the end will be better. What if they are worse? If I accept your premise that the CBO’s numbers are simply projectiions then that means the over all numbers will be better or worse.

    I’m not assuming anything. It could be worse, it could be better. But it means that a focus on the future state of the economy, and how government spending affects that is legitimate.

    But that’s not what the focus has been. The Republicans, after a period of just coming up with one bogus complaint after another, just flat out concluded that nothing in the stimulus bill (which I know is separate) and the budget (which still might contain stimulating items) would work. Convenient enough, since if anything there really works, we might see more of the same, and Obama might succeed in his aims of pushing a more liberal agenda. That’s why I’m saying you’re betting on failure. You have to convince people that it won’t work, but if it does work, it’ll still be bad for the country. And this, before much of the money is even spent or distributed.

    And what is your fiscally sound alternative now, from the Republicans? Drop the top rates by another ten percentage points. Yeah. We’ll just have to make even more drastic cuts. And probably will run even more drastic deficits.

    You do realize, that your budget has to beat Obama’s in the CBO estimations, and that it actually has to be palatable to the rest of the country, even if it does make it past that test.

    What I’ve heard of that small trapper folder of budgetary goodness is that it uses the economic crisis to push your party’s priorities. Big surprise. The difference is, we got some decent ideas of what to do, and the country is interested in and already has consented to much of that agenda.

    We need to stimulate so the economy does on its own, what simple cuts in spending cannot do, and in situations like this, shouldn’t try to do.

    Posted by: Stephen Daugherty at March 26, 2009 11:07 PM
    Comment #278825

    Marysdude:

    No it’s not well thought out. If it were the numbers would not be far apart from CBO. And remember the stimulus bill that wasn’t even read? The world has changed since Obama put his plan together last summer. IT has not been adjusted since the world changed, and that is one of the big reasons why there is so much debt.

    The stimulus package and the budget are not married as you propose. Obama is simply using the crisis to push his agenda. You don’t want to waste a good crisis.

    Posted by: Craig Holmes at March 26, 2009 11:36 PM
    Comment #278826

    When was the last time CBO was on target?

    Posted by: Marysdude at March 26, 2009 11:49 PM
    Comment #278827

    >The stimulus package and the budget are not married as you propose.
    Posted by: Craig Holmes at March 26, 2009 11:36 PM

    Craig,

    Nyahnyahnyahnyah! Yes they are too…so there! (one finger waving)

    Why has my proposal or assumption so much less meaning or validity than yours…because Rush Limbaugh said so? I have given you very good reasons for my beliefs in this program, and all you can say is…nope Marysdude, you’re wrong, and Obama is the anti-christ?

    Posted by: Marysdude at March 26, 2009 11:54 PM
    Comment #278829

    very funny.

    So a trillion dollar deficit in 2019 is planned? Why would someone well plan bankruptcy?

    And if it is so well planned then why does the EU call it the road to hell?

    And notice the movement away from the dollar?

    Not exactly restoring American prestige with his well thought out plan.

    Posted by: Craig Holmes at March 27, 2009 12:04 AM
    Comment #278834

    I’ll ask it one more time…when was the last time CBO was on target? And, by the way, CBO is not run by the party in power, it is always non-partisan.

    Posted by: Marysdude at March 27, 2009 12:13 AM
    Comment #278842


    How is it possible that a plan that calls for a trillion dollar deficit per year for a decade be considered well thought out by any stretch of the imagination.

    Why doesn’t Obama just tell the truth. There are a lot of things I want to do and I am not going to commit political suicide by asking the people to pay for them when I can pass the cost on to their children.

    The people of this country have really allowed themselves to be put between a rock and a hard place. In order to stop the Republicans they have to vote for Democrats and in order to stop the Democrats they have to vote for Republicans.

    Posted by: jlw at March 27, 2009 1:34 AM
    Comment #278851

    The trillion next decade is a broad guess by an entity that is famous for missing the mark by wide margins. Any projected budget that far in the future is suspect…even the President’s.

    Posted by: Marysdude at March 27, 2009 5:40 AM
    Comment #278868

    Marysdude,

    You don’t read very well do you? There is a reason why it was shrunk. Read what I wrote with a little more attention. The changes of early 1900s and the civil rights movement was due to the large middle class which exersized it’s public legislative initiative in the streets and forced congress to ratify de-facto situation. We wouldn’t have had the civil rights movement and the women’s suffrage, if America didn’t have a strong middle class.

    That is the reason why there has been a concentrated effort to shrink the middle class and make more Americans dependant on the Government. More you depend on the government, more freedoms you surender. Look at this way, at this point a liberal wouldn’t vote for a candidate even with a perfect qualifications and honesty if that candidate is pro-life, against gay marriage and for 2nd amendment. None of these social issues have any impact on your economic situation and especially on the economic situation in the country but guess what, it is a way to control the voter. Same goes to Conservative voter, they wouldn’t consider a candidate worthy of their vote if they weren’t pro life, pro 2nd amandment and against gay marriege. These are the phony issues glorified by politicians in order to control our votes.

    Most of the “enlightened” liberals don’t see this. We declared war on poverty in the 60’s. How is the war comming along? How about Racism? The Government will never resolve either one of these issues because it is the way to control the votes. Every election is the same way, promisses before the election, broken promises after elections. What gets politicians reelcted is government cheese which gets brought back to the state so the Rich get them reelected.

    Posted by: Crusader at March 27, 2009 11:08 AM
    Comment #278882

    Crusader,

    You’ve told me all that is bad in the land…now tell me what is your holy grail? Is there a point in there someplace?

    Posted by: Marysdude at March 27, 2009 11:59 AM
    Comment #278887

    jlw, Craig Holmes-
    First, let us acknowledge that Republicans estimates of the deficits before Obama took office left out huge deficit expenditures; Bush in effect kept two pairs of books. That is one reason why Obama’s budget looks so irresponsible: he’s taking responsibility for the deficit spending Bush hid!

    He adds the cost of the wars, adds a buffer in the budget for the disaster relief costs Bush did not budget for, properly conveys the price of keeping the AMT off of people’s backs, and does away with other tricks that funnily enough people like Republican darling Kent Conrad would have us return to. In other words, the appearance of fiscal probity without the reality.

    Additionally, the impression has been conveyed that Obama’s budget will have continuous trillion dollar deficits. This is false. What’s actually projected is that Obama’s budget deficit will fall to around 600 billion. Under Obama’s projections, the numbers remain south of 800 Billion during the next five years. the CBO, using more pessimistic growth numbers, projects that it will increase steadily. This is where we get the profound difference.

    The Republicans should read the fine print on the CBO’s findings, because they put the Republican’s contrarianism in a starker, less friendly light. The CBO assumes that the president’s economic plan will work, and that it will solve the economic crisis.

    For the next two years, CBO anticipates that economic output will average about 7 percent below its potential—the output that would be produced if the economy’s resources were fully employed. That shortfall is comparable with the one that occurred during the recession of 1981 and 1982 and will persist for significantly longer—making the current recession the most severe since World War II. In CBO’s forecast, the unemployment rate peaks at 9.4 percent in late 2009 and early 2010 and remains above 7.0 percent through the end of 2011. With a large and sustained output gap, inflation is expected to be very low during the next several years.

    When you factor in the focus of President Obama’s additional spending, when you look at the fact that Obama is free to adjust the budget over the course of his administration every year, then the argument for irresponsibility grows more tenuous. This isn’t Obama’s only plan that they can ever make, and by his numbers, the CBO-projected rise in deficits doesn’t happen. Additionally, once we’re out of the current deflationary period, some fiscal belt tightening will be possible, above and beyond what has already occured. It might not be pleasant, but huge deficits aren’t either.

    The Republican’s alternative is unlikely to do much better. They simply chucked a ten percent tax cut for the rich in there, a move that is sure to increase deficits further. But then, the Republicans know they’re correct, and therefore don’t need to consult the facts to shape their policy like the rest of us do. It’s worked pretty well, so far.

    Posted by: Stephen Daugherty at March 27, 2009 12:09 PM
    Comment #278895

    stephen


    “I’m used to arguing points I have to support against conventional wisdom. I don’t feel that I have to use the constitution as a bloody shirt on every issue.”

    pesky old thing isn’t it.


    “Me? I might have different opinions about what should be law, what should be considered legitimate. But I recognize the rule of law makes things I don’t agree with legitimately law.”

    not if they violate the limits put on gov’t by ( you guessed it ) that pesky old constitution.


    “This is about matching taxation to those who have the means to live normal, happy lives while bearing that burden.
    That, as opposed to the alternative, which is to dump taxes on those who actually can’t pay all that much before the weight crushes them.”

    there are many in this country that pay no taxes at all. you can continue to argue that if we don’t raise taxes on the rich we’ll have to tax the poor, but the problem with that is they’re going to be taxed by obama anyway. he can’t possibly fund all his promises by just soaking the rich. i mentioned a couple of examples before. at some point the goose will have no more golden eggs.

    “I don’t want to hear about waste from the Republicans. I just don’t. I don’t believe that the GOP suddenly just saw the light either. The Republicans simply have a conflict of interest at this point with government that works well. They don’t want to fund it properly, they don’t want to improve it’s performance,”

    sorry stephen, but just because the republicans screwed up and forgot who they were, and failed to police thier own ranks doesn’t make MY argument any less valid. and i might add that improving it’s performance doesn’t nessesarily involve throwing more money at it. it’s time to re evaluate gov’t expenditures, and cut waste, and redundencies. once thats done then we can realisticly look at what and where we should be spending. to continue increasing the size of gov’t without evaluating where it’s working and where it isn’t we’re just pissing away the TAXPAYERS hard earned money.


    Posted by: dbs at March 27, 2009 12:54 PM
    Comment #278904

    Stephen:

    First, let us acknowledge that Republicans estimates of the deficits before Obama took office left out huge deficit expenditures; Bush in effect kept two pairs of books. That is one reason why Obama’s budget looks so irresponsible: he’s taking responsibility for the deficit spending Bush hid!

    Let’s also acknowledge that there is very sound reasons for doing this. IE a believe that the war would will not last for ever.

    Also, lets acknowledge that there is strong political reasons for including them now. IE, if the budget looks worse now, when the war ends it will look better even if obama does nothing.

    So your point is hogwash. There is a strong political incentive for doint what Obama is doing with the budget. By movning temporary spending into the full budget projections he is setting himself up to make his long term projections look better.

    All this “honesty” crap is simply the new guy redoing the books to make himself look better in the future.

    Posted by: Craig Holmes at March 27, 2009 1:23 PM
    Comment #278906

    I did tell you the point, but you chose not to read it. Vote incumbents out until others learn to make small promises and live up to them. Put term limits at 3 for senate and 4 for the House.

    Make elections funded only by the public money and do away with the special interest groups running adds about candidates or parties, rather than issues. I don’t have a problem with running an add about a specific issue but I do have a problem with a tax exempt groups spending $600mil to elect a president where no one knows where that $600mil come from.

    Is that simple enough for ya? That way NRA, which I am a member of, will concentrate on 2nd amendment protection efforts and educating citizens on gun safety etc. On the other hand, unions will concentrate on specific issues concerning the welfare of the workers not whether Democrats are good and Republicans are bad.

    As we saw in the early 1920s and 1960s, people, when mobilized and motivated, can initiate changes where needed no matter who is sitting in the office. I think, April 15th TEA parties will show that again and we will put the focus on the issues instead of politicians.

    I am honestly tired of choosing lesser of two evils. I want to know that if a person has good ideas and is honest, he/she will have a chance to go up against sitting corrupt senators in California. Today that is impossible because unions and super rich are backing the incumbents because they want to preserve the status quo. Why, because Dianne Feinstein is a Chairwoman of of a subcommittee of the Senate Appropriations committee that controls the discretionary spending of the Department of Interior. That spot doesn’t go to “freshmen” senators. Also, our second senator, Barbara Boxter is a chair woman of Senate Committee on Environment and Public Works. Guess what, because of Unions and idiots in the state legislature, public projects are the only ones that are being build at the moment. Again, a “freshman” senator doesn’t get that assignment. She has support of the businesses who rely on government projects because private corporations are moving out of the state, and Unions get a bigger government which means more union workers which means more money and more power. Everybody wins right? Wrong, the central valley of California has been in a drought for going on to 3 years and no one gives a rats behind, because there are no union jobs in farming communities. We are overrun by illegals, hospitals are closing, God forbid an emergency happens emergency rooms are full of illegals who seek a none emergency health care, crime is out of control, schools are overcrowded, I walk up to a bank teller machine and I have to press 1 to hear the message in English, I order a fricking hamburger and if I don’t speak Spanish I will get a cheeseburger with a taco salad. That is the problem. And all the while the Speaker of the House is shouting that enforcing the US laws is un-American.

    That’s my point. Vote Incumbents Out! Take America Back from the sellouts!

    Posted by: Crusader at March 27, 2009 1:33 PM
    Comment #278931

    Crusader,

    Too late…that grail dissolved into ash a long time ago. Now you’re tilting at windmills…

    Posted by: Marysdude at March 27, 2009 3:44 PM
    Comment #278938

    Well,

    So I take it, you wouldn’t want to be my Sancho Panza?

    I am sure the good knight would have agreed with this:

    “I hold it true, whate’er befall;
    I feel it, when I sorrow most;
    ‘Tis better to have loved and lost
    Than never to have loved at all.”

    This bloodsuckers don’t love anything.

    Though I am romanticist in heart, I do not share fatalism of that era.

    Our time will come, this is America and we will take our country back. This spineless wheezels will bend to our will as soon as their seats are threatened and couple of them loose the re-elections.

    Posted by: Crusader at March 27, 2009 4:08 PM
    Comment #278968

    dbs-
    I don’t sensationalize the constitution. If I think a question of constitutional law applies to a matter, or somebody’s making a constitutional argument, I’ll make that argument. Until then, I typically try and use more basic arguments.

    I’m not a big fan of those who scream about unconstitutionality and then make arguments I know wouldn’t last twelve rounds with my brother the lawyer, much less a Supreme Court justice. Amateur legalism is typically painful for me to read, because half the time people are getting their arguments from pundits who probably never cracked open a book on the constitution in their lives.

    there are many in this country that pay no taxes at all. you can continue to argue that if we don’t raise taxes on the rich we’ll have to tax the poor, but the problem with that is they’re going to be taxed by obama anyway. he can’t possibly fund all his promises by just soaking the rich. i mentioned a couple of examples before. at some point the goose will have no more golden eggs.

    Your pessimism is not justified. We had one of the most prosperous times in our nation’s history under higher taxes than these, and the other with taxes which were virtually identical. We have more room to raise taxes than you think. I’m sure moderate increases will help us absorb the burden your side imposed on this nation.

    As for waste, I’m no fan; every dollar wasted is one that can’t go to worthy programs and initiatives. We Democrats recognize the political pressure that comes with keeping budgets in good order. The key is using our brains to deal with problems, rather than just philosophical pontifications from the parties.

    Craig Holmes-
    Oh, so its fine to be dishonest for political purpose, but not honest? My point’s not hogwash. Part of the terrible, excessive spending you guys are bashing us over is the spending your president never admitted to, and your party never demanded honesty on. Given the long term problem the wars turned into, budgeting them as temporary spending is dishonest.

    Posted by: Stephen Daugherty at March 27, 2009 7:24 PM
    Comment #279073

    Stephen:

    It’s just politics. It’s in Obama’s best interest to change the budget rules. If he did not he would not be able to claim cutting the deficit in half.

    It’s showmanship.

    As President he writes those rules. I just don’t want a lecture from the left about some new level of morality on the budget. Obama is doing this because it serves his purposes.

    Posted by: Craig Holmes at March 28, 2009 8:26 PM
    Comment #279101

    Craig,

    It also serves OUR purpose…

    Posted by: Marysdude at March 29, 2009 6:15 AM
    Comment #279109

    Marysdude:

    If by “OUR” you mean liberals. It is the only way he can get a vast liberal agenda through Congress.

    Posted by: Craig Holmes at March 29, 2009 9:30 AM
    Comment #279112

    Marysdude;

    Let’s be clear about what is happening. Wow am I thankful for checks and balances. There is a fiscal crisis. There are also clear signs that the recession is starting to thaw. Housing starts are up 19% the largest increase in over 20 years. Wholesale prices are stabilizing, consumer spending is rebounding. etc etc.

    The Republicans are weak right now. Democrats rightly believe this is their best opportunity in a generation to move a dream liberal agenda through Congress.

    There is still hope for those moderate conservatives like myself. Far from unifying the world, Obama’s overreach is dividing American from Europe and China.

    It strangely is Europe that is on the side of Republicans. (As in Germany etc). And also China!!

    Your side has not had an opportunity like this since 1964, and it is taking full advantage of the crisis.

    As a moderate conservative, the 2010 elections look good. Republicans had a great track record of stopping democratic excess during the Clinton administration. Congressional Republicans can well run on a “stop the madness” agenda. There is plenty of ammunition out there. All we need to do is start quoting Europeans!!

    By November of 2010, we should well be on our way to recovery. With the fiscal crisis moving in the rear view mirror what could be left is a legacy of liberal spending and deficits.

    The Republican Congress from 1995 and forward has a great legacy to build on. It’s a great model to look at to keep our children from being overwhelmed with high taxes due to debt from Obama’s plan of taking advantage of this crisis.

    We need to win this thing for the sake of our children

    Posted by: Craig Holmes at March 29, 2009 10:39 AM
    Comment #279154

    Craig Holmes-
    Careful with the percentages on Housing starts.

    We still have a deep hole to dig ourselves out of. Note that in the article linked, the Housing industry still is in a depression, despite the increase.

    Don’t be so eager to make a political point that you don’t factcheck your information.

    I would tell you that we all think, when we get hit, that we can just stand right back up. But this is no ordinary situation here. Your people lost two elections in a row, and their popularity remains low. Unless Republicans become seriously helpful to anything else but their own agenda, I suspect that you’re going to find Republicans remaining in their current situation.

    You can talk about stopping the madness, but have you realized that the madness most people are interested in stopping is the madness your people inflicted on the country? That folks haven’t forgotten who the prime movers behind the policies in question were?

    The Republicans all too often assume that people’s memories are short and their feelings about matters are shallow. You folks tested your theory out this last election, and not only didn’t gain back any seats, but lost more.

    Take the hint: the Republicans are not popular. Their policies are not wanted back. Very few people are pining for the days of Bush, or wishing to revive the glory of the majority that started its tenure in 1995.

    Posted by: Stephen Daugherty at March 29, 2009 8:21 PM
    Comment #279189

    Doomsday…hmmm, we dig ourselves out of the muck Republicans mired us down into, get us on the road to recovery, and you call it Armageddon…have I got that right so far?

    Posted by: Marysdude at March 30, 2009 3:43 AM
    Comment #279314

    PS:

    Post #279189 is aimed at Craig, not Stephen…sorry about that.

    Posted by: Marysdude at March 31, 2009 1:30 PM
    Comment #279398
    Title of Stephen Daugherty’s article:
      “Deflation, Not Deficit Spending, Is The Real Threat”
    More deficit spending is a serious problem since so much debt already exists.

    The U.S. did not have as much debt entering the Great Depression or World War II.

    The record level national debt per-capita in year 1945 after World War II was $21,719 (in 2008 dollars), which is 65% less than the $11.1 Trillion national debt per-capita ($35,807) today (MAR-2009). And that does not even include the $12.8 Trillion borrowed from Social Security, leaving it pay-as-you-go, with an 78 Million baby-boomer bubble approaching.

    Also, the total nation-wide debt is much worse now than ever before, with $70.44 Trillion of nation-wide debt ($70.44 Trillion = $57.64T + $12.8T), which has quintupled from 100% of GDP in year 1956 to 508% of GDP today (using $13.86 Trillion GDP in year 2007; actuall GDP for year probably lower in 2008 than 2007). The current $70.44 Trillion nation-wide debt per-capita is $225,000.

    That’s not good.

    So sayin’ “Deficit Spending, Is The Real Threat” is most likely false if the current total federal debt is already untenable, and these these questions remain unanswered:

    • (a) Is there any historical precedent of any nation so deep into debt ever successfully solving a massive debt-bubble with more debt, borrowing, new money, and spending?

    • (b) Is there any macro economics model that states that a massive debt-bubble can solved with more debt, borrowing, new money, and spending?

    • (c) Is there any mathematical rationale that demonstrates how any nation so ridiculously deep into debt (much less the biggest debtor nation on the planet) has ever successfully solved a massive debt-bubble with more debt, borrowing, new money, and spending?

    • (d) If the current debt is untenable, how is growing it bigger going to help?
    • Where will the money come from when 90%-to-95% of all money in existence in the U.S. exists as debt, because money is created as debt at a steep ratio of 9-to-1 of debt-to-reserves.

    While deficit spending may be impractical (if not impossible) now, growing the debt much larger doesn’t make sense either if the debt is already untenable.

    At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

    Posted by: d.a.n at April 1, 2009 6:31 PM
    Comment #288969

    I agree that deflation is worse than deficits.

    The problem is, liberals run deficits even when the economy is running red hot. And that’s just foolish.

    It’s one thing to run deficits during a recession, and quite another to run them constantly and at ever-increasing magnitudes.

    Posted by: Justin at October 6, 2009 1:56 PM
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